EMPLOYEE BENEFITS AGREEMENT BY AND BETWEEN KERR-McGEE CORPORATION AND TRONOX INCORPORATED DATED AS OF November 28, 2005
Exhibit
10.52
Execution
Copy
BY
AND BETWEEN
XXXX-XxXXX
CORPORATION
AND
TRONOX
INCORPORATED
DATED
AS OF November 28, 2005
TABLE
OF CONTENTS
|
Article
1. Definitions and Construction
|
2
|
|
|
1.01.
|
Definitions
|
2
|
|
1.02.
|
Construction
|
9
|
|
Article
2. General Principles
|
10
|
|
|
2.01.
|
Assumption
of Liabilities
|
10
|
|
2.02.
|
Participation
in Xxxx-XxXxx Employee Benefit Plans
|
10
|
|
2.03.
|
Establishment
and Maintenance of Tronox Employee Benefit Plans
|
11
|
|
2.04.
|
Terms
of Participation in Tronox Employee Benefit Plans
|
12
|
|
2.05.
|
Allocation
of Costs
|
13
|
|
Article
3. Terms of Employment and Compensation
|
14
|
|
|
3.01.
|
Salary
and Base Pay
|
14
|
|
3.02.
|
Incentive
Awards
|
14
|
|
3.03.
|
Severance
|
15
|
|
3.04.
|
Success
Bonus Program
|
15
|
|
3.05.
|
2005
Retention Program
|
15
|
|
Article
4. Defined Benefit Retirement Plans
|
16
|
|
|
4.01.
|
Establishment
of Mirror Retirement Plan and Trust
|
16
|
|
4.02.
|
Assumption
of Pension Plan Liabilities
|
16
|
|
4.03.
|
Transfer
of Assets
|
16
|
|
4.04.
|
Pension
Plan Transfer Amount
|
17
|
|
Article
5. Defined Contribution Retirement Plans
|
18
|
|
|
5.01.
|
Establishment
of SIP and Trust
|
18
|
|
5.02.
|
Vesting
in Xxxx-XxXxx SIP
|
18
|
|
5.03.
|
Acceptance
of Rollovers
|
18
|
|
5.04.
|
Maintenance
of Universal Life Policy
|
18
|
|
Article
6. Health and Welfare Plans
|
19
|
|
|
6.01.
|
Establishment
of Health and Welfare Plans
|
19
|
|
6.02.
|
Health
and Welfare Plans
|
19
|
|
6.03.
|
Special
Rule for HCSA and DCSA Plans
|
19
|
|
6.04.
|
Vendor
Contracts
|
20
|
|
6.05.
|
Disability
Plans
|
21
|
|
6.06.
|
Life
Insurance Plans
|
21
|
|
6.07.
|
COBRA
|
21
|
|
6.08.
|
Leave
of Absence Programs and FMLA
|
22
|
|
6.09.
|
Xxxx-XxXxx
Workers’ Compensation Program
|
22
|
|
6.10.
|
Xxxx-XxXxx
Employee Assistance Program
|
22
|
|
6.11.
|
Unemployment
Insurance Tax Management Program
|
23
|
|
6.12.
|
Administration
|
23
|
|
6.13.
|
UMWA
Combined Benefit Fund
|
23
|
|
6.14.
|
Medicare
Part B Reimbursements
|
23
|
|
6.15.
|
Reimbursements
by Kennecott
|
23
|
|
6.16.
|
Application
of Article 6 to Tronox Entities
|
23
|
|
Article
7. Stock-Based Compensation
|
25
|
|
|
7.01.
|
Establishment
of Plan
|
25
|
|
7.02.
|
Stock
Options
|
25
|
|
7.03.
|
Restricted
Stock
|
25
|
|
Article
8. Executive Benefits
|
26
|
|
|
8.01.
|
Establishment
of Plans
|
26
|
|
8.02.
|
Xxxx-XxXxx
Benefits Restoration Plan
|
26
|
|
8.03.
|
Rabbi
Trust
|
26
|
|
8.04.
|
Continuity
Agreements
|
26
|
|
8.05.
|
Code
Section 162(m)
|
27
|
|
Article
9. Miscellaneous Benefits
|
28
|
|
|
9.01.
|
Service
Award Program
|
28
|
|
9.02.
|
Other
Welfare Plans
|
28
|
|
Article
10. Non-U.S. Employees and Employee Benefit Plans
|
29
|
|
|
10.01.
|
In
General
|
29
|
|
10.02.
|
Stock
Opportunity Grants
|
29
|
|
10.03.
|
Stock
Options—Foreign Plans
|
29
|
|
Article
11. General and Administrative Provisions
|
30
|
|
|
11.01.
|
Actuarial
and Accounting Methodologies and Assumptions
|
30
|
|
11.02.
|
Sharing
of Participant Information
|
30
|
|
11.03.
|
Reporting,
Disclosure, and Communications to Participants
|
30
|
|
11.04.
|
Non-Termination
of Employment, No Third-Party Beneficiaries
|
31
|
|
11.05.
|
Plan
Audits
|
31
|
|
11.06.
|
Beneficiary
Designations
|
33
|
|
11.07.
|
Cooperation
in Requests for Rulings and DOL Opinions
|
33
|
|
11.08.
|
Fiduciary
Matters
|
33
|
|
11.09.
|
Collective
Bargaining
|
33
|
|
11.10.
|
Consent
of Third Parties
|
33
|
|
11.11.
|
General
Obligations as Plan Sponsors
|
34
|
|
11.12.
|
Adjustments
to Plan Transfers
|
34
|
|
Article
12. Miscellaneous
|
35
|
|
|
12.01.
|
Effect
If Neither Distribution nor Exchange Occurs
|
35
|
|
12.02.
|
Relationship
of Parties
|
35
|
|
12.03.
|
Affiliates
|
35
|
|
12.04.
|
Disputes
|
35
|
|
12.05.
|
Arbitration
|
35
|
| Schedule I Xxxx-XxXxx U.S. Employee Benefit Plans, Programs, and Policies | ||
| Schedule II Xxxx-XxXxx Non-U.S. Employee Benefit Plans, Programs, and Policies | ||
This
EMPLOYEE BENEFITS AGREEMENT, dated as of November 28, 2005, is by and between
Xxxx-XxXxx and Tronox. Capitalized terms used in this Agreement (other than
the
formal names of Xxxx-XxXxx Plans and related trusts of Xxxx-XxXxx) and not
otherwise defined shall have the respective meanings assigned to them in
Article
1
of
this Agreement or as assigned to them in the Principal Agreement.
RECITALS
WHEREAS,
the Board of Directors of Xxxx-XxXxx has determined that it is in the best
interests of Xxxx-XxXxx and its stockholders to separate Xxxx-XxXxx’x existing
business into two independent businesses;
WHEREAS,
in order to separate Xxxx-XxXxx’x existing business into two independent
businesses, Xxxx-XxXxx and Tronox have entered into the Master Separation
Agreement among Xxxx-XxXxx Corporation, Xxxx-XxXxx Worldwide Corporation and
Tronox Incorporated, dated as of the same date as this Agreement (the “Principal
Agreement”), and certain other agreements that will govern matters relating to
the separation, the Distribution or Exchange, and the relationship of Xxxx-XxXxx
and Tronox and their respective Subsidiaries following the Distribution or
Exchange; and
WHEREAS,
pursuant to the Principal Agreement, Xxxx-XxXxx and Tronox have agreed to enter
into this Agreement allocating assets, liabilities, and responsibilities with
respect to certain employee compensation and benefit plans and programs between
them.
NOW,
THEREFORE, in consideration of the mutual agreements, provisions and covenants
contained in this Agreement, the parties, intending to be legally bound, agree
as follows:
1
ARTICLE
1. DEFINITIONS
AND CONSTRUCTION
1.01. Definitions.
For
purposes of this Agreement the following terms shall have the following
meanings:
| (a) |
Agreement.
Agreement means this Employee Benefits Agreement, including all the
Schedules and Exhibits hereto.
|
| (b) |
Article.
Article means an Article of this
Agreement.
|
| (c) |
Award.
Award means an award under a Stock Plan, a Short Term Incentive Plan,
or a
Non-U.S. Benefit Plan.
|
| (d) |
Benefits
Restoration Plan.
Benefits Restoration Plan, when immediately preceded by “Xxxx-XxXxx,”
means the Xxxx-XxXxx Corporation Benefits Restoration Plan. When
immediately preceded by “Tronox,” Benefits Restoration Plan means the
non-qualified retirement plan to be established by Tronox pursuant
to
Section 2.03
that corresponds to the defined benefit portion of the Xxxx-XxXxx
Benefits
Restoration Plan.
|
| (e) |
Cafeteria
Plan. Cafeteria
Plan, when immediately preceded by “Xxxx-XxXxx,” means the cafeteria plan
component of the Xxxx-XxXxx Health and Protection Plan, which includes
the
HCSA and the DCSA. When immediately preceded by “Tronox,” cafeteria plan
means the plan that may be established by Tronox pursuant to Section
2.03
that corresponds to the Xxxx-XxXxx Cafeteria
Plan.
|
| (f) |
Change
In Control.
Change in Control means the occurrence, on or after the Offering
Date and
before the Close of the Distribution Date, of a “Change in Control” as
such term is defined in either the (1) Xxxx-XxXxx Corporation 2005
Long
Term Incentive Plan as amended through the date of this Agreement
or
(2) Tronox Incorporated 2005 Long Term Incentive
Plan.
|
| (g) |
Close
of the Distribution Date.
Close of the Distribution Date means 11:59:59 P.M., Eastern Standard
Time
or Eastern Daylight Time (whichever shall then be in effect), on
the
Distribution Date.
|
| (h) |
COBRA.
COBRA means the continuation coverage requirements for “group health
plans” under Title X of the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended, and as codified in Code section 4980B and ERISA
sections 601 through 608.
|
| (i) |
Code.
Code means the Internal Revenue Code of 1986, as amended, or any
successor
federal income tax law. Reference to a specific Code provision also
includes any proposed, temporary, or final regulation or other guidance
of
general applicability in force under that
provision.
|
| (j) |
DCSA.
DCSA,
when immediately preceded by “Xxxx-XxXxx,” means the dependent care
spending account component of the Xxxx-XxXxx Cafeteria Plan. When
immediately preceded by “Tronox,” DCSA means the plan to be established by
Tronox pursuant to Section 2.03
that corresponds to the Xxxx-XxXxx
DCSA.
|
2
| (k) |
Disability
Plans. Disability
Plans, when immediately preceded by “Xxxx-XxXxx,” means the short term
disability and long term disability components of the Xxxx-XxXxx
Health
and Protection Plan and the Xxxx-XxXxx Pigments (Savannah), Inc.
Personal
Protection Plan. When immediately preceded by “Tronox,” Disability Plans
means the plans to be established by Tronox pursuant to Section
2.03
that correspond to the respective Xxxx-XxXxx Disability
Plans.
|
| (l) |
Distribution
Date.
Distribution Date means the date on which the Distribution or Exchange
(both as defined in the Principal Agreement)
occurs.
|
| (m) |
DOL.
DOL means the U.S. Department of
Labor.
|
| (n) |
EAP.
EAP,
when immediately preceded by “Xxxx-XxXxx,” means the employee assistance
component of the Xxxx-XxXxx Health and Protection Plan and the Xxxx-XxXxx
Pigments (Savannah), Inc. Personal Protection Plan. When immediately
preceded by “Tronox,” EAP means the plans to be established by Tronox
pursuant to Section 2.03
that correspond to the Xxxx-XxXxx
EAP.
|
| (o) |
Employee
Benefit Plans.
Employee Benefit Plans, when immediately preceded by “Xxxx-XxXxx,” means
the Xxxx-XxXxx Retirement Plan, the Xxxx-XxXxx SIP, the Xxxx-XxXxx
Stock
Plans, the Xxxx-XxXxx Executive Benefit Plans, the Xxxx-XxXxx Short
Term
Incentive Plans, the Xxxx-XxXxx Health and Welfare Plans, the Xxxx-XxXxx
Other Benefit Programs, and the Xxxx-XxXxx Non-U.S. Benefit Plans.
When
immediately preceded by “Tronox,” Employee Benefit Plans means the Tronox
Retirement Plan, the Tronox SIP, the Tronox Stock Plans, the Tronox
Executive Benefit Plans, the Tronox Short Term Incentive Plans, the
Tronox
Health and Welfare Plans, the Tronox Other Benefit Programs, and
the
Tronox Non-U.S. Benefit Plans.
|
| (p) |
ERISA.
ERISA means the Employee Retirement Income Security Act of 1974,
as
amended. Reference to a specific provision of ERISA also includes
any
proposed, temporary, or final regulation or other guidance of general
applicability in force under that
provision.
|
| (q) |
Executive
Benefit Plans.
Executive Benefit Plans, when immediately preceded by “Xxxx-XxXxx,” means
the Xxxx-XxXxx Benefits Restoration Plan and the Xxxx-XxXxx Corporation
Chemical Division Nonqualified Retirement Plan. When immediately
preceded
by “Tronox,” Executive Benefit Plans means the non-qualified retirement
plans to be established by Tronox pursuant to Section 2.03
that correspond to the defined benefit portion of the Xxxx-XxXxx
Benefits
Restoration Plan and to the Xxxx-XxXxx Corporation Chemical Division
Nonqualified Retirement Plan.
|
| (r) |
FMLA.
FMLA means the Family and Medical Leave Act of 1993, as
amended.
|
| (s) |
HCSA.
HCSA,
when immediately preceded by “Xxxx-XxXxx,” means the health care spending
account component of the Xxxx-XxXxx Cafeteria Plan. When immediately
preceded by “Tronox,” HCSA means the plan to be established by Tronox
pursuant to Section 2.03
that corresponds to the Xxxx-XxXxx
HCSA.
|
3
| (t) |
Health
and Welfare Plans.
Health and Welfare Plans, when immediately preceded by “Xxxx-XxXxx,” means
the Xxxx-XxXxx Health and Protection Plan, the Xxxx-XxXxx Retiree
Health
and Protection Plan, the Xxxx-XxXxx Pigments (Savannah), Inc. Personal
Protection Plan, and the Xxxx-XxXxx Other Welfare Plans. When immediately
preceded by “Tronox,” Health and Welfare Plans means the health and
welfare plans to be established by Tronox pursuant to Section 2.03
that correspond to the Xxxx-XxXxx Health and Welfare
Plans.
|
| (u) |
Health
Plans. Health
Plans, when immediately preceded by “Xxxx-XxXxx,” means the medical,
dental, and vision components of the Xxxx-XxXxx Health and Protection
Plan, the Xxxx-XxXxx Retiree Health and Protection Plan, and the
Xxxx-XxXxx Pigments (Savannah), Inc. Personal Protection Plan. When
immediately preceded by “Tronox,” Health Plans means the medical, dental,
and vision plans to be established by Tronox pursuant to Section
2.03
that correspond to the Xxxx-XxXxx Health
Plans.
|
| (v) |
HMO.
HMO means a health maintenance organization that provides benefits
under
the Xxxx-XxXxx Health Plans or the Tronox Health
Plans.
|
| (w) |
Immediately
after the Distribution Date.
Immediately after the Distribution Date means 12:00 A.M., Eastern
Standard
Time or Eastern Daylight Time (whichever shall then be in effect),
on the
day after the Distribution Date.
|
| (x) |
IPO.
IPO means the initial public offering by Tronox of shares of Tronox
Common
Stock pursuant to the IPO Registration
Statement.
|
| (y) |
IRS.
IRS means the Internal Revenue
Service.
|
| (z) |
Xxxx-XxXxx.
Xxxx-XxXxx means Xxxx-XxXxx Corporation, a Delaware
corporation.
|
| (aa) |
Xxxx-XxXxx
Entity.
Xxxx-XxXxx Entity means any entity that is, at the relevant time,
controlled, directly or indirectly, by Xxxx-XxXxx, other than, after
the
Close of the Distribution Date, Tronox or any Tronox
Entity.
|
| (bb) |
Xxxx-XxXxx
Stock Value.
Xxxx-XxXxx Stock Value means a price for Xxxx-XxXxx Common Stock
on the
Distribution Date, or, if such date is not a trading day on the NYSE,
on
the next preceding day that was a trading day on the NYSE, calculated
using a methodology to be determined by Xxxx-XxXxx. Notwithstanding
the
foregoing, if an adjustment is required under Article
7
with respect to a Change in Control, Xxxx-XxXxx Stock Value shall
mean the
closing price on the NYSE for Xxxx-XxXxx Common Stock on the Offering
Date.
|
| (cc) |
Leave
of Absence Programs.
Leave of Absence Programs, when immediately preceded by “Xxxx-XxXxx,”
means the Xxxx-XxXxx Sick Leave and Extended Sick Leave Policies,
Vacation
Policy, Personal Leave Policy, Jury Duty Policy, Military Leave Program,
Xxxx-XxXxx Funeral Leave Program, and other similar programs offered
from
time to time under the personnel policies and practices of Xxxx-XxXxx
or a
Xxxx-XxXxx Entity. When immediately preceded by “Tronox,” Leave of Absence
Programs means the programs to be established by Tronox pursuant
to
Section 2.03
that correspond to the respective Xxxx-XxXxx Leave of Absence
Programs.
|
4
| (dd) |
Life
Insurance Plans. Life
Insurance Plans, when immediately preceded by “Xxxx-XxXxx,” means (1) the
accidental death and dismemberment insurance, business travel accident
insurance, dependent life insurance, and group term life insurance
components of the Xxxx-XxXxx Health and Protection Plan, (2) the
group
term life insurance component of the Xxxx-XxXxx Retiree Health and
Protection Plan, and (3) the accidental death and dismemberment and
group
term life insurance components of the Xxxx-XxXxx Pigments (Savannah),
Inc.
Personal Protection Plan. When immediately preceded by “Tronox,” Life
Insurance Plans means the plans, if any, to be established by Tronox
pursuant to Section 2.03
that correspond to the Xxxx-XxXxx Life Insurance
Plans.
|
| (ee) |
Material
Feature.
Material Feature means any feature of an Employee Benefit Plan that
could
reasonably be expected to be of material importance to the sponsoring
employer or the participants and beneficiaries of the Employee Benefit
Plan, which could include, depending on the type and purpose of the
particular Employee Benefit Plan, the class or classes of employees
eligible to participate in such Employee Benefit Plan, the nature,
type,
form, source, and level of benefits provided by the employer under
such
Employee Benefit Plan and the amount or level of contributions, if
any,
required to be made by participants (or dependents or beneficiaries)
or
the employer to such Employee Benefit
Plan.
|
| (ff) |
Non-Employee
Director.
Non-Employee Director, when immediately preceded by “Xxxx-XxXxx,” means a
member of Xxxx-XxXxx’x Board of Directors who is not an employee of
Xxxx-XxXxx, a Xxxx-XxXxx Entity, Tronox, or a Tronox Entity. When
immediately preceded by “Tronox,” Non-Employee Director means a member of
Tronox’s Board of Directors who is not an employee of Xxxx-XxXxx, a
Xxxx-XxXxx Entity, Tronox or a Tronox
Entity.
|
| (gg) |
Non-U.S.
Benefit Plans. Non-U.S.
Benefit Plans, when immediately preceded by “Xxxx-XxXxx,” means the
employee benefit plans listed on Schedule II. When immediately preceded
by
“Tronox,” Non-U.S. Plans means employee benefit plans to be established by
Tronox pursuant to Section 2.03
that correspond to the Xxxx-XxXxx Non-U.S. Benefit Plans to the extent
such Xxxx-XxXxx Non-U.S. Benefit Plans provide benefits to Tronox
Individuals.
|
| (hh) |
Offering
Date.
Offering Date means the Closing Date (as defined in the Principal
Agreement).
|
| (ii) |
Option.
Option, when immediately preceded by “Xxxx-XxXxx,” means an option to
purchase Xxxx-XxXxx Common Stock (including any tandem stock appreciation
right). When immediately preceded by “Tronox,” Option means an option to
purchase Tronox Common Stock (including any tandem stock appreciation
right), in each case pursuant to a Stock
Plan.
|
| (jj) |
Other
Benefit Programs. Other
Benefit Programs, when immediately preceded by “Xxxx-XxXxx,” means the
Leave of Absence Programs, Service Award Program, Education Gift
Matching
Program, Automobile/Homeowners Insurance Program, Death Benefit Policy,
and any other payroll practice, program, or policy available to Xxxx-XxXxx
employees. When immediately preceded by “Tronox,” Other Benefit Programs
means the plans to be established by Tronox pursuant to Section
2.03
that correspond to Leave of Absence Programs, Service Award Program,
Education Gift Matching Program, Automobile/Homeowners Insurance
Program,
Death Benefit Policy, or other payroll practice, program, or policy
available to Xxxx-XxXxx employees.
|
5
| (kk) |
Other
Welfare Plans. Other
Welfare Plans, when immediately preceded by “Xxxx-XxXxx,” means the
Xxxx-XxXxx Long Term Care Program and the Xxxx-XxXxx Educational
Assistance Program, regardless of whether such plans are subject
to ERISA.
When immediately preceded by “Tronox,” Other Welfare Plans means the
welfare plans, if any, to be established by Tronox pursuant to Section
2.03
that correspond to the Xxxx-XxXxx Long Term Care Program and the
Xxxx-XxXxx Educational Assistance Program,
respectively.
|
| (ll) |
Participating
Company.
Participating Company means, with respect to a particular Employee
Benefit
Plan, (1) Xxxx-XxXxx, (2) any Xxxx-XxXxx Entity that Xxxx-XxXxx has
approved for participation in, and which is participating in, such
Employee Benefit Plan sponsored by Xxxx-XxXxx, and (3) any entity
that by the terms of such an Employee Benefit Plan, participates
in such
Employee Benefit Plan or has employees who, by the terms of such
Employee
Benefit Plan, participate in or are covered by such Employee Benefit
Plan.
|
| (mm) |
Pension
Transfer Amount.
Pension Transfer Amount is defined in Section 4.04.
|
| (nn) |
Pension
Trust.
Pension Trust, when immediately preceded by “Xxxx-XxXxx,” means the trust
that is exempt from taxation under Code section 501(a) that holds
the
assets of the Xxxx-XxXxx Retirement Plan and forms a part of the
Xxxx-XxXxx Retirement Plan. When immediately preceded by “Tronox,” Pension
Trust means the trust that is exempt from taxation under Code section
501(a) that holds the assets of the Tronox Retirement Plan and forms
a
part of the Tronox Retirement Plan.
|
| (oo) |
Principal
Agreement.
Principal Agreement is defined in the second recital of this
Agreement.
|
| (pp) |
QDRO.
QDRO means a domestic relations order which qualifies under Code
section
414(p) and ERISA section 206(d) and which creates or recognizes an
alternate payee’s right to, or assigns to an alternate payee, all or a
portion of the benefits payable to a participant under any of the
Xxxx-XxXxx Retirement Plans or the Xxxx-XxXxx Savings
Plan.
|
| (qq) |
QMCSO.
QMCSO means a medical child support order that qualifies under section
609(a) of ERISA and that creates or recognizes the existence of an
alternate recipient’s right to, or assigns to an alternate recipient the
right to, receive benefits for which a participant or beneficiary
is
eligible under a Xxxx-XxXxx Health
Plan.
|
| (rr) |
Rabbi
Trust.
Rabbi Trust, when immediately preceded by “Xxxx-XxXxx,” means the rabbi
trust established by Xxxx-XxXxx Corporation. When immediately preceded
by
“Tronox,” Rabbi Trust means the grantor trust to be established by Tronox
pursuant to Section 8.03
that corresponds to the Xxxx-XxXxx rabbi
trust.
|
6
| (ss) |
Ratio.
Ratio means the amount obtained by dividing the Xxxx-XxXxx Stock
Value by
the Tronox Stock Value; provided, however, that, in determining the
Ratio,
adjustments may be made to minimize the independent, determinable
and
verifiable effects of events other than the Distribution or Exchange
on
the Xxxx-XxXxx Stock Value and the Tronox Stock
Value.
|
| (tt) |
Retirement
Plan.
Retirement Plan, when immediately preceded by “Xxxx-XxXxx,” means the
Xxxx-XxXxx Corporation Retirement Plan. When immediately preceded
by
“Tronox,” Retirement Plan means the tax-qualified defined benefit
retirement plan to be established by Tronox pursuant to Section
2.03
that corresponds to the Xxxx-XxXxx Retirement
Plan.
|
| (uu) |
Section.
Section means a section of this
Agreement.
|
| (vv) |
Short
Term Incentive Plans.
Short Term Incentive Plans, when immediately preceded by “Xxxx-XxXxx,”
means the Xxxx-XxXxx 2002 Annual Incentive Compensation Plan and
the
Xxxx-XxXxx SCORE Compensation Program (effective 2003). When immediately
preceded by “Tronox,” Short Term Incentive Plans means the plans to be
established by Tronox pursuant to Section 2.03
that correspond to the Xxxx-XxXxx 2002 Annual Incentive Compensation
Plan
and the Xxxx-XxXxx SCORE Compensation Program (effective
2003).
|
| (ww) |
SIP.
SIP, when immediately preceded by “Xxxx-XxXxx,” means the Xxxx-XxXxx
Corporation Savings Investment Plan. When immediately preceded by
“Tronox,” SIP means the tax-qualified defined contribution retirement plan
to be established by Tronox pursuant to Section 2.03
that corresponds to the Xxxx-XxXxx
SIP.
|
| (xx) |
Stock
Plans.
Stock Plans, when immediately preceded by “Xxxx-XxXxx,” means the
Xxxx-XxXxx Corporation 2005 Long Term Incentive Plan, the Xxxx-XxXxx
Corporation 2002 Long Term Incentive Plan, the Xxxx-XxXxx Corporation
2000
Long Term Incentive Plan, the Xxxx-XxXxx Corporation 1998 Long Term
Incentive Plan, and the Xxxx-XxXxx Corporation Long Term Incentive
Plan
(adopted in 1987 and restated in 1995), and such other stock-based
incentive plans that have been assumed by Xxxx-XxXxx by reason of
merger,
acquisition, or otherwise, each as amended through the date of this
Agreement. Stock Plans shall also be deemed to include the stock
award
plans of companies acquired by (1) Tronox or a Tronox Entity after
the
date of this Agreement and before the Close of the Distribution Date,
if
Tronox or the Tronox Entity assumes those plans and (2) Xxxx-XxXxx
or a
Xxxx-XxXxx Entity after the date of this Agreement and before the
Close of
the Distribution Date, if Xxxx-XxXxx or the Xxxx-XxXxx Entity assumes
those plans. When immediately preceded by “Tronox,” Stock Plans means the
stock award plans to be established by Tronox pursuant to Section
2.03.
|
| (yy) |
Transferred
Individual.
Transferred Individual means any Tronox Individual other than (1)
any
Tronox Individual who became an employee of Xxxx-XxXxx or a Xxxx-XxXxx
Entity after the latest date on which he was a Tronox Individual
and
before the Close of the Distribution Date or (2) any Tronox Individual
who
is a Transferred Non-U.S. Individual.
|
7
| (zz) |
Transferred
Non-U.S. Individual.
A Transferred Non-U.S. Individual is a Tronox Individual who was
last
employed before the Close of the Distribution Date by Xxxx-XxXxx
or a
Xxxx-XxXxx Entity located outside of the U.S.
|
| (aaa) |
Tronox.
Tronox means Tronox Incorporated, and, with respect to periods before
the
Offering Date, the chemical division of
Xxxx-XxXxx.
|
| (bbb) |
Tronox
Committee.
Tronox Committee means the Executive Compensation Committee of the
Tronox
Board of Directors, or such other committee as is appointed to administer
the provisions of the Tronox Stock
Plans.
|
| (ccc) |
Tronox
Entity.
Tronox Entity means any entity or business unit (1) that is, at the
relevant time, a subsidiary of Tronox or is otherwise controlled,
directly
or indirectly, by Tronox or (2) that is or has been controlled by
Xxxx-XxXxx, directly or indirectly, and involved in the chemical,
refining, coal, offshore contract drilling, or nuclear business units.
|
| (ddd) |
Tronox
Individual.
Tronox Individual means any individual who
is—
|
| (1) |
on
the Offering Date, actively employed by (A) Tronox, (B) a Tronox
Entity,
or (C) Xxxx-XxXxx Shared Services Company, LLC, and, in the case
of
subsection (C), is on
a list of individuals to be assigned to Tronox on the Offering
Date,
|
| (2) |
not
actively employed by Tronox or a Tronox Entity on the Offering Date
and
(A) on the Offering Date, is receiving benefits under a Xxxx-XxXxx
Leave
of Absence Program or a Xxxx-XxXxx Disability Plan and (B) according
to the human resources records of Xxxx-XxXxx, was actively employed
by (i)
Tronox, (ii) a Tronox Entity, (iii) Xxxx-XxXxx Shared Services Company,
LLC, or (iv) the Xxxx-XxXxx Technology Center and, in the case of
subsections (iii) and (iv), is on
a list of individuals to be assigned to Tronox on the Offering
Date,
immediately before beginning to receive benefits under a Xxxx-XxXxx
Leave
of Absence Program or the Xxxx-XxXxx Disability
Plan,
|
| (3) |
hired
by Tronox or a Tronox Entity on or after the Offering Date and before
the
Close of the Distribution Date, or
|
| (4) |
on
the Offering Date, a former employee of Xxxx-XxXxx, a Xxxx-XxXxx
Entity,
Tronox, or a Tronox Entity whose last employment with Xxxx-XxXxx
or a
Xxxx-XxXxx Entity before the Offering Date was, according to the
human
resources records of Xxxx-XxXxx, (A) with Tronox or a Tronox Entity
or (B)
with Xxxx-XxXxx Shared Services, LLC, or the Xxxx-XxXxx Technology
Center
and, in the case of this subsection (B), is on
a list of individuals to be assigned to Tronox on the Offering
Date.
|
An
alternate payee under a QDRO, an alternate recipient under a QMCSO, a
beneficiary or a covered dependent, in each case of an individual described
in
Section 1.01(ddd)(1)
through (4)
shall
also be a Tronox Individual with respect to that employee’s benefit under the
applicable Plans. Such an alternate payee, alternate recipient, beneficiary,
or
covered dependent shall not otherwise be considered a Tronox Individual with
respect to his or her own benefits under any Plan(s) unless he or she is a
Tronox Individual by virtue of his employment with Tronox or a Tronox Entity.
8
| (eee) |
Tronox
Stock Value.
Tronox Stock Value means a price for Tronox Common Stock on the
Distribution Date or, if such date is not a trading day on the NYSE,
on
the next preceding day that was a trading day on the NYSE, calculated
using a methodology to be determined by Xxxx-XxXxx. Notwithstanding
the
foregoing, if an adjustment is required under Article
7
with respect to a Change in Control, Tronox Stock Value shall mean
the
price at which shares of Tronox Common Stock are offered to purchasers
in
the IPO.
|
| (fff) |
U.S.
U.S. means the 50 states comprising the United States of America,
territories thereof, and the District of
Columbia.
|
| (ggg) |
WCP.
WCP, when immediately preceded by “Xxxx-XxXxx,” means the Xxxx-XxXxx
Workers’ Compensation Program, comprised of the various arrangements
established by Xxxx-XxXxx or a Xxxx-XxXxx Entity to comply with the
workers’ compensation requirements of the states in which Xxxx-XxXxx and
its Affiliates conduct business. When immediately preceded by “Tronox,”
WCP means the Tronox Workers’ Compensation Program to be established by
Tronox to administer Tronox WCP Claims (as defined in Section 6.09).
|
1.02. Construction.
For
purposes of this Agreement, unless the contrary is clearly indicated by the
context,
| (a) |
the
use of the masculine gender shall also include within its meaning
the
feminine and vice versa,
|
| (b) |
the
use of the singular shall also include within its meaning the plural
and
vice versa, and
|
| (c) |
the
word “include” shall mean to include without
limitation.
|
9
ARTICLE
2. GENERAL
PRINCIPLES
2.01. Assumption
of Liabilities.
Except
as otherwise provided in this Agreement or in the Principal Agreement, Tronox
hereby agrees, as of the dates set forth herein, to assume and pay, perform,
fulfill, and discharge, or to cause a Tronox Employee Benefit Plan to assume,
pay, perform, fulfill, and discharge, in accordance with their respective terms,
all liabilities (regardless of when or where such liabilities arose or arise
or
were or are incurred) to or relating to Transferred Individuals, under or with
respect to the employee compensation programs and Employee Benefit Plans, to
the
extent relating to, arising out of, or resulting from future, present, or former
employment with Tronox, a Tronox Entity, Xxxx-XxXxx, or a Xxxx-XxXxx Entity
(including all liabilities under Xxxx-XxXxx Employee Benefit Plans and Tronox
Employee Benefit Plans).
2.02. Participation
in Xxxx-XxXxx Employee Benefit Plans.
| (a) |
In
General.
Effective as of the Offering Date and subject to the terms and conditions
of this Agreement, Tronox shall be a Participating Company in the
Xxxx-XxXxx Employee Benefit Plans (other than, with respect to Awards
granted after the Offering Date, the Stock Plans) in effect as of
the
Offering Date. Each Tronox Entity that is, as of the Offering Date,
a
Participating Company in any of such Xxxx-XxXxx Employee Benefit
Plans
shall continue as such. Effective as of any date on or after the
Offering
Date and before the Close of the Distribution Date, a Tronox Entity
not
described in the preceding sentence may, at its request and with
the
consent of Xxxx-XxXxx (which shall not be unreasonably withheld),
become a
Participating Company in any or all of the Xxxx-XxXxx Employee Benefit
Plans. Without Xxxx-XxXxx’x consent, neither Tronox nor any Tronox Entity
shall become a Participating Company in any such Xxxx-XxXxx Employee
Benefit Plan on or after the Offering
Date.
|
| (b) |
Obligations
as Participating Company.
With respect to its participation in the Xxxx-XxXxx Employee Benefit
Plans, Tronox shall perform, and shall cause each other Tronox Entity
that
is a Participating Company in any Xxxx-XxXxx Employee Benefit Plan
to
perform, the duties of a Participating Company as set forth in the
applicable Employee Benefit Plan document and related administrative
procedures, including: (1) assisting in the administration of claims,
to
the extent requested by the claims administrator of the applicable
Xxxx-XxXxx Employee Benefit Plan; (2) cooperating fully with benefit
personnel and benefit vendors; (3) preserving the confidentiality of
all financial arrangements Xxxx-XxXxx has or may have with any vendors,
claims administrators, trustees or any other entity or individual
with
whom Xxxx-XxXxx has entered into an agreement relating to the Xxxx-XxXxx
Employee Benefit Plans; and (4) preserving the confidentiality of
participant health information (including health information in relation
to FMLA leaves).
|
| (c) |
Termination
of Participating Company Status.
Tronox and each Tronox Entity shall cease to be a Participating Company
in
the Xxxx-XxXxx Employee Benefit Plans at the Close of the Distribution
Date, except to the extent the parties agree to continue Tronox or
any
Tronox Entity as a Participating Company in a Xxxx-XxXxx Employee
Benefit
Plan after that date. Notwithstanding the foregoing, in the event
of a
Change in Control, Tronox and each Tronox Entity shall cease to be
a
Participating Company in the Xxxx-XxXxx Stock Plans as of the date
as of
which the adjustments called for by Article
7
have been made.
|
10
2.03. Establishment
and Maintenance of Tronox Employee Benefit Plans.
Effective
as of the Offering Date, Tronox shall adopt, or cause to be adopted, the Tronox
Stock Plans for the benefit of Tronox Individuals and other current and future
employees of Tronox and the Tronox Entities. Effective Immediately after the
Distribution Date, Tronox shall adopt, or cause to be adopted, the remaining
Tronox Employee Benefit Plans for the benefit of Transferred Individuals and
other current and future employees (and Non-Employee Directors) of Tronox and
the Tronox Entities.
The
Tronox Employee Benefit Plans, as in effect immediately after their effective
dates, need not be substantially similar in any respect to the corresponding
Xxxx-XxXxx Employee Benefit Plans as in effect immediately before the effective
dates of the Tronox Employee Benefit Plans, except as follows:
| (a) |
Defined
Benefit Retirement Plans.
Tronox shall establish the Tronox Retirement Plan, which shall be
substantially similar in all Material Features to the Xxxx-XxXxx
Retirement Plan. In addition, Tronox shall establish the Tronox Benefits
Restoration Plan, which shall be substantially similar in all Material
Features to the defined benefit portion of the Xxxx-XxXxx Benefits
Restoration Plan. Tronox may, but is not required to, establish a
plan
that mirrors the defined contribution portion of the Xxxx-XxXxx Benefits
Restoration Plan.
|
| (b) |
Health
Plans.
The Tronox Health Plans shall be substantially similar in all Material
Features to the Xxxx-XxXxx Health Plans, except that the participants’
share of any premium payments may differ from the payment levels
of
participants in the Xxxx-XxXxx Health Plans (except as provided below
with
respect to the provision of health benefits to retirees and their
spouses
and dependents).
|
| (c) |
Leave
of Absence Programs. The
Tronox Leave of Absence Programs shall not cause any Transferred
Individual to forfeit any accrued vacation or leave that is transferred
to
Tronox or a Tronox Entity from Xxxx-XxXxx or a Xxxx-XxXxx Entity
that
could not be forfeited under the applicable Xxxx-XxXxx Leave of Absence
Program.
|
| (d) |
Non-U.S.
Benefit Plans.
Tronox shall establish Non-U.S. Benefit Plans to the extent provided
in
Article
10.
|
| (e) |
Incentive
Awards.
Tronox shall establish incentive plans to the extent provided in
Section
3.02.
|
| (f) |
DCSA
and HCSA Plans.
Tronox shall establish a DCSA Plan and an HCSA Plan for the remainder
of
the calendar year in which the Distribution Date occurs to the extent
provided in Section 6.03.
|
| (g) |
Disability
Plans.
Tronox shall establish Disability Plans to the extent provided in
Section
6.05.
|
11
Nothing
in this Agreement is intended to prohibit Tronox or any Tronox Entity from
amending or terminating any Tronox Employee Benefit Plan at any time after
the
Close of the Distribution Date, provided that: (a) any such amendment or
termination is permitted by law (including under section 411(d)(6) of the Code
or section 204(g) of ERISA), (b) the Material Features of the Tronox Health
Plans and Life Insurance Plans that apply to retirees (regardless of whether
the
retiree retires before the Close of the Distribution Date) or their spouses
or
dependents shall not be amended before the third anniversary of the Distribution
Date, (c) any such amendment or termination complies with Tronox’s obligations
to contribute to the UMWA Combined Benefit Fund and to provide Medicare Part
B
reimbursements as required by Sections 6.13
and
6.14,
and
(d) any such amendment or termination is permitted by any applicable
collective bargaining agreement.
Those
Tronox Stock Plans as to which shareholder approval is required shall be adopted
by Tronox and approved by a Xxxx-XxXxx Entity as sole shareholder of Tronox,
before their effective dates.
2.04. Terms
of Participation in Tronox Employee Benefit Plans.
The
Tronox Employee Benefit Plans shall be, with respect to Tronox Individuals,
in
all respects the successors in interest to, and shall not provide benefits
that
duplicate benefits provided by, the corresponding Xxxx-XxXxx Employee Benefit
Plans. Xxxx-XxXxx and Tronox shall agree on methods and procedures to prevent
Tronox Individuals and Transferred Individuals from receiving duplicative
benefits from the Xxxx-XxXxx Employee Benefit Plans and the Tronox Employee
Benefit Plans.
With
respect to Transferred Individuals, each Tronox Employee Benefit Plan that
is
effective on the Offering Date (in the case of the Stock Plans) or the
Distribution Date (in the case of all Employee Benefit Plans other than the
Stock Plans) shall provide that all service, all compensation and all other
benefit-affecting determinations that, immediately before their effective dates,
were recognized under the corresponding Xxxx-XxXxx Employee Benefit Plan shall,
as of the Offering Date or Distribution Date (as applicable), receive full
recognition, credit, and validity and be taken into account under such Tronox
Employee Benefit Plan to the same extent as if they occurred under such Tronox
Employee Benefit Plan, except to the extent that duplication of benefits would
result.
The
provisions of this Agreement for the transfer of assets from certain trusts
relating to Xxxx-XxXxx Employee Benefit Plans (including Non-U.S. Benefit Plans)
to the corresponding trusts relating to Tronox Employee Benefit Plans (including
Non-U.S. Benefit Plans) are based upon the understanding of the parties that
each such Tronox Employee Benefit Plan will assume all liabilities of the
corresponding Xxxx-XxXxx Employee Benefit Plan to or relating to Transferred
Individuals, as provided for in this Agreement. If any such liabilities are
not
effectively assumed by the appropriate Tronox Employee Benefit Plan and are
retained by the corresponding Xxxx-XxXxx Employee Benefit Plan, then the amount
of assets transferred to the trust relating to such Tronox Employee Benefit
Plan
from the trust relating to the corresponding Xxxx-XxXxx Employee Benefit Plan
shall be recomputed, as set forth below but taking into account the retention
of
such liabilities by such Xxxx-XxXxx Employee Benefit Plan, and assets shall
be
transferred by the trust relating to such Tronox Employee Benefit Plan to the
trust relating to such Xxxx-XxXxx Employee Benefit Plan so as to place each
such
trust in the position it would have been in, had the initial asset transfer
been
made in accordance with such recomputed amount of assets.
12
2.05. Allocation
of Costs.
Between
the Offering Date and the Close of the Distribution Date, all Xxxx-XxXxx
Employee Benefit Plans will be administered by employees of Xxxx-XxXxx or a
Xxxx-XxXxx Entity, and Tronox or a Tronox Entity shall reimburse Xxxx-XxXxx
or
the appropriate Xxxx-XxXxx Entity for their ratable share of such costs.
13
ARTICLE
3. TERMS
OF EMPLOYMENT AND COMPENSATION
3.01. Salary
and Base Pay.
Until
the Distribution Date, Tronox and any Tronox Entity shall continue to use
existing salary or pay structures for Transferred Individuals and Transferred
Non-U.S. Individuals. However, nothing in this Agreement shall prohibit Tronox
or any Tronox Entity from modifying the existing salary or pay structures
prospectively in any manner Tronox or the Tronox Entity deems appropriate after
the Distribution Date.
3.02. Incentive
Awards.
| (a) |
2005
Short Term Incentive Awards.
For the 2005 calendar year (or such later year during which the Offering
Date occurs), Awards under the Xxxx-XxXxx Short Term Incentive Plans
for
Transferred Individuals shall be divided as
follows:
|
| (1) |
The
performance targets and Award amounts in effect as of the Offering
Date
shall be prorated for the portion of 2005 that occurs between January
1,
2005, and the Offering Date. Xxxx-XxXxx, in its discretion, shall
determine the extent to which these prorated performance targets
were
achieved. Xxxx-XxXxx shall ensure that Tronox receives an amount
sufficient to fund the prorated portion of the 2005 Awards on the
earlier
to occur of (A) the Distribution Date or (B) the date on which Tronox
makes payment to the Transferred Individual in connection with such
Awards.
|
| (2) |
Tronox
and the Tronox Entities shall establish appropriate performance targets
and Award amounts that shall be in effect for the portion of 2005
that
occurs between the Offering Date and December 31, 2005. Tronox or
the
applicable Tronox Entity, in its discretion, shall determine the
extent to
which the performance targets were achieved.
|
| (3) |
Tronox
shall pay to each Transferred Individual both (A) the portion of
his 2005
Award prorated for the period from January 1, 2005 to the Offering
Date,
and (B) the portion of his 2005 Award prorated for the period from
the
Offering Date to December 31, 2005, in a single payment at the time
specified under the applicable Short Term Incentive
Plan.
|
| (b) |
Long
Term Performance Awards with Performance Cycles that Include
2005.
For any performance cycles that include the 2005 calendar year (or
such
later year during which the Offering Date occurs),
|
| (1) |
Xxxx-XxXxx
shall pay, in accordance with its terms, all, or any portion of,
a
performance unit Award that is held by a Transferred Individual and
that
is no longer outstanding on the Distribution Date under the Xxxx-XxXxx
Stock Plans.
|
| (2) |
All,
or any portion of, a performance unit Award that is held by a Transferred
Individual and that is outstanding on the Distribution Date under
the
Xxxx-XxXxx Stock Plans shall be
canceled.
|
14
| (3) |
Tronox
shall provide to each Transferred Individual a long term performance
Award
(in the form of restricted stock and/or stock options) that is equal
in
value to the value of the forfeited portion of any Award as described
in
Section 3.02(b)(2).
As soon as practicable following the Offering Date, Xxxx-XxXxx shall
notify Tronox of the value of the portion of any Award that will
be
forfeited pursuant to this Section 3.02(b),
with such value being determined by calculating total shareholder
return
and associated payout as if the entire performance cycle ended on
the
Offering Date.
|
| (c) |
Compliance
with Section 409A of the Code.
To the extent practicable, all incentive Awards shall be paid in
such a
manner as to avoid the adverse consequences of section 409A of the
Code.
|
3.03. Severance.
Tronox
or the applicable Tronox Entity shall provide severance benefits to any
Transferred Individual whose employment with Tronox or a Tronox Entity is
terminated (other than for cause) after the Close of the Distribution Date
and
before the first anniversary of the Distribution Date that are at least as
great
as the severance benefits that such individual would have received had his
employment been terminated as a direct result of the transaction consummated
on
the Distribution Date.
3.04. Success
Bonus Program.
Xxxx-XxXxx
shall
be responsible for and shall retain all liabilities under the Xxxx-XxXxx
Corporation 2005 Success Bonus Program and shall provide for full payment of
all
bonuses owed under such program as soon as practicable after a Transferred
Individual becomes entitled to such payment.
3.05. 2005
Retention Program.
Effective
as of the Distribution Date, Tronox shall assume and be solely responsible
for
all unpaid liabilities to or relating to Transferred Individuals under the
Xxxx-XxXxx Corporation 2005 Retention Program and shall provide for full payment
of all bonuses owed under such program as soon as feasible following the
expiration of the retention period required under such program. As soon as
practicable after Tronox or a Tronox Entity pays any award under the Xxxx-XxXxx
Corporation 2005 Retention Program to a Transferred Individual, Xxxx-XxXxx
shall
reimburse Tronox for the full amount of such payment multiplied by a fraction,
the numerator of which is the total number of days from and including April
1,
2005 until the Offering Date, and the denominator of which is the total number
of days from and including April 1, 2005 until the date the award is payable
under such program.
15
ARTICLE
4. DEFINED
BENEFIT RETIREMENT PLANS
4.01. Establishment
of Mirror Retirement Plan and Trust.
Effective
Immediately after the Distribution Date, Tronox shall establish, or cause to
be
established, a Retirement Plan and Pension Trust qualified in accordance with
Code section 401(a), and exempt from taxation under Code section 501(a).
Before
the expiration of the applicable remedial amendment period under Code section
401(b), Tronox shall file, or shall cause to be filed, an application for a
determination from the IRS that the Tronox Retirement Plan and the Tronox
Pension Trust are qualified within the meaning of sections 401(a) and 501(a)
of
the Code, respectively. Tronox shall timely make, or cause to be made, any
modifications to the Tronox Retirement Plan and the Tronox Pension Trust
required by the IRS as a condition of issuing a favorable
determination.
4.02. Assumption
of Pension Plan Liabilities.
Immediately
after the Distribution Date, all liabilities relating to Transferred Individuals
under the Xxxx-XxXxx Retirement Plan shall cease to be liabilities of the
Xxxx-XxXxx Retirement Plan and shall be transferred to and assumed by the Tronox
Retirement Plan.
| 4.03. |
Transfer
of Assets.
|
Assets
shall be transferred from the Xxxx-XxXxx Pension Trust to the Tronox Pension
Trust in connection with the assumption by the Tronox Retirement Plan of
liabilities relating to Transferred Individuals under the Xxxx-XxXxx Retirement
Plan in two stages, an initial pension transfer and a final pension transfer,
as
described below:
| (a) |
The
Initial Pension Transfer.
The initial pension transfer shall be in an amount equal to at least
ninety percent (90%) of Xxxx-XxXxx’x reasonable best estimate on the
Offering Date of the Pension Transfer Amount. Xxxx-XxXxx shall transfer
or
cause to be transferred the amount of the initial pension transfer
from
the Xxxx-XxXxx Pension Trust to the Tronox Pension Trust on the first
day
after the Distribution Date on which the New York Stock Exchange
is open
for business (the “First Transfer Date”).
|
| (b) |
The
Final Pension Transfer.
On a date agreed upon by Xxxx-XxXxx and Tronox that is no later than
six
months after the Distribution Date, or on such later date as they
may
agree (the “Final Transfer Date”), (A) Xxxx-XxXxx shall transfer or cause
to be transferred from the Xxxx-XxXxx Pension Trust to the Tronox
Pension
Trust assets of the Xxxx-XxXxx Retirement Plan in an amount equal
to the
excess, if any, of the Pension Transfer Amount over the amount transferred
as of the First Transfer Date, or (B) Tronox shall transfer or cause
to be
transferred from the Tronox Pension Trust to the Xxxx-XxXxx Pension
Trust
assets of the Tronox Retirement Plan, in an amount equal to the excess,
if
any, of the amount transferred as of the First Transfer Date over
the
Pension Transfer Amount.
|
16
The
amount to be transferred as of the Final Transfer Date shall be adjusted by
(A)
the aggregate amount of any pension benefit payments made by the Xxxx-XxXxx
Pension Trust on behalf of the Tronox Pension Trust (and by the aggregate amount
of any pension benefit payments made by the Tronox Pension Trust on behalf
of
the Xxxx-XxXxx Pension Trust) before the Final Transfer Date, and to reflect
data corrections and computational refinements, and (B) interest calculated
from
the First Transfer Date at a rate equal to the London InterBank Offered Rate
(LIBOR) plus 2 percent per year.
On
or
before the Final Transfer Date, Xxxx-XxXxx shall provide Tronox with a copy
of
the actuarial reports relating to the determination of the Pension Transfer
Amount, together with a written certification of the Pension Transfer Amount
prepared by the enrolled actuary for the Xxxx-XxXxx Retirement
Plan.
| 4.04. |
Pension
Plan Transfer Amount.
|
| (a) |
Except
as provided in Section 4.04(b),
“Pension Transfer Amount” shall mean the amount equal to the projected
benefit obligation for Transferred Individuals under such plan as
of the
Close of the Distribution Date (using the actuarial methods and
assumptions used to value the plan on a termination basis).
|
| (b) |
Notwithstanding
the foregoing provisions of this Article
4,
in no event shall the Pension Transfer Amount be less than the minimum
required transfer amount for Transferred Individuals determined in
accordance with the terms of the Xxxx-XxXxx Retirement Plan and the
requirements of section 414(l) of the
Code.
|
| (c) |
For
purposes of determining all actuarial liabilities required under
this
Section 4.04,
active and inactive employee data shall be based on the census data
as of
the Distribution Date and not the census data as of the Offering
Date.
|
17
ARTICLE
5. DEFINED
CONTRIBUTION RETIREMENT PLANS
5.01. Establishment
of SIP and Trust
Effective
Immediately after the Distribution Date, Tronox shall establish, or cause to
be
established, a SIP and related trust qualified under Code section 401(a), exempt
from taxation under Code section 501(a), and forming part of the Tronox
SIP.
Before
the expiration of the applicable remedial amendment period, Tronox shall file,
or shall cause to be filed, an application for a determination from the IRS
that
the Tronox SIP and the related trust are qualified within the meaning of
sections 401(a) and 501(a) of the Code, respectively. Tronox shall timely make,
or cause to be made, any modifications to the Tronox SIP and related trust
required by the IRS as a condition of receiving a favorable
determination.
5.02. Vesting
in Xxxx-XxXxx SIP.
As
of
the Close of the Distribution Date, Xxxx-XxXxx shall amend, or shall cause
the
amendment of, the Xxxx-XxXxx SIP to provide that every Transferred Individual
shall be fully vested in his account in the Xxxx-XxXxx SIP to the extent such
unvested amount has not been forfeited before the Close of the Distribution
Date.
5.03. Acceptance
of Rollovers.
Effective
Immediately after the Distribution Date, the Tronox SIP shall accept the
rollover of all or any portion of the vested account balance (including any
outstanding participant loans) of any Transferred Individual who is a
participant in the Xxxx-XxXxx SIP and who properly completes the necessary
forms
to request such a rollover, provided that the Tronox SIP shall not be required
to accept the rollover of any shares of Xxxx-XxXxx Common Stock held in a
participant’s Xxxx-XxXxx SIP account. The Tronox SIP shall be solely responsible
for all liabilities to or relating to Transferred Individuals under the
Xxxx-XxXxx SIP to the extent such Transferred Individuals roll over their
account balances from the Xxxx-XxXxx SIP to the Tronox SIP.
Effective
no later than Immediately after the Distribution Date, Tronox shall enter into
agreements satisfactory to Xxxx-XxXxx related to such rollovers, the maintenance
of the necessary participant records, the appointment of an initial trustee
under the Tronox SIP, and the engagement of an initial recordkeeper under the
Tronox SIP.
5.04. Maintenance
of Universal Life Policy.
Tronox
shall assume the individual universal life insurance policies into which certain
Transferred Individuals who participate in the Xxxx-XxXxx SIP are entitled
to
contribute and shall maintain such policies under the same terms as are in
effect under the Xxxx-XxXxx SIP on the Distribution Date.
18
ARTICLE
6. HEALTH
AND WELFARE PLANS
6.01. Establishment
of Health and Welfare Plans.
Effective
Immediately after the Distribution Date, Tronox shall establish, or cause to
be
established, Tronox Health and Welfare Plans.
6.02. Health
and Welfare Plans.
| (a) |
The
Xxxx-XxXxx Health and Welfare Plans shall provide coverage, subject
to the
provisions of such plans, for Transferred Individuals otherwise covered
under the Xxxx-XxXxx Health and Welfare Plans for any claim incurred
by
such Transferred Individuals before the Close of the Distribution
Date
(regardless of whether the claim is actually presented to Xxxx-XxXxx
or
the Xxxx-XxXxx Health and Welfare Plan for payment before the Close
of the
Distribution Date). Tronox or the appropriate Tronox Entity shall
reimburse Xxxx-XxXxx or the Xxxx-XxXxx Health and Welfare Plans for
any
claims, expenses, costs, or other expenditures incurred by Xxxx-XxXxx
or
the Xxxx-XxXxx Health and Welfare Plans in providing such coverage
for
Transferred Individuals to the same extent Tronox or the applicable
Tronox
Entity would have reimbursed Xxxx-XxXxx or the Xxxx-XxXxx Health
and
Welfare Plan had the IPO not
occurred.
|
| (b) |
Tronox
shall cause its Health and Welfare Plans to recognize and maintain
all
coverage and contribution elections made by Transferred Individuals
under
the Xxxx-XxXxx Health and Welfare Plans. Tronox shall apply such
elections
under its Health and Welfare Plans for the remainder of the period
or
periods for which the elections are by their terms applicable.
|
| (c) |
Tronox
shall also cause its Health and Welfare Plans to recognize and give
credit
for (1) all amounts applied by Transferred Individuals under the
Xxxx-XxXxx Health and Welfare Plans to deductibles, out-of-pocket
maximums, and other applicable benefit coverage limits with respect
to
which such expenses have been incurred during the calendar year in
which
the Distribution Date occurs and (2) all benefits paid to, or received
by,
Transferred Individuals under the Xxxx-XxXxx Health and Welfare Plans,
in
either case, for purposes of determining when such persons have received
the maximum benefits, including lifetime maximum benefits, provided
under
its Health and Welfare Plans.
|
6.03. Special
Rule for HCSA and DCSA Plans.
To
the
extent any Transferred Individual contributed to an account under the Xxxx-XxXxx
HCSA Plan or DCSA Plan during the calendar year in which the Distribution Date
occurs, Xxxx-XxXxx shall transfer, as soon as practicable after the Distribution
Date, to the corresponding Tronox Health and Welfare Plan the account balances
of the Transferred Individual for such calendar year under the Xxxx-XxXxx HCSA
Plan or DCSA Plan, regardless of whether the account balance is positive or
negative.
19
6.04. Vendor
Contracts.
| (a) |
Third-Party
ASO Contracts.
|
| (1) |
At
Tronox’s request, Xxxx-XxXxx shall use its reasonable best efforts to
cause each third-party administrator that operates pursuant to an
administrative services only contract that relates to any of the
Xxxx-XxXxx Health and Welfare Plans (an “ASO Contract”) in existence as of
the date of this Agreement to enter into an agreement with Tronox
with
substantially similar terms and conditions. Such terms and conditions
shall include the financial and termination provisions, performance
standards, methodology, auditing policies, quality measures, reporting
requirements and target claims. The request by Tronox for Xxxx-XxXxx
to
negotiate such ASO Contracts shall be deemed to be the authorization
by
Tronox of Xxxx-XxXxx to act on its behalf to extend to Tronox the
terms
and conditions of the ASO Contracts. Tronox shall use its reasonable
best
efforts to cooperate with Xxxx-XxXxx in such efforts, and Tronox
shall not
perform any act, including discussing any alternative arrangements
with
any third party, that would prejudice Xxxx-XxXxx’x
efforts.
|
| (2) |
If
it becomes reasonably likely that Xxxx-XxXxx will not be successful
in
negotiating contract language that will permit compliance with this
Section 6.04(a),
Xxxx-XxXxx shall so notify Tronox promptly, and after such notification,
Tronox shall be released from the restriction contained in the last
sentence of Section 6.04(a)(1).
In such case, Xxxx-XxXxx may offer a contingency plan for the
administration of the portion of the Xxxx-XxXxx Health and Welfare
Plans
affected by the unavailability of such ASO Contract, including, if
possible, an offer by the third-party administrator under the relevant
ASO
Contract of its services under a separate contract with Tronox, with
terms
and conditions as similar as practicable to those of the ASO Contract
with
Xxxx-XxXxx. Tronox shall, effective Immediately after the Distribution
Date, either adopt its own contingency plan or the contingency plan
established by Xxxx-XxXxx for such
arrangement.
|
| (b) |
Insured
HMO/PPO/Expatriate Carrier
Agreements.
|
| (1) |
At
Tronox’s request, Xxxx-XxXxx shall use its reasonable best efforts to
cause all HMOs, PPOs, and Expatriate Carriers that provide medical
services under the Xxxx-XxXxx Health Plans in existence as of the
date of
this Agreement to provide coverage to employees and retirees of Tronox
on
terms that are substantially similar to the terms and conditions
of the
letter agreement between Xxxx-XxXxx and such carrier (“HMO Agreement”), in
each case, from the Distribution Date until December 31, 2006, or
such
other date on which the parties may agree. Such terms and conditions
shall
include the financial and termination provisions of the HMO Agreements.
The request of Tronox as described above shall be deemed Tronox’s
authorization of Xxxx-XxXxx to act on its behalf to extend to Tronox
the
terms and conditions of the HMO Agreements. Tronox shall use its
reasonable best efforts to cooperate with Xxxx-XxXxx in such efforts,
and
Tronox shall not perform any act, including discussing any alternative
arrangements with any third-party that would prejudice Xxxx-XxXxx’x
efforts.
|
20
| (2) |
Tronox
shall have the sole discretion to determine which HMOs, PPOs, or
Expatriate Carriers to offer to the participants in the Tronox Health
Plans Immediately after the Distribution
Date.
|
6.05. Disability
Plans.
| (a) |
At
Tronox’s request, Xxxx-XxXxx shall use its reasonable best efforts to
cause the insurance carriers that provide coverage under the Xxxx-XxXxx
Disability Plans in existence as of the date of this Agreement to
provide
coverage for the employees of Tronox and Tronox Entities on terms
that are
substantially similar to the terms and conditions of the letter agreement
between Xxxx-XxXxx and such insurance carrier (“Disability Agreement”), in
each case, from the Distribution Date until December 31, 2006, or
such
other date on which the parties may agree. Such terms and conditions
shall
include the financial and termination provisions of the Disability
Agreements. The request of Tronox as described above shall be deemed
Tronox’s authorization of Xxxx-XxXxx to act on its behalf to negotiate the
extension to Tronox of the terms and conditions of the Disability
Agreements. Tronox shall use its reasonable best efforts to cooperate
with
Xxxx-XxXxx in such efforts, and Tronox shall not perform any act,
including discussing any alternative arrangements with any third-party
that would prejudice Xxxx-XxXxx’x
efforts.
|
| (b) |
As
of the Distribution Date, a portion of the Xxxx-XxXxx Disability
Plans
shall be transferred to Tronox to create the Tronox Disability Plan.
Xxxx-XxXxx and Tronox shall use their reasonable best efforts to
replace
the Disability Agreements with two groups of separate letter agreements
with the insurance carriers reflecting the division of the Xxxx-XxXxx
Disability Plans between Xxxx-XxXxx and Tronox.
|
6.06. Life
Insurance Plans.
At
Tronox’s request, Xxxx-XxXxx shall use its reasonable best efforts to cause the
insurance carrier that provides coverage under the Xxxx-XxXxx Life Insurance
Plans to provide coverage for employees and retirees under the Tronox Life
Insurance Plans effective Immediately after the Distribution Date on terms
that
are substantially similar to those provided under the Xxxx-XxXxx Life Insurance
Plans.
6.07. COBRA.
Through
the Close of the Distribution Date, Xxxx-XxXxx shall be solely responsible
for
administering compliance with the health care continuation coverage requirements
of COBRA and the Xxxx-XxXxx Health and Welfare Plans with respect to Tronox
Individuals, and Tronox and the Tronox Entities shall be responsible for filing
all necessary employee change notices with respect to their respective employees
in accordance with applicable Xxxx-XxXxx policies and procedures. Effective
Immediately after the Distribution Date, Tronox shall be solely responsible
for
providing health care continuation coverage under COBRA with respect to any
Transferred Individual (regardless of whether such Transferred Individual first
became eligible for COBRA coverage at any time before the Close of the
Distribution Date), including any Transferred Individual who became eligible
for
COBRA in connection with a Change in Control.
21
6.08. Leave
of Absence Programs and FMLA.
| (a) |
Effective
Immediately after the Distribution Date: (1) Tronox shall honor,
and shall
cause each Tronox Entity to honor, all terms and conditions of leaves
of
absence which have been granted to any Transferred Individual under
a
Xxxx-XxXxx Leave of Absence Program or FMLA before the Close of the
Distribution Date by Xxxx-XxXxx, a Xxxx-XxXxx Entity, Tronox, or
a Tronox
Entity, including such leaves that are to commence after the Distribution
Date; (2) Tronox and each Tronox Entity shall be solely responsible
for administering leaves of absence and compliance with FMLA with
respect
to their employees; and (3) Tronox and each Tronox Entity shall recognize
all periods of service of Transferred Individuals with Xxxx-XxXxx
or a
Xxxx-XxXxx Entity, as applicable, to the extent such service is recognized
by Xxxx-XxXxx for the purpose of eligibility for leave entitlement
under
the Xxxx-XxXxx Leave of Absence Programs and FMLA; provided that
no
duplication of benefits shall be required by the
foregoing.
|
| (b) |
As
soon as administratively practicable after the Close of the Distribution
Date, Xxxx-XxXxx shall provide to Tronox copies of all records pertaining
to the Xxxx-XxXxx Leave of Absence Programs and FMLA with respect
to all
Transferred Individuals to the extent such records have not been
provided
previously to Tronox or a Tronox
Entity.
|
6.09. Xxxx-XxXxx
Workers’ Compensation Program.
| (a) |
Administration
of Claims. Effective
Immediately after the Distribution Date, Tronox shall be responsible
for
the administration of all claims that are, or have been, incurred
under
the Xxxx-XxXxx WCP before the Distribution Date by Tronox Individuals
(“Tronox WCP Claims”). Tronox shall discharge its responsibility by
securing insurance coverage or, to the extent Legally Permissible
(as
defined below), securing a self-insurance certificate in one or more
states. For purposes of this Section 6.09(a),
“Legally Permissible” shall be determined on a state-by-state basis, and
shall mean that administration of Tronox WCP Claims by Tronox is
permissible under the applicable state’s workers’ compensation laws
(taking into account all relevant facts, including that Tronox may
have a
self-insurance certificate in that
state).
|
| (b) |
Cooperation.
Each party shall fully cooperate with the other with respect to the
administration and reporting of Tronox WCP Claims and the transfer
of the
administration of any Tronox WCP Claims to Tronox as determined under
this
Section 6.09.
Upon the request of Tronox, Xxxx-XxXxx will make reasonable efforts
to
support any application Tronox may make for a self-insurance certificate
in one or more states.
|
6.10. Xxxx-XxXxx
Employee Assistance Program.
As
of
the Close of the Distribution Date, the Xxxx-XxXxx Employee Assistance Program
shall cease to have any responsibility to provide employee assistance services
for any Transferred Individuals.
22
6.11. Unemployment
Insurance Tax Management Program.
At
Tronox’s request, Xxxx-XxXxx shall use its reasonable best efforts to cause its
unemployment insurance tax management vendor and any successor thereto to enter
into an agreement with Tronox to provide unemployment insurance tax management
under substantially similar terms and conditions to the terms and conditions
of
the agreement between Xxxx-XxXxx and the vendor from Immediately after the
Distribution Date through December 31, 2006, or such other date on which the
parties may agree. These efforts shall substantially conform to the guidelines
set forth in Section 6.04(a)
as if
such agreements were ASO Contracts. Xxxx-XxXxx shall use its reasonable best
efforts to cause such agreements to provide that Tronox’s participation shall
include administration of all unemployment compensation claims of Transferred
Individuals, regardless of whether such claims were filed before, on, or after
the Distribution Date.
6.12. Administration.
| (a) |
Health
and Welfare Plan Subrogation Recovery.
After the Distribution Date, Xxxx-XxXxx and Tronox shall pay to each
other
any amounts recovered from time to time through subrogation or otherwise
for claims that are paid or payable by the other party (as provided
in
Section 6.02).
|
| (b) |
Exchange
of Historical Data.
Xxxx-XxXxx acknowledges that Tronox shall have access to medical
claims
and eligibility data for Tronox Individuals through the Close of
the
Distribution Date. Xxxx-XxXxx will allow Tronox to make written requests
for this historical data to the extent permitted by
law.
|
6.13. UMWA
Combined Benefit Fund.
On
the
Distribution Date, Tronox shall assume all liability for payments due to the
UMWA Combined Benefit Fund with respect to Transferred Individuals. Xxxx-XxXxx
and Tronox shall cooperate in taking all steps necessary to effectuate this
assumption of liability.
6.14. Medicare
Part B Reimbursements.
On
the
Distribution Date, Tronox shall assume all liability to reimburse 43 former
Southwest Refining employees for Medicare Part B premiums.
6.15. Reimbursements
by Kennecott.
Beginning
on the Distribution Date, Tronox shall be entitled to receive all payments
from
Kennecott Energy and Coal Company designated as reimbursements for the provision
of medical coverage to Transferred Individuals. Xxxx-XxXxx and Tronox shall
cooperate in taking all steps necessary to effectuate this
entitlement.
23
6.16.
Application of Article 6 to Tronox
Entities.
Any
reference in this Article
6
to
“Tronox” shall include a reference to a Tronox Entity when and to the extent
Tronox has caused the Tronox Entity to (a) become a party to a vendor contract,
group insurance contract, or HMO letter agreement associated with a Tronox
Health and Welfare Plan, (b) become a self-insured entity for the purposes
of
one or more Tronox Health and Welfare Plans, (c) assume all or a portion of
the
liabilities or administrative responsibilities for benefits which arose before
the Close of the Distribution Date under a Xxxx-XxXxx Health and Welfare Plan
and which were expressly assumed by Tronox pursuant to the terms of this
Agreement, or (d) take any other action, extend any coverage, assume any other
liability or fulfill any other responsibility that Tronox would otherwise be
required to take under the terms of this Article
6,
unless it is clear from the context that the particular reference is not
intended to include a Tronox Entity. In all such instances in which a reference
in this Article
6
to
“Tronox” includes a reference to a Tronox Entity, Tronox shall be responsible to
Xxxx-XxXxx for ensuring that the Tronox Entity complies with the applicable
terms of this Agreement and the Transferred Individuals allocated to such Tronox
Entity shall have the same rights and entitlements to benefits under the
applicable Tronox Health and Welfare Plans that the Transferred Individual
would
have had if he or she had instead been allocated to Tronox.
24
ARTICLE
7. STOCK-BASED
COMPENSATION
7.01. Establishment
of Plan.
Effective
Immediately after the Offering Date, Tronox shall establish, or cause to be
established, a Stock Plan as provided in Section 2.03.
7.02. Stock
Options.
| (a) |
Vested
Options.
Except as otherwise provided in this Article
7,
to the extent that a Transferred Individual is holding an Award consisting
of a Xxxx-XxXxx Option that is vested and outstanding as of the Close
of
the Distribution Date, that Transferred Individual shall be treated
as
experiencing a separation from service from, or otherwise terminating
employment with, Xxxx-XxXxx. Any such Option shall expire unless
it is
exercised within the time provided in the Option itself.
|
| (b) |
Unvested
Options. Except
as otherwise provided in this Article
7,
the Executive Compensation Committee of Xxxx-XxXxx’x Board of Directors
and the Tronox Committee shall cause each Award consisting of a Xxxx-XxXxx
Option to the extent unvested and outstanding as of the Distribution
Date
and held by a Transferred Individual to be adjusted, effective as
of the
Distribution Date, by substitution of a Tronox Option under a Tronox
Stock
Plan. Each such Tronox Option shall provide for the purchase of a
number
of shares of Tronox Common Stock equal to the number of shares of
Xxxx-XxXxx Common Stock subject to the corresponding Xxxx-XxXxx Option
as
of the Distribution Date, multiplied by the Ratio, with fractional
shares
rounded down to the nearest whole share. The per-share exercise price
of
such Tronox Option shall equal the per-share exercise price of the
corresponding Xxxx-XxXxx Option as of the Distribution Date, divided
by
the Ratio, rounded to the nearest hundredth of a cent. Each such
Tronox
Option shall otherwise have the same terms and conditions as were
applicable to the corresponding Xxxx-XxXxx Option as of the Distribution
Date, except that references to Xxxx-XxXxx, and to Xxxx-XxXxx Entities,
shall be amended to refer to Tronox and to Tronox Entities.
|
7.03. Restricted
Stock.
The
Tronox Committee shall cause each Award that consists of restricted shares
of
Xxxx-XxXxx Common Stock that is outstanding as of the Distribution Date and
is
held by a Transferred Individual to be adjusted, effective as of the
Distribution Date, by substitution of a new award under a Tronox Stock Plan
consisting of a number of restricted shares of Tronox Common Stock equal to
the
number of restricted shares of Xxxx-XxXxx Common Stock constituting such Award
as of the Distribution Date multiplied by the Ratio, with fractional shares
rounded down. Each such adjusted Award shall otherwise have the same terms
and
conditions as were applicable to the corresponding Xxxx-XxXxx Award as of the
Distribution Date, except that references to Xxxx-XxXxx and Xxxx-XxXxx Entities
shall be amended to refer to Tronox and Tronox Entities. In the event of a
Change in Control, the adjustments and substitution provided for herein shall
be
made as of the Distribution Date with respect to the awards outstanding on
the
day before the Change in Control and held by Tronox Individuals, based on the
Ratio.
25
ARTICLE
8. EXECUTIVE
BENEFITS
8.01. Establishment
of Plans.
Effective
Immediately after the Distribution Date, Tronox and the Tronox Entities shall
assume and be solely responsible for all liabilities to or relating to
Transferred Individuals under the defined benefit portion of the Xxxx-XxXxx
Benefits Restoration Plan and under the Xxxx-XxXxx Corporation Chemical Division
Nonqualified Retirement Plan.
8.02. Xxxx-XxXxx
Benefits Restoration Plan.
Tronox
shall establish a plan that mirrors the defined benefits portion of the
Xxxx-XxXxx Benefits Restoration Plan in all Material Features. Immediately
after
the Distribution Date, all liabilities relating to Transferred Individuals
under
the defined benefit portion of the Xxxx-XxXxx Benefits Restoration Plan shall
cease to be liabilities of Xxxx-XxXxx or any Xxxx-XxXxx Entity and shall be
assumed by Tronox or a Tronox Entity, as appropriate.
8.03. Rabbi
Trust.
| (a) |
Establishment
of Mirror Rabbi Trust. Effective
no later than Immediately after the Distribution Date, Tronox shall
establish, or cause to be established, the Tronox Rabbi Trust as
a grantor
trust, which shall, unless otherwise determined by the Tronox Committee,
be substantially similar in all Material Features to the Xxxx-XxXxx
Rabbi
Trust. Tronox shall appoint as trustee under the Tronox Rabbi Trust
the
then-current trustee of the Xxxx-XxXxx Rabbi
Trust.
|
| (b) |
Funding
of Tronox Rabbi Trust.
As soon as practicable after the Close of the Distribution Date,
Xxxx-XxXxx shall determine the amount of the liabilities under the
Xxxx-XxXxx Executive Benefit Plans that are payable from the Xxxx-XxXxx
Rabbi Trust as of the Distribution Date and the amount of such liabilities
attributable to Transferred Individuals. Xxxx-XxXxx shall then transfer
to
the trustee of the Tronox Rabbi Trust an amount equal to the projected
benefit obligation of liabilities attributable to Transferred Individuals,
to the extent such liabilities are funded under the Xxxx-XxXxx Rabbi
Trust
as of the Distribution Date (the “Rabbi Trust Transfer Amount”). Assets
shall be transferred from Xxxx-XxXxx to the Tronox Rabbi Trust in
a manner
similar to that used to transfer the assets from the Xxxx-XxXxx Pension
Trust to the Tronox Pension Trust described in Section
4.03.
|
8.04. Continuity
Agreements.
Effective
as of the Offering Date, Tronox shall enter into Continuity Agreements with
certain of its officers and key employees. These Continuity Agreements shall
be
similar in all Material Features to the Continuity Agreements that Xxxx-XxXxx
has in effect with its officers and key employees, as appropriate, as of the
Offering Date. Neither the offering nor the Distribution (or Exchange), as
contemplated by the Principal Agreement, shall entitle any Transferred
Individual to any payments under a Continuity Agreement with Xxxx-XxXxx or
Tronox.
26
8.05. Code
Section 162(m).
Notwithstanding
any other provision of this Article
8,
Xxxx-XxXxx and the Executive Compensation Committee of Xxxx-XxXxx’x Board of
Directors and Tronox and the Tronox Committee may modify the procedures for
approval and payment of compensation under Article
8
to
persons who are “covered employees” for purposes of Code section 162(m), to the
extent they reasonably determine that modifications are necessary and desirable
to preserve the deductibility of compensation paid to such employees; provided,
however, that no such modification shall reduce the compensation payable to
such
employees below the amount that would have been paid had there been no
Distribution or Exchange.
27
ARTICLE
9. MISCELLANEOUS
BENEFITS
9.01. Service
Award Program.
| (a) |
Before
the Close of the Distribution Date, at the request of Tronox, Xxxx-XxXxx
shall use its reasonable best efforts to cause the vendor that provides
service anniversary merchandise related to the Xxxx-XxXxx Service
Award
Program as of the date of this Agreement to enter into a contract
with
Tronox and the Tronox Entities to provide service anniversary merchandise
under similar terms and conditions to the terms and conditions of
the
contract between Xxxx-XxXxx and the vendor effective Immediately
after the
Distribution Date. These efforts shall substantially conform with
the
guidelines set forth in Section 6.04(a)
as if the service anniversary merchandise vendor contract were an
ASO
Contract.
|
| (b) |
Tronox
and the Tronox Entities may provide to their employees service anniversary
merchandise bearing the name and/or logo of Xxxx-XxXxx ordered by
Xxxx-XxXxx before the date of this Agreement and delivered under
the
Tronox Service Award Program to Transferred Individuals and other
employees and former employees of Tronox and the Tronox Entities
whose
service anniversary occurs on or before December 31, 2005 (or such
other
date on which the parties shall agree), subject to the terms and
conditions of any separate agreement between Xxxx-XxXxx and Tronox
regarding the use of the corporate names, logos, service marks, and
other
intellectual property of Xxxx-XxXxx and a Xxxx-XxXxx Entity. No service
anniversary merchandise bearing the corporate name and/or logo of
Xxxx-XxXxx shall be delivered to any Transferred Individuals or other
employees and former employees of Tronox and the Tronox Entities
with
respect to a service anniversary after December 31, 2005 (or such
other
date on which the parties shall agree), without the express written
consent of Xxxx-XxXxx.
|
9.02. Other
Welfare Plans.
Any
Transferred Individual who is enrolled in a course that is being reimbursed
through the Xxxx-XxXxx Corporation Educational Assistance Program as of the
Distribution Date shall be provided with continued reimbursement without
interruption for such course to the extent provided under the Xxxx-XxXxx
Corporation Educational Assistance Program. If Tronox does not sponsor an
Employee Benefit Plan that reimburses such Transferred Individual, Xxxx-XxXxx’x
plan shall provide the continued reimbursement as provided under the Xxxx-XxXxx
Corporation Educational Assistance Program, but Tronox shall reimburse
Xxxx-XxXxx for all liabilities relating to, arising out of or resulting from
such on-going course after the Distribution Date.
This
Agreement shall not affect any insurance contract providing coverage for long
term care purchased by Transferred Individual through the Xxxx-XxXxx Long Term
Care Program prior to the Distribution Date. As of the Distribution Date, Tronox
shall have no obligation to permit Transferred individuals to purchase long
term
care coverage through payroll deductions.
28
ARTICLE
10. NON-U.S.
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
10.01. In
General.
The
provisions of Section 3.01 regarding salary and base pay shall apply with
respect to Transferred Individuals and Transferred Non-U.S.
Individuals.
Xxxx-XxXxx
and Tronox intend that, to the fullest extent permitted by applicable law,
the
Xxxx-XxXxx Non-U.S. Benefit Plans listed on Schedule II (other than the
Xxxx-XxXxx Plans listed as “U.K. Plans” on Schedule II), to the extent not
sponsored by Tronox or a Tronox Entity, shall be transferred to Tronox or the
applicable Tronox Entity on the Distribution Date, and neither Xxxx-XxXxx nor
any Xxxx-XxXxx Entity shall have any liability with respect to such plans
Immediately after the Distribution Date. To the extent such a transfer is not
permitted by applicable law, Xxxx-XxXxx and Tronox shall negotiate a resolution
that results in Xxxx-XxXxx, the Xxxx-XxXxx Entities, Tronox, and the Tronox
Entities being in the economic position they would have been in had the transfer
been legally permitted.
With
respect to any liabilities to Transferred Non-U.S. Individuals other than those
set forth in the two preceding paragraphs of this Section 10.01,
Xxxx-XxXxx and Tronox shall negotiate a resolution that results in Xxxx-XxXxx
and the Xxxx-XxXxx Entities ceasing to have any liabilities as of the
Distribution Date.
10.02. Stock
Opportunity Grants.
The
Tronox Committee shall cause each Award that consists of stock opportunity
grants relating to shares of Xxxx-XxXxx Common Stock that is outstanding as
of
the Distribution Date and is held by a Transferred Individual to be adjusted,
effective as of the Distribution Date, by substitution of a new award under
a
Tronox Stock Plan consisting of a number of stock opportunity grants or
restricted stock units relating to shares of Tronox Common Stock equal to the
number of stock opportunity grants of Xxxx-XxXxx Common Stock constituting
such
Award as of the Distribution Date multiplied by the Ratio, with fractional
shares rounded down. Each such adjusted Award shall otherwise have the same
terms and conditions as were applicable to the corresponding Xxxx-XxXxx Award
as
of the Distribution Date, except that references to Xxxx-XxXxx and Xxxx-XxXxx
Entities shall be amended to refer to Tronox and Tronox Entities and dividend
equivalent payments, if any, shall be payable after the Distribution Date with
reference to dividends on Tronox Common Stock. In the event of a Change in
Control, the adjustments and substitution provided for herein shall be made
as
of the Distribution Date with respect to the awards outstanding on the day
before the Change in Control and held by Tronox Individuals, based on the Ratio.
10.03. Stock
Options—Foreign Plans.
Subject
to applicable law in non-U.S. jurisdictions, outstanding awards shall be
adjusted with the aim of achieving equivalent treatment as described in
Article
7.
29
ARTICLE
11. GENERAL
AND ADMINISTRATIVE PROVISIONS
11.01. Actuarial
and Accounting Methodologies and Assumptions.
For
purposes of this Agreement, unless specifically indicated otherwise: (a) all
actuarial methodologies and assumptions used for a particular Employee Benefit
Plan shall (except to the extent otherwise determined by Xxxx-XxXxx and Tronox
to be reasonable or necessary) be substantially the same as those used in the
actuarial valuation of that Employee Benefit Plan used to determine minimum
funding requirements under ERISA section 302 and Code section 412 for 2004,
or,
if such Employee Benefit Plan is not subject to such minimum funding
requirements, used to determine Xxxx-XxXxx’x deductible contributions under Code
section 419A or, if such Plan is not subject to Code section 419A, the
assumptions used to prepare Xxxx-XxXxx’x audited financial statements for fiscal
2004, as the case may be; and (b) the value of plan assets shall be the value
established for purposes of audited financial statements of the relevant plan
or
trust for the period ending on the date as of which the valuation is to be
made.
Tronox liabilities relating to, arising out of or resulting from the status
of
Tronox and the Tronox Entities as Participating Companies in Xxxx-XxXxx Health
and Welfare Plans, as provided for in Section 2.02
and
all accruals relating thereto shall be determined by Xxxx-XxXxx using actuarial
assumptions and methodologies (including with respect to demographics, medical
trends, and other relevant factors) determined by Xxxx-XxXxx in a manner
consistent with Xxxx-XxXxx’x practice as in effect on the Distribution Date and
in conformance with the generally accepted actuarial principles promulgated
by
the American Academy of Actuaries, the Code, ERISA, and/or generally accepted
accounting principles, as applicable, in each case as interpreted by Xxxx-XxXxx
consistent with its past practice. Except as otherwise contemplated by this
Agreement or as required by law, all determinations as to the amount or
valuation of any assets of or relating to any Xxxx-XxXxx Employee Benefit Plan
(whether or not such assets are being transferred to a Tronox Employee Benefit
Plan) shall be made pursuant to procedures to be established by the parties
before the Distribution Date.
11.02. Sharing
of Participant Information.
Xxxx-XxXxx
and Tronox shall share, Xxxx-XxXxx shall cause each applicable Xxxx-XxXxx Entity
to share, and Tronox shall cause each applicable Tronox Entity to share, with
each other and their respective agents and vendors (without obtaining releases)
all participant information necessary for the efficient and accurate
administration of each of the Xxxx-XxXxx Employee Benefit Plans and the Tronox
Employee Benefit Plans during the respective transition periods applicable
to
such Employee Benefit Plans, as permitted by applicable law, and with respect
to
each of the Xxxx-XxXxx Health and Welfare Plans and Tronox Health and Welfare
Plans, Xxxx-XxXxx and Tronox and their respective authorized agents shall,
subject to applicable laws on confidentiality, be given reasonable and timely
access to, and may make copies of, all information relating to the subjects
of
this Agreement in the custody of the other party, to the extent necessary for
such administration.
11.03. Reporting,
Disclosure, and Communications to Participants.
While
Tronox is a Participating Company in the Xxxx-XxXxx Employee Benefit Plans,
Tronox shall take, and shall cause each other applicable Tronox Entity to take,
all actions necessary or appropriate to facilitate the distribution of all
Xxxx-XxXxx Employee Benefit Plan-related communications and materials to
employees, participants and beneficiaries, including summary plan descriptions
and related summaries of material modification, summary annual reports, and
notices for the Xxxx-XxXxx Employee Benefit Plans. Tronox shall pay Xxxx-XxXxx
the cost relating to the copies of all such documents provided to Tronox. Tronox
shall assist, and Tronox shall cause each other applicable Tronox Entity to
assist, Xxxx-XxXxx in complying with all reporting and disclosure requirements
of ERISA, including the preparation of Form 5500 annual reports for the
Xxxx-XxXxx Employee Benefit Plans, where applicable.
30
11.04. Non-Termination
of Employment, No Third-Party Beneficiaries.
No
provision of this Agreement or the Principal Agreement shall be construed to
create any right, or accelerate entitlement, to any compensation or benefit
whatsoever on the part of any Tronox Individual or Transferred Individual or
other future, present or former employee of Xxxx-XxXxx, a Xxxx-XxXxx Entity,
Tronox, or a Tronox Entity under any Xxxx-XxXxx Plan or Tronox Employee Benefit
Plan or otherwise. Without limiting the generality of the foregoing: (a) neither
the IPO, the Distribution (or Exchange) nor the termination of the Participating
Company status of Tronox or a Tronox Entity shall cause any employee to be
deemed to have incurred a termination of employment or layoff which entitles
such individual to the commencement of benefits under any of the Xxxx-XxXxx
Employee Benefit Plans, any of the Tronox Plans, or any of the Individual
Agreements; and (b) except as expressly provided in this Agreement, nothing
in
this Agreement shall preclude Tronox, at any time after the Close of the
Distribution Date, from amending, merging, modifying, terminating, eliminating,
reducing, or otherwise altering in any respect any Tronox Employee Benefit
Plan,
any benefit under any Plan or any trust, insurance policy or funding vehicle
related to any Tronox Employee Benefit Plan.
11.05. Plan
Audits.
| (a) |
Audit
Rights with Respect to the Allocation or Transfer of Plan
Assets.
The determination of the Pension Transfer Amount and the allocation
of
Pension Plan assets and liabilities pursuant to Section 4.02
and the determination and transfer of assets from Xxxx-XxXxx pursuant
to
Section 8.03,
may be audited on behalf of both Xxxx-XxXxx and Tronox by a consulting
firm to be determined jointly by Xxxx-XxXxx and Tronox. The scope
of such
audit shall be limited to the accuracy of the final data relied upon
and
the accuracy of the computation and adherence to the methodology
specified
in this Agreement and, except as set forth in the last sentence of
this
Section 11.05(a),
such audit shall not be binding on the parties. The auditing firm
shall
provide its report to both Xxxx-XxXxx and Tronox. No other audit
shall be
conducted with respect to the transfer or allocation of plan assets.
The
costs of such audit shall be shared proportionately to the asset
split
between Xxxx-XxXxx and Tronox, or, at each company’s discretion and to the
extent allocable thereto, by their respective Retirement Plans. To
the
extent such audit recommends a change to the value of assets allocated
to
any Tronox Plan of less than 0.25% of the amount originally determined
by
Xxxx-XxXxx’x actuaries under each of Sections 4.02
and 8.03,
as applicable to each transfer, the original determination shall
be
binding on the parties and shall not be subject to the dispute resolution
process provided under the Principal Agreement. To the extent such
audit
recommends such a change of 0.25% or more, any unresolved dispute
between
the parties as to whether and how to make any change in response
to such
recommendation shall be subject to the dispute resolution process
provided
under the Principal Agreement.
|
31
| (b) |
Audit
Rights with Respect to Information
Provided.
|
| (1) |
Each
of Xxxx-XxXxx and Tronox, and their respective duly authorized
representatives, shall have the right to conduct audits with respect
to
all information provided to it by the other party. The party conducting
the audit (the “Auditing Party”) shall have the sole discretion to
determine the procedures and guidelines for conducting audits and
the
selection of audit representatives under this Section 11.05(b);
provided, that audits with respect to the allocation or transfer
of plan
assets and liabilities shall be subject only to Section 11.05(a).
The Auditing Party shall have the right to make copies of any records
at
its expense, subject to the confidentiality provisions set forth
in the
Principal Agreement, which are incorporated by reference herein.
The party
being audited shall provide the Auditing Party’s representatives with
reasonable access during normal business hours to its operations,
computer
systems, and paper and electronic files, and provide workspace to
its
representatives. After any audit is completed, the party being audited
shall have the right to review a draft of the audit findings and
to
comment on those findings in writing within ten business days after
receiving such draft.
|
| (2) |
The
Auditing Party’s audit rights under this Section 11.05(b)
shall include the right to audit, or participate in an audit facilitated
by the party being audited, of any subsidiaries and affiliates of
the
party being audited and of any benefit providers and third parties
with
whom the party being audited has a relationship, or agents of such
party,
to the extent any such persons are affected by or addressed in this
Agreement (collectively, the “Non-parties”). The party being audited
shall, upon written request from the Auditing Party, provide an individual
(at the Auditing Party’s expense) to supervise any audit of a Non-party.
The Auditing Party shall be responsible for supplying, at the Auditing
Party’s expense, additional personnel sufficient to complete the audit
in
a reasonably timely manner. The responsibility of the party being
audited
shall be limited to providing, at the Auditing Party’s expense, a single
individual at each audited site for purposes of facilitating the
audit.
|
| (c) |
Audit
Rights Regarding Vendor Contracts. From
the Offering Date through the Distribution Date, Xxxx-XxXxx and Tronox
and
their duly authorized representatives shall have the right to conduct
joint audits with respect to any vendor contracts that relate to
the
Xxxx-XxXxx Employee Benefit Plans. The scope of such audits shall
encompass the review of all correspondence, account records, claim
forms,
canceled drafts (unless retained by the bank), provider bills, medical
records submitted with claims, billing corrections, vendors’ internal
corrections of previous errors and any other documents or instruments
relating to the services performed by the vendor under the applicable
vendor contracts. Xxxx-XxXxx and Tronox shall agree on the performance
standards, audit methodology, auditing policy and quality measures
and
reporting requirements relating to the audits described in this Section
11.05
and the manner in which costs incurred in connection with such audits
will
be shared.
|
32
11.06. Beneficiary
Designations.
All
beneficiary designations made by Transferred Individuals for Xxxx-XxXxx Employee
Benefit Plans shall be transferred to and be in full force and effect under
the
corresponding Tronox Employee Benefit Plans until such beneficiary designations
are replaced or revoked by the Transferred Individual who made the beneficiary
designation.
11.07. Cooperation
in Requests for Rulings and DOL Opinions.
Tronox
shall cooperate fully with Xxxx-XxXxx on any issue relating to the transactions
contemplated by this Agreement for which Xxxx-XxXxx elects to seek a
determination letter or private letter ruling from the IRS or an advisory
opinion or other guidance from the DOL. Xxxx-XxXxx shall cooperate fully with
Tronox with respect to any request for a determination letter or private letter
ruling from the IRS or advisory opinion other guidance from the DOL with respect
to any of the Tronox Employee Benefit Plans relating to the transactions
contemplated by this Agreement.
11.08. Fiduciary
Matters.
Xxxx-XxXxx
and Tronox each acknowledges that actions required to be taken pursuant to
this
Agreement may be subject to fiduciary duties or standards of conduct under
ERISA
or other applicable law, and no party shall be deemed to be in violation of
this
Agreement if it fails to comply with any provisions hereof based upon its good
faith determination that to do so would violate such a fiduciary duty or
standard.
11.09. Collective
Bargaining.
| (a) |
A
Xxxx-XxXxx Entity is a party to a Labor Agreement between Xxxx-XxXxx
Pigments (Savannah), Inc., Savannah, GA Plant and District No. 96,
International Association of Machinists and Aerospace Workers (affiliated
with AFL-CIO), dated May 12, 2003 (the “Labor Agreement”). The Labor
Agreement settles certain terms and conditions of employment for
represented employees of this Xxxx-XxXxx Entity. The Labor Agreement
continues for one year periods beginning on May 1 of each year unless
either party provides at least 60 days advance written notice of
its
intent to terminate the agreement at the end of the then-current
term.
(The current term of the Agreement expires on April 30,
2006.)
|
| (b) |
As
of the Distribution Date, Tronox or a Tronox Entity shall assume
the
Xxxx-XxXxx Entity’s rights and obligations under the Labor Agreement. To
the extent that any provisions of this Agreement are inconsistent
with the
Labor Agreement, the provisions of the Labor Agreement shall
prevail.
|
11.10. Consent
of Third Parties.
If
any
provision of this Agreement is dependent on the consent of any third party
(such
as a vendor) and such consent is withheld, Xxxx-XxXxx and Tronox shall use
their
reasonable best efforts to implement the applicable provisions of this Agreement
to the full extent practicable. If any provision of this Agreement cannot be
implemented due to the failure of such third party to consent, Xxxx-XxXxx and
Tronox shall negotiate in good faith to implement the provision in a mutually
satisfactory manner. The phrase “reasonable best efforts” as used herein shall
not be construed to require the incurrence of any non-routine or unreasonable
expense or liability or the waiver of any right.
33
11.11. General
Obligations as Plan Sponsors.
Xxxx-XxXxx
and Tronox, respectively, shall continue to administer, or cause to be
administered, in accordance with their terms and applicable law, their
respective Employee Benefit Plans and shall have the sole discretion and
authority to interpret their respective Employee Benefit Plans as set forth
therein.
11.12. Adjustments
to Plan Transfers.
In
the
event of transfers of employment status, or corrections to data, calculations
or
methods used to calculate any liabilities or assets transferred to the trust
relating to a Tronox Employee Benefit Plan from the trust relating to the
corresponding Xxxx-XxXxx Employee Benefit Plan that occur before December 31,
2006, such liabilities and assets shall be recomputed so as to place each such
trust in the position it would have been in, had the initial asset transfer
been
made in accordance with such recomputed amount of assets. Any such adjustments
to amounts transferred pursuant to this Agreement from a Xxxx-XxXxx Employee
Benefit Plan or trust thereunder to a Tronox Employee Benefit Plan or a trust
thereunder shall be made between such Employee Benefit Plans or trusts. If
an
employee assigned to either Tronox or Xxxx-XxXxx is not correctly reported
on
the records of any Employee Benefit Plan, any liability arising from such error
shall be the responsibility of the employer of the individual on the date such
error is identified, or of a Employee Benefit Plan sponsored by such employer.
Determinations of what entity employs or employed a particular individual shall
be made by reference to the applicable legal entity and/or other appropriate
accounting code, to the extent possible.
34
ARTICLE
12. MISCELLANEOUS
12.01. Effect
If Neither Distribution nor Exchange Occurs.
If
neither the Distribution nor the Exchange occurs, then all actions and events
that are, under this Agreement, to be taken or occur effective as of the Close
of the Distribution Date, Immediately after the Distribution Date, or otherwise
in connection with the Distribution or Exchange, shall not be taken or occur
except to the extent specifically agreed by Tronox and Xxxx-XxXxx.
12.02. Relationship
of Parties.
Nothing
in this Agreement shall be deemed or construed by the parties or any third
party
as creating the relationship of principal and agent, partnership or joint
venture between the parties, it being understood and agreed that no provision
contained herein, and no act of the parties, shall be deemed to create any
relationship between the parties other than the relationship set forth
herein.
12.03. Affiliates.
Each
of
Xxxx-XxXxx and Tronox shall cause to be performed, and hereby guarantees the
performance of, all actions, agreements and obligations set forth in this
Agreement to be performed by a Xxxx-XxXxx Entity or a Tronox Entity,
respectively.
12.04. Disputes.
The
parties shall attempt to finally resolve any claim, controversy, or dispute
arising out of or relating to this Agreement, or the threatened, alleged or
actual breach or default thereof by either party, as hereinafter set forth.
The
resolution procedures shall be invoked when either party sends a written notice
to the other party of the occurrence of a claim, controversy or dispute, or
of
the threatened, alleged or actual breach of this Agreement. The notice shall
describe the nature of the dispute and the party’s position with respect to such
dispute. The parties shall expeditiously schedule consultations or a meeting
between knowledgeable representatives designated by each party in an effort
to
resolve the dispute informally. Such consultations or meetings shall in no
event
occur later than 10 days after delivery of the written notice by a party under
this Section 12.04.
If
the parties are unable to resolve the dispute within 15 days after consultations
commence, the dispute shall be submitted in writing to an appropriate executive
officer of each party. The executive officers shall attempt to resolve any
dispute submitted to them for resolution in accordance with this Section
12.04
through consultation and negotiation, within 30 days after such submittal (or
such longer period as may be mutually agreed by the parties). The executive
officers may request the assistance of an independent mediator if they believe
that such a mediator would be of assistance to the efficient resolution of
the
dispute.
12.05. Arbitration.
If
the
parties are unable resolve any claim, controversy or dispute arising out of
or
relating to this Agreement, or the breach hereof, pursuant to the provisions
of
Section 12.04,
then
such claim, controversy or dispute, shall be settled by arbitration administered
by the American Arbitration Association in New York City before a single
arbitrator selected by mutual agreement of the parties under its Commercial
Arbitration Rules, and judgment on the award rendered by the arbitrator may
be
entered in any court having jurisdiction thereof.
35
IN
WITNESS WHEREOF, the parties have caused this Employee Benefits Agreement to
be
duly executed as of the day and year first above written.
|
XXXX-XxXXX
CORPORATION
|
|
|
By:
/s/ Xxxxxx
X. Xxxxxxxx
|
|
|
Name: Xxxxxx
X. Xxxxxxxx
|
|
|
Title: Senior
Vice President and CFO
|
|
|
TRONOX
INCORPORATED
|
|
|
By:
/s/ Xxxxxx X. Xxxxx
|
|
|
Name: Xxxxxx
X. Xxxxx
|
|
|
Title: Chief
Executive Officer
|
