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Exhibit
10.5
EXECUTIVE EMPLOYMENT
AGREEMENT
THIS AGREEMENT
(“Agreement”), is made and entered into as of the 1st
day of April, 2008 by and between Tronox Incorporated, a Delaware
corporation (hereinafter the “Company” or
“Employer”), and Robert Y. Brown, III (hereinafter the
“Executive”). This Agreement replaces and renders void
any other agreement of employment between the Company and the
Executive, including that certain Continuity Agreement between the
Company and Executive dated November 28, 2005 (the
“Prior Agreement”).
WHEREAS: Executive has been
employed by the Company for 26 years and is currently Vice
President, Strategic Planning and Business Services; and
WHEREAS, Executive possesses
an intimate knowledge of the business and affairs of the Company,
its policies, methods, personnel and problems; and
WHEREAS, the Board of
Directors of the Company (hereinafter the “Board,”
which term includes any committees of the Board) recognizes that
the Executive’s contribution to the Company has been
substantial and desires to assure the Company of Executive’s
continued employment in an executive capacity and to compensate
Executive therefor; and
WHEREAS Executive has
specific duties and unique talents which are of a benefit to the
Company both presently and in the future; and
WHEREAS, the Company’s
Board considers the continued services of key executives of the
company to be in the best interests of the Company and its
stockholders; and
WHEREAS, the Company’s
Board desires to assure, and has determined that it is appropriate
and in the best interests of the Company and its stockholders to
reinforce and encourage the continued attention and dedication of
key executives of the Company to their duties of employment without
personal distraction or conflict of interest in circumstances which
could arise from the occurrence of a change in control of the
Company; and
WHEREAS, the Company’s
Board has previously authorized the Company to enter into
continuity agreements including the Prior Agreement with the key
executives of the Company and any of its respective subsidiaries
(such entities are hereinafter included in the term the
“Employer” as the context may require), which
agreements set forth, among other things, the severance
compensation which the Company agrees under certain circumstances
to pay such executives; and
WHEREAS, the Company’s
Board and the Executive desire to amend and replace the Prior
Agreement, amend the term of the Prior Agreement and to enter into
this Agreement to address the matters previously included in the
Prior Agreement and additional matters; and
WHEREAS, this Agreement is
intended to comply with the provisions of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”).
This Agreement shall be interpreted, operated, and administered in
a manner consistent with these intentions, and the parties agree to
amend this Agreement further (if necessary) in order to avoid the
adverse tax consequences of Code Section 409A.
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NOW, THEREFORE, in
consideration of the premises and the covenants and agreements
contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
Company and the Executive agree as follows:
1. Term . This
Agreement shall become effective on the date hereof first written
above (the “Effective Date”) and remain in effect until
the third anniversary thereof. Unless the Company informs the
Executive, in writing, at least 180 days prior to the end of the
initial term or any renewal date, that this Agreement shall not be
renewed, this Agreement shall automatically renew for additional
one (1) year terms on each successive anniversary date of the
preceding term. The foregoing shall constitute the
“Term” of this Agreement for purposes hereof and all of
the period during the Term shall be referred to as the
“Employment Period”.
2. Position and Duties
. During the Employment Period, Executive will devote substantially
all of Executive’s working time, attention and energies
(other than absences due to illness or vacation) to the performance
of Executive’s duties for the Company. Notwithstanding the
above, Executive will be permitted, to the extent such activities
do not interfere with the performance by Executive of
Executive’s duties and responsibilities under this Agreement
or violate Sections 14(a) or (b) of this Agreement, to
(i) manage Executive’s personal, financial and legal
affairs, and (ii) serve on civic or other boards or
committees.
3. Place of
Performance . Executive’s place of employment will be the
Company’s principal executive offices in Oklahoma City,
Oklahoma.
4. Compensation and
Related Matters .
(a) Base Salary .
During the Employment Period, the Company will pay Executive a base
salary (“Base Salary”), to be set by the Board and
reviewed in accordance with the Company’s compensation
policies from time to time established by the Board. The Base
Salary will be paid in approximate equal installments in accordance
with the Company’s customary payroll practices.
(b) Annual Incentive
Bonus . During each year of the Employment Period, Executive
shall participate in the Company’s Annual Incentive
Compensation Plan, as amended, replaced and determined from time to
time by the Board.
(c) Welfare, Pension and
Incentive Benefit Plans; Reimbursement for COBRA Coverage .
During the Employment Period, Executive (and Executive’s
spouse and/or dependents to the extent provided in the applicable
plans and programs) will be entitled to participate in and be
covered under all the welfare benefit plans or programs maintained
by the Company for the benefit of its senior executive officers
pursuant to the terms of such plans and programs including, without
limitation, all medical, life, hospitalization, dental, disability,
accidental death and dismemberment and travel accident insurance
plans and programs. In addition, during the Employment Period,
Executive will be eligible to participate in all pension,
retirement, savings and other employee benefit plans and programs
and long-term incentive plans maintained from time to time by the
Company for the benefit of its senior executive
officers.
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(d) Fringe Benefits .
During the Employment Period, the Company will provide Executive
with such other fringe benefits as commensurate with
Executive’s position and as determined from time to time by
the Board.
5. Change in Control .
No compensation or other benefit pursuant to Section 7 hereof
shall be payable under this Agreement unless and until either
(i) a Change in Control of the Company (as hereinafter
defined) shall have occurred while the Executive is employed by an
Employer and the Executive’s employment by an Employer
thereafter shall have terminated in accordance with Section 6
hereof or (ii) the Executive’s employment by an Employer
shall have terminated in accordance with Section 6(a)(ii)
hereof prior to the occurrence of the Change in Control. For
purposes of this Agreement, a “Change in Control” shall
be deemed to have occurred if, beginning on the Effective Date and
before the end of the Term of this Agreement:
(a) any person
(“Person”) as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and as used in Section 13(d) and 14(d) thereof,
including a “group” as defined in Section 13(d) of
the Exchange Act but excluding the Company and any subsidiary and
any employee benefit plan sponsored or maintained by the Company or
any subsidiary (including any trustee of such plan acting as
trustee), directly or indirectly, becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), of
securities of the Company representing 25% or more of the combined
voting power of the Company’s then outstanding securities
(other than indirectly as a result of the Company’s
redemption of its securities); or
(b) the consummation of any
merger or other business combination of the Company, sale of 50% or
more of the Company’s assets, liquidation or dissolution of
the Company or combination of the foregoing transactions (the
“Transactions”) other than a Transaction immediately
following which the shareholders of the Company and any trustee or
fiduciary of any Company employee benefit plan immediately prior to
the Transaction own at least 60% of the voting power, directly or
indirectly, of (A) the surviving corporation in any such
merger or other business combination; (B) the purchaser of or
successor to the Company’s assets; (C) both the
surviving corporation and the purchaser in the event of any
combination of Transactions; or (D) the parent company owning
100% of such surviving corporation, purchaser or both the surviving
corporation and the purchaser, as the case may be; or
(c) within any twenty-four
month period, the persons who were directors immediately before the
beginning of such period (the “Incumbent Directors”)
shall cease (for any reason other than death) to constitute at
least a majority of the Board or the board of directors of a
successor to the Company. For this purpose, any director who was
not a director at the beginning of such period shall be deemed to
be an Incumbent Director if such director was elected to the Board
by, or on the recommendation of or with the approval of, at least
two-thirds of the directors who then qualified as Incumbent
Directors (so long as such director was not nominated by a person
who commenced or threatened to commence an election contest or
proxy solicitation by or on behalf of a Person (other than the
Board) or who has entered into an agreement to effect a Change in
Control or expressed an intention to cause such a Change in
Control); or
(d) a majority of the members
of the Board in office immediately prior to a proposed transaction
determine by a written resolution that such proposed transaction,
if taken, will be deemed a Change in Control and such proposed
transaction is consummated.
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6. Termination of
Employment; Definitions .
(a) Termination without
Cause by the Company or for Good Reason by the Executive
.
(i) The Executive shall be
entitled to the compensation provided for in Section 7 hereof,
if within three years after a Change in Control, the
Executive’s employment by an Employer shall be terminated
(A) by an Employer for any reason other than (I) the
Executive’s Disability or Retirement, (II) the
Executive’s death or (III) for Cause, or (B) by the
Executive with Good Reason (all terms are as hereinafter defined),
unless such termination occurs with the Executive’s prior
written consent expressly waiving the rights provided
hereunder.
(ii) The Executive shall be
entitled to the compensation provided for in Section 7 hereof
if, (A) in the event that an agreement is executed and
delivered which, if consummated, would result in a Change of
Control and, within 12 months thereafter, the Executive is
terminated without Cause by the Company (other than on account of
Executive’s Death or Disability) or terminates employment
with Good Reason prior to the Change in Control, (B) such
termination is at the request or instigation of the acquiror or
merger partner or otherwise in connection with the anticipated
Change in Control, and (C) within said 12 month period, such
Change in Control actually occurs.
(iii) The Executive shall be
entitled to the compensation provided for in Section 8 hereof
if (x) the Executive’s employment by an Employer shall
be terminated by an Employer for any reason other than (I) the
Executive’s Disability or Retirement, (II) the
Executive’s death or (III) for Cause and (y) the
provisions of clauses (i) or (ii) above do not apply to
such termination.
(b) Disability . For
purposes of this Agreement, “Disability” shall mean the
Executive’s absence from the full-time performance of the
Executive’s duties (as such duties existed immediately prior
to such absence) for 180 consecutive business days, when the
Executive is disabled as a result of incapacity due to physical or
mental illness.
(c) Retirement . For
purposes of this Agreement, “Retirement” shall mean the
Executive’s voluntary termination of employment pursuant to
late, normal or early retirement under a pension plan sponsored by
an Employer, as defined in such plan, but only if such retirement
occurs prior to a termination by an Employer without Cause or by
the Executive for Good Reason.
(d) Cause . For
purposes of this Agreement, “Cause” shall
mean:
(i) the willful and continued
failure of the Executive to perform substantially all of
Executive’s duties with an Employer (other than any such
failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is
delivered to such Executive by the Board which specifically
identifies the manner in which the Board believes that the
Executive has not substantially performed Executive’s
duties;
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(ii) the willful engaging by
the Executive in gross misconduct which is materially and
demonstrably injurious to the Company or any Employer;
or
(iii) the conviction of, or
plea of guilty or nolo contendere to, a felony.
Termination of the Executive
for Cause shall be made by delivery to the Executive of a copy of a
resolution duly adopted by the affirmative vote of not less than a
three-fourths majority of the non-employee Directors of the Company
or of the ultimate parent of the entity which caused the Change in
Control (if the Company has become a subsidiary) at a meeting of
such Directors called and held for such purpose, after 30 days
prior written notice to the Executive specifying the basis for such
termination and the particulars thereof and a reasonable
opportunity for the Executive to cure or otherwise resolve the
behavior in question prior to such meeting, finding that in the
reasonable judgment of such Directors, the conduct or event set
forth in any of clauses (i) through (iii) above has
occurred and that such occurrence warrants the Executive’s
termination.
(e) Good Reason . For
purposes of this Agreement, “Good Reason” shall mean
the occurrence, within the Term of this Agreement, of any of the
following without the Executive’s written consent expressly
waiving the rights provided hereunder:
(i) any material and adverse
diminution in the Executive’s duties or responsibilities with
the Company (or any affiliate thereof) from those in effect
immediately prior to the Change in Control;
(ii) any reduction in the
Executive’s annual base salary or any adverse change in bonus
opportunity or participation in cash bonus programs in effect
immediately prior to the Change in Control;
(iii) any requirement that
Executive be based at a location more than 35 miles from the
location at which the Executive was based immediately prior to the
Change in Control (or a substantial increase in the amount of
travel Executive is required to do because of a relocation of the
executive offices);
(iv) any failure by the
Company to obtain from any successor to the Company an agreement
reasonably satisfactory to the Executive to assume and perform this
Agreement, as contemplated by Section 10(a) hereof;
or
(v) any amendment, reduction
or termination of any benefit plan, program or arrangement, which
has the effect of causing the Executive to have benefits which are
substantially decreased, in the aggregate, from those benefits
provided to the Executive immediately prior to the Change in
Control.
Notwithstanding the
foregoing, in the event Executive provides the Company with a
Notice of Termination (as defined below) referencing this
Section 6(e) (with the exception of Section 6(e)(v)), the
Company shall have 30 days thereafter in which to cure or resolve
the behavior otherwise constituting Good Reason.
(f) Notice of
Termination . Any purported termination of the
Executive’s employment (other than on account of
Executive’s death) with an Employer, if such
termination
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occurs after the occurrence of a Change
in Control or under circumstances specified under
Section 6(a)(ii) above, shall be communicated by a Notice of
Termination to the Executive, if such termination is by an
Employer, or to an Employer, if such termination is by the
Executive. For purposes of this Agreement, “Notice of
Termination” shall mean a written notice which shall indicate
the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive’s employment under the provisions so indicated. For
purposes of this Agreement, no purported termination of
Executive’s employment with an Employer shall be effective
without such a Notice of Termination having been given.
7. Compensation Upon
Termination After a Change in Control .
Subject to Section 12
hereof, if after or in connection with a Change in Control, the
Executive’s employment by an Employer is terminated under
circumstances requiring payments in accordance with
Section 6(a)(i) or (ii), the Executive shall be entitled to
the following payments and benefits:
(a) Severance . The
Company shall pay or cause to be paid to the Executive a lump sum
cash severance amount equal to two (2) times the sum of
(A) the Executive’s annual Base Salary on the date of
the Change in Control (or, if higher, the annual base salary in
effect immediately prior to the giving of the Notice of
Termination) and (B) the Executive’s target bonus for
the year in which the Notice of Termination is given.
(b) Additional Payments
and Benefits . The Executive shall also be entitled
to:
(i) a lump sum cash payment
equal to the sum of (A) the Executive’s accrued but
unpaid annual base salary through the date of termination,
(B) the unpaid portion, if any, of bonuses previously earned
by the Executive pursuant to the Company’s incentive award
program, plus the pro rata portion of the target bonus to be paid
for the year in which the date of termination occurs (calculated
through the date of termination), and (C) an amount, if any,
equal to any accrued vacation pay, in full satisfaction of
Executive’s rights thereto;
(ii) a lump sum cash payment
equal to the aggregate sum of (A) additional pension
contributions in an amount equal to the Company’s
contributions under the Company’s 401(k) plan, profit sharing
or other savings pension plans (or such other qualified and
nonqualified defined contribution pension plans as then in effect)
for the two (2) year period following the date of termination
(the “Separation Period”) (based on assumed rates of
Executive’s contributions at the level of participation in
effect as of the last date Executive was permitted to participate);
and (B) the difference between the discounted present value
(i.e., lump sum value) of the annuity benefit the Executive is
entitled to receive under the Company’s qualified and
nonqualified defined benefit retirement programs in which the
Executive is a participant calculated through the date of
termination and the discounted present value (i.e., lump sum value)
of the annuity benefit the Executive would be entitled to receive
under such retirement programs calculated after adding an
additional two years of credit to age and service up to a maximum
of age 65 as if the Executive had been paid at the rate used to
calculate the payments under Section 7(a), provided that the
such credits shall not be added to any additional credits already
provided by the terms of any other Company programs in respect of
the termination covered hereby and Executive shall be entitled only
to the greater of the credits
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provided herein or those of any other
program; discounted present value (i.e., lump sum value) shall be
calculated using a discount factor equal to one percentage point
below the rate of interest, per annum, publicly announced by The
Chase Manhattan Bank, N.A. as its prime rate in effect at its
principal office in New York City, and using the actuarial factors
set forth in the defined benefit retirement program;
(iii) continued medical,
dental, vision, and life insurance coverage (excluding accident,
death, and disability insurance) for the Executive and the
Executive’s eligible dependents, on the same basis as in
effect prior to the Change in Control or the Executive’s
termination, whichever is deemed to provide for more substantial
benefits, for a period ending on the earlier of (A) the end of
the Separation Period or (B) the commencement of comparable
coverage by the Executive with a subsequent employer; provided,
however, to the extent required, to effect the foregoing, the
Company shall reimburse the Executive for the COBRA premiums paid
by the Executive for the first six months following the
Executive’s termination on or before the first business day
of the eighth month following the Executive’s termination.
The Company shall also pay the Executive’s COBRA premiums for
a period commencing on the six-month anniversary of the date of the
Executive’s termination through the end of the COBRA period.
Subsequent to the COBRA period, the Company shall continue to
provide, for a period of up to 18 months following the last day of
the Executive’s COBRA period , the Executive (and the
Executive’s eligible dependents, if applicable) with the same
level of health insurance benefits upon substantially similar terms
and conditions (including contributions required by the Executive
for such benefits) as existed immediately prior to the
Executive’s termination (or, if more favorable to the
Executive, as such benefits and terms and conditions existed
immediately prior to the Change in Control).
(iv) unless it would
adversely affect the Company’s ability to use pooling of
interest accounting in a Change in Control transaction in which
such accounting is intended to be used, immediate 100% vesting of
all outstanding stock options, stock appreciation rights,
performance awards and restricted stock granted or issued by any
Employer to the extent not previously vested on or following the
Change of Control; and
(v) all other accrued or
vested benefits in accordance with the terms of the applicable plan
(with an offset for any amounts paid under Section 7(b)(i)(C),
above).
(c) Outplacement . If
so requested by the Executive, outplacement services shall be
provided by a professional outplacement provider selected by
Executive; provided, however, that such outplacement services shall
be provided the Executive at an aggregate total cost to the Company
of not more than ten (10) percent of such Executive’s
annual base salary. All expenses related to outplacement services
under this Section 7(d) must be incurred by the end of the
second year, and reimbursement for such services must in fact be
made by the end of the third year, following the year in which the
Termination occurs.
8. Compensation Upon
Termination by Company Without Cause Prior to a Change of
Control .
Subject to Section 12,
in the event Executive’s employment is terminated by Company
without Cause prior to a Change in Control, except as otherwise
provided in Section 6(a)(ii),
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Executive will be entitled to the
benefits specified in this Section 8(a). Notwithstanding
anything herein or in any other plan or agreement to the contrary,
the benefits and payments pursuant to this Section 8 are not
in addition to any similar payments or benefits otherwise available
to Executive and shall be reduced, but not less than zero, by the
amount of any other similar payments or benefits provided by the
Company or any of its plans as a result of the termination,
including without limitation any replacements or continuations of
the Company’s ITP Plan (which is currently expired) or any
similar plans.
(a) the Company shall pay
Executive a lump sum cash severance amount equal to two
(2) times the sum of (i) the Executive’s annual
Base Salary on the date of termination and (ii) the
Executive’s target bonus for the year in which the Notice of
termination is given;
(b) The Executive shall also
be entitled to:
(i) a lump sum cash payment
equal to the sum of (A) the Executive’s accrued but
unpaid annual base salary through the date of termination,
(B) the unpaid portion, if any, of bonuses previously earned
by the Executive pursuant to the Company’s incentive award
program, plus the pro rata portion of the actual bonus, if any, to
be paid for the year in which the date of termination occurs
(calculated through the date of termination), and (C) an
amount, if any, equal to any accrued vacation pay, in full
satisfaction of Executive’s rights thereto;
(ii) a lump sum cash payment
equal the difference between the discounted present value (i.e.,
lump sum value) of the annuity benefit the Executive is entitled to
receive under the Company’s qualified and nonqualified
defined benefit retirement programs in which the Executive is a
participant calculated through the date of termination and the
discounted present value (i.e., lump sum value) of the annuity
benefit the Executive would be entitled to receive under such
retirement programs calculated after adding an
additional
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