Tax Sharing Agreement

Tax Sharing Agreement, dated as of November 28, 2005 (the “Agreement”), between Kerr-McGee Corporation, a Delaware corporation (“Distributing”) and Tronox Incorporated (“Tronox”), a Delaware corporation. To the extent not defined herein, all defined terms shall have the same meaning as in the Master Separation Agreement (as hereinafter defined). 

WHEREAS, as of the date hereof, Distributing is the common parent of an affiliated group of domestic corporations, including Tronox, which has elected to file consolidated federal income tax returns;

WHEREAS, the board of directors of Distributing has determined that it would be in the best interests of Distributing and its shareholders to separate the Tronox Business (as hereinafter defined) from Distributing;

WHEREAS, the boards of directors of Distributing and Kerr-McGee Worldwide Corporation have determined to contribute to Tronox Worldwide LLC certain entities engaged in the Tronox Business and to contribute Tronox Worldwide LLC to Tronox (the “Contribution”);

WHEREAS, the board of directors of Distributing expects to distribute (the “Distribution”) all the outstanding shares of Class B common stock of Tronox to the shareholders of Distributing;

WHEREAS, prior to the Distribution, Tronox will issue to the public shares of Class A common stock of Tronox which, when issued, will constitute all of the outstanding shares of Tronox’s Class A common stock (the “IPO”);

WHEREAS, Distributing and Tronox intend that the Contribution qualify as a tax-free transfer under Sections 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the “Code”), and the Distribution qualify as a pro rata or non-pro rata tax-free distribution under Sections 355 and 368(a)(1)(D) of the Code;

WHEREAS, it is appropriate and desirable to set forth the principles and responsibilities of the parties to this Agreement regarding (i) future adjustments with respect to Taxes, Tax Contests and other related Tax matters and (ii) current Tax liabilities that arise as a result of the activities of the parties prior to the IPO and restructuring activities undertaken to implement the separation and Distribution;

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereby agree as follows:

The following terms shall have the following meanings (such meanings to apply equally to both the singular and the plural forms of the terms defined). All section references are to this Agreement unless otherwise stated.

“ Claims Court Litigation ” means the litigation that is currently pending in the United States Court of Federal Claims, docket number 05-5T relating to the question of capitalization versus deductibility of certain environmental clean-up expenditures with respect to the contamination of the refining sites in Cushing and Cleveland, Oklahoma.

“ Claims Court Related Tax Adjustment ” means, with respect to any Pre-Deconsolidation Period, and as computed separately for each Tax, the net increase in each such Tax equal to the sum of all adjustments made after the Deconsolidation Date with respect to each such Tax for each such Pre-Deconsolidation Period that are made pursuant to a Final Determination in a Tax Contest involving the same or similar factual and legal issues that are at issue in the Claims Court Litigation.

“ Claims Court Related Tax Benefit ” means (i) 100% of any Tax refund received in the Claims Court Litigation or any Tax Contest related to a Pre-Deconsolidation Period involving the same or similar factual and legal issues that are at issue in the Claims Court Litigation and (ii) any deduction, amortization, exclusion from income, or other allowance (including a loss or reduced gain recognized upon a sale of an asset) that actually reduces in cash the amount of Tax that a member of the Tronox Group would have been required to pay in a Post-Deconsolidation Period (or actually increases in cash the amount of any Tax refund to which a member of the Tronox Group would have been entitled in a Post-Deconsolidation Period) in the absence of any basis increase resulting from a Final Determination in the Claims Court Litigation or in a Tax Contest related to a Pre-Deconsolidation Period involving the same or similar factual and legal issues that are at issue in the Claims Court Litigation.

“ Code ” means the Internal Revenue of Code of 1986, as amended.

“ Combined Tax ” means any income or franchise Tax (whether measured by income or capital) payable to any state, local or foreign taxing jurisdiction in which any member of the Tronox Group has filed or will file a Return with a member of the Distributing Group on an affiliated, consolidated, combined or unitary basis with respect to such Tax.

“ Combined Tax Return ” means any Return with respect to a Combined Tax.

“ Controlling Party ” means, except as provided for in Section 4.06 hereof, Distributing or any other member of the Distributing Group, or Tronox or any other member of the Tronox Group, as the case may be, that filed or, if no Return has been filed, was required to file, a Return that is subject to a Tax Contest, or any successor and/or assign of any of the foregoing, provided that any Combined Tax Return filed by Kerr-McGee Worldwide Corporation with a Taxing Authority in Mississippi shall be deemed to be a Return filed by Tronox and therefore Tronox shall be the Controlling Party with respect to any Tax Contest related to any such Return. For the avoidance of doubt, with the exception of Returns filed in Mississippi and subject to Section 4.06 hereof, the company that actually filed any Federal Tax Return or Combined Tax Return (or any successor or assign of such company) shall be the Controlling Party.

“ Credit Facility ” means the Credit Agreement dated as of November 28, 2005 among Tronox, Tronox Worldwide LLC, Lehman Brothers Inc., Credit Suisse, ABN AMRO N.V., JPMorgan Chase Bank, N.A., Citicorp North America Inc. and the lenders that are parties thereto.

“ Deconsolidation Date ” means, for purposes of this Agreement, the last date on which Distributing and Tronox are permitted to file Returns on a consolidated or combined basis, determined on a Tax jurisdiction by Tax jurisdiction basis.

“ Distributing Business ” means the businesses conducted by Distributing and its subsidiaries other than the Tronox Business.

“ Distributing Consolidated Group ” means Distributing and each direct and indirect subsidiary, including members of the Tronox Group, that is eligible to join Distributing or any other member of the Distributing Group in the filing of a consolidated Federal Tax Return or a Combined Tax Return.

“ Distributing Group ” means, at any time, Distributing and each of its direct and indirect subsidiaries other than those subsidiaries that are members of the Tronox Group.

“ Distributing Tax Adjustment ”means, with respect to any taxable period or portion thereof, and as computed separately for each Tax, the net increase in each such Tax equal to the sum of all adjustments made pursuant to a Final Determination after the Deconsolidation Date with respect to each such Tax for each such taxable period or portion thereof that are attributable to the Distributing Business; provided , however , that any adjustment comprising a Restructuring Adjustment shall not be considered in determining the amount of any Distributing Tax Adjustment. 

“ Distributing Tax Benefit ”means, with respect to any taxable period or portion thereof, and as computed separately for each Federal Tax and Combined Tax, the net decrease in each Tax equal to the sum of all adjustments made pursuant to a Final Determination after the Deconsolidation Date with respect to each such Tax for each such taxable period or portion thereof that are attributable to the Distributing Business; provided, however , that the amount of any Distributing Tax Benefit shall not exceed the amount that the actual Tax liability for the Tronox Group for the relevant taxable period is actually reduced by the adjustments made pursuant to such Final Determination; provided   further,   however , that any adjustment comprising a Restructuring Adjustment shall not be considered in determining the amount of any Distributing Tax Benefit. For purposes of the foregoing, if an adjustment that would otherwise constitute a Distributing Tax Benefit is not considered a Distributing Tax Benefit because the Tax liability of the Tronox Group is not actually reduced as a result of such adjustment, such adjustment shall be carried-forward and shall constitute a Distributing Tax Benefit at the time (and to the extent) that the Tax liability of the Tronox Group is actually reduced as a result of such prior adjustment. For purposes of determining when an adjustment described in the preceding sentence actually reduces the Tax liability of the Tronox Group, the Tronox Group shall be deemed to use all Tax Assets of the Tronox Group prior to such adjustment.

“ Distribution Date ” means the date on which the Distribution is effected.

“ Federal Tax ” means any Tax imposed under Subtitle A of the Code with respect to which any member of the Tronox Group has filed or will file a consolidated Return with a member of the Distributing Group.

“ Federal Tax Return ” means any Return with respect to a Federal Tax.

“ Final Determination ” means (i) a decision, judgment, decree or other order by any court of competent jurisdiction, which has become final and is either no longer subject to appeal or for which a determination not to appeal has been made, (ii) a closing agreement made under Section 7121 of the Code or any comparable provision of state, local or foreign law, (iii) a final disposition by any Taxing Authority of a claim for refund or (iv) any other written agreement relating to an adjustment between any Taxing Authority and any Controlling Party the execution of which is final and prohibits such Taxing Authority or the Controlling Party from seeking any further legal or administrative remedies with respect to such adjustment.

“ Group ” means the Distributing Group or the Tronox Group, as the context requires.

“ Independent Third Party ” means a nationally recognized law firm or any of the following firms or their successors: Ernst & Young, KPMG, Deloitte & Touche and PricewaterhouseCoopers.

“ Interested Party ” means, except as provided in Section 4.06 hereof, Distributing or Tronox (including any successor and/or assign of any of the foregoing), as the case may be, to the extent (i) such person or a member of such person’s Group is not a Controlling Party with respect to a Tax Contest and (ii) such person or a member of such person’s Group (A) may be liable for, or required to make, any indemnity payment, reimbursement, tax sharing payment or other payment pursuant to this Agreement with respect to such Tax Contest or (B) may be entitled to receive any indemnity payment, reimbursement, tax sharing payment or other payment pursuant to this Agreement with respect to such Tax Contest.

“ Master Separation Agreement ”means the Master Separation Agreement, dated as of November 28, 2005, among Distributing, Kerr-McGee Worldwide Corporation and Tronox.

“ Post-Deconsolidation Period ” shall mean (i) a taxable period that begins after the Deconsolidation Date and (ii) the portion beginning after the Deconsolidation Date of any taxable period that includes (but does not end on) the Deconsolidation Date.

“ Pre-Deconsolidation Period ” means (i) any taxable period that ends on or before the close of the Deconsolidation Date and (ii) the portion ending on the close of the Deconsolidation Date of any taxable period that includes (but does not end on) the Deconsolidation Date.

“ Restructuring Adjustment ” means, with respect to any taxable period or portion thereof, and as computed separately for each Tax, the net increase in each such Tax equal to the sum of all adjustments made pursuant to a Final Determination with respect to each such Tax for each such taxable period or portion thereof that are attributable to any Restructuring Transaction.

“ Restructuring Transaction ” means any transaction undertaken to effectuate the separation of Distributing’s existing businesses into two independent businesses other than (i) the Distribution, (ii) the IPO and (iii) the entering into of the Credit Facility, including any pledges of collateral thereunder.

“ Restructuring Tax ” means any Tax incurred as a result of any Restructuring Transaction which in the judgment of the parties is currently required to be taken into account in determining the tax liability of any member of the Distributing Group or Tronox Group for any Pre-Deconsolidation Period.

“ Return ” means any report of Taxes due, any claims for refund of Taxes paid, any information return with respect to Taxes, or any other similar report, statement, declaration, or document required to be filed under the Code or other Tax Law, including any attachments, exhibits, or other materials submitted with any of the foregoing, and including any amendments or supplements to any of the foregoing.

“ Tax ” means any income, gross income, gross receipts, profits, capital, capital stock, franchise, withholding, payroll, social security, workers compensation, unemployment, disability, real property, property, ad valorem, stamp, excise, severance, occupation, service, sales, use, license, lease, transfer, import, export, value added, alternative minimum, estimated or other similar tax (including any fee, assessment, or other charge in the nature of or in lieu of any tax) imposed by any governmental entity or political subdivision thereof, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

“ Tax Asset ” means any net operating loss, net capital loss, investment tax credit, foreign tax credit, charitable deduction or any other loss, credit or tax attribute that could be carried forward or back to reduce any Tax liability (including, without limitation, deductions and credits relating to alternative minimum taxes).

“ Taxing Authority ” means, with respect to any Tax, the governmental entity or political subdivision thereof that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such entity or subdivision.

“ Tax Contest ” means an audit, review, examination, assessment, deficiency or any other administrative or judicial proceeding with the purpose or effect of redetermining any Taxes (including any administrative or judicial review of any claim for refund).

“ Tax Packages ” mean one or more packages of information that are (i) reasonably necessary for the purpose of preparing Returns of the Distributing Consolidated Group with respect to any tax period in which the information is relevant, and (ii) completed in all material respects in accordance with the standards that Distributing has established for its subsidiaries.

“ Tiwest JV Entities ” means the Tiwest Joint Venture, Tiwest Sales Pty. Ltd. and Tiwest Pty. Ltd.

“ Transition Services Agreement ” means the Transition Services Agreement, dated as of November 28, 2005, among Distributing, Kerr-McGee Worldwide Corporation and Tronox.

“ Tronox Business ” means the business of producing and marketing inorganic industrial chemicals (including titanium dioxide pigment) and heavy minerals conducted by the Tronox Group, together with the businesses previously conducted by members of the Tronox Group.

“ Tronox Combined Tax Liability ” means, with respect to any taxable year, except with respect to any Combined Tax Return filed in a Combined Add-Up State (as defined below) an amount determined, on a Combined Tax Return by Combined Tax Return basis, by dividing the total Combined Tax liability reflected on such Return into two segments in proportion to the Distributing Group’s and the Tronox Group’s relative contribution, if any, to the apportionment factor relevant to such Combined Tax liability. For purposes of the foregoing, the Distributing Group’s and the Tronox Group’s relative contribution, if any, to an apportionment factor shall be determined by Distributing in good faith and in a manner consistent with the past practices of Distributing and Tronox that have been used in determining apportionment factors. In the case of any jurisdiction in which Combined Taxes are calculated by first determining the taxable income (or loss) of each member of the combined group and then adding each separate company calculation to determine the group’s total Combined Tax liability (a “Combined Add-Up State”), the amount of the Tronox Combined Tax Liability with respect to such jurisdiction shall be calculated based on the product of the Tronox Group’s income or loss and the separate apportionment factors (property, payroll and sales) for each member of the Tronox Group, unless such amount is determined pursuant to another allocation method mandated by a specific jurisdiction. For purposes of the preceding sentence, the apportionment factors shall be determined for each taxable period.

“ Tronox Federal Tax Liability ” means, with respect to any taxable year, the sum of the Tronox Group’s Federal Tax liability and any interest, penalties and other additions to Tax for such taxable year, computed as if the Tronox Group were not and never were part of the Distributing Consolidated Group, but rather were a separate affiliated group of corporations filing a consolidated United States federal income tax return pursuant to Section 1501 of the Code; provided , however , that transactions between members of the Tronox Group and members of the Distributing Group shall, so long as Tronox is a member of the Distributing Consolidated Group, be reflected in accordance with the consolidated return regulations governing intercompany transactions. Such computation shall be made (i) without regard to the income, deductions (including net operating loss and capital loss deductions) and credits in any year of any member of the Distributing Group, (ii) by taking into account any Tax Asset of the Tronox Group, (iii) with regard to net operating loss and capital loss carryforwards and carrybacks and minimum tax credits from earlier years of the Tronox Group, but without regard to any such carryforwards from a Tax period (or portion thereof) ending on or before the date hereof and arising solely due to treating the Tronox Group as if it were never part of the Distributing Consolidated Group, (iv) as though the highest rate of tax specified in Section 11(b) of the Code were the only rate set forth in that section of the Code, (v) reflecting positions, elections and accounting methods used by Distributing in preparing the relevant Federal Tax Return for the Distributing Consolidated Group and (vi) as though Tronox Worldwide LLC were a corporation rather than a disregarded entity for all taxable periods. For purposes of the foregoing, the Tronox Federal Tax Liability shall not include any Restructuring Taxes.

“ Tronox Group ” means (i) prior to the Contribution, (A) Tronox Worldwide LLC and each of its direct and indirect subsidiaries, (B) KM (Luxembourg) Holdings Sarl and its direct and indirect subsidiaries, (C) Kerr-McGee B.V. and its subsidiary, (D) Kerr-McGee Finance (Curacao) N.V., (E) KM Denmark International ApS and its direct and indirect subsidiaries and (F) the Tiwest JV Entities and (ii) after the Contribution, Tronox and each of its direct and indirect subsidiaries and the Tiwest JV Entities.

“ Tronox Tax Adjustment ” means, with respect to any taxable period or portion thereof, and as computed separately for each Tax, the net increase in each such Tax equal to the sum of all adjustments made pursuant to a Final Determination after the Deconsolidation Date with respect to each such Tax for each such taxable period or portion thereof that are attributable to the Tronox Business; provided , however , that any adjustment comprising a Restructuring Adjustment shall not be considered in determining the amount of any Tronox Tax Adjustment.

“ Tronox Tax Benefit ” means, with respect to any taxable period or portion thereof, and as computed separately for each Federal Tax and Combined Tax, the net decrease in each such Tax equal to the sum of all adjustments made pursuant to a Final Determination after the Deconsolidation Date with respect to each such Tax for each such taxable period or portion thereof that are attributable to the Tronox Business; provided, however , that the amount of any Tronox Tax Benefit shall not exceed the amount that the actual Tax liability for the Distributing Consolidated Group for the relevant taxable period is actually reduced by the adjustments made pursuant to such Final Determination; provided   further, however , that any adjustment comprising a Restructuring Adjustment shall not be considered in determining the amount of any Tronox Tax Benefit. For purposes of the foregoing, if an adjustment that would otherwise constitute a Tronox Tax Benefit is not considered a Tronox Tax Benefit because the Tax liability of the Distributing Consolidated Group is not actually reduced as a result of such adjustment, such adjustment shall be carried-forward and shall constitute a Tronox Tax Benefit at the time (and to the extent) that the Tax liability of the Distributing Consolidated Group is actually reduced as a result of such prior adjustment. For purposes of determining when an adjustment described in the preceding sentence actually reduces the Tax liability of the Distributing Consolidated Group, the Distributing Consolidated Group shall be deemed to use all Tax Assets of the Distributing Group prior to such adjustment.

SECTION 2.01    Sole Tax Sharing Agreement . Any and all existing tax sharing agreements or arrangements, written or unwritten, between any member of the Distributing Group and any member of the Tronox Group shall be terminated as of the date of this Agreement. As of the date of this Agreement, neither the members of the Distributing Group nor the members of the Tronox Group shall have any further rights or liabilities under any such pre-existing tax sharing agreement or arrangement, and this Agreement shall be the sole tax sharing agreement or arrangement between the members of the Distributing Group and the members of the Tronox Group.

SECTION 2.02    Designation as Agent . Each member of the Tronox Group hereby irrevocably authorizes and designates Distributing as its agent, coordinator and administrator for the purpose of taking any and all actions (including the execution of waivers of applicable statutes of limitations) necessary or incidental to (i) the filing of any Federal Tax or Combined Tax Return (including any amended Return), (ii) the claiming of any refund, credit or offset of Federal Tax or Combined Tax (even where an item or Tax Asset giving rise to any such refund, credit or offset arises in a Post-Deconsolidation Period), (iii) the control of any proceeding and (iv) the making of any payments to, or collecting refunds from, any Taxing Authority, in each case relating only to Federal Taxes or Combined Tax for any Pre-Deconsolidation Period. Distributing covenants to Tronox that it shall be responsible to see that all such administrative matters relating thereto shall be handled promptly and appropriately.

a)    Preparation of Returns . Distributing shall prepare, in accordance with applicable law, the Federal Tax Return and Combined Tax Returns of the Distributing Consolidated Group for all Pre-Deconsolidation Periods. Distributing shall have the right with respect to such Returns to determine (i) the manner in which such Returns shall be prepared and filed, including, without limitation, the manner in which any item of income, gain, loss, deduction or credit shall be reported, (ii) whether any extensions should be requested and (iii) the elections that will be made by any member of the Distributing Group or the Tronox Group. Distributing shall consult with representatives of Tronox in exercising its rights set forth in the preceding sentence. Any Return with respect to a Pre-Deconsolidation Period, other than the Federal Tax Return and Combined Tax Returns, shall be prepared by the party required to file such Return under applicable law.

b)    Delivery of Tax Packages . No later than July 15, 2006, Tronox shall prepare and deliver to Distributing Tax Packages that include information of the Tronox Group for any taxable period in which a member of the Tronox Group files Federal Tax Returns or Combined Tax Returns with a member of the Distributing Group, provided that if any Combined Tax Return is required to be filed (taking into account available extensions) on or prior to September 15, 2006, Tronox shall prepare and deliver Tax Packages to Distributing no later than 60 days prior to the due date for filing such Return.

c)    Allocation . Distributing may, at its option, elect and Tronox shall join Distributing (if necessary) in electing to ratably allocate items (other than extraordinary items) of the Tronox Group in accordance with the relevant provisions of Treasury Regulation Section 1.1502-76 and any comparable provision of state, local or foreign law. If Distributing exercises its option to make such an election, each member of the Tronox Group shall provide a statement stating its consent to such election as required under applicable regulations.

d)    Post-Deconsolidation Period Returns of the Tronox Group . Subject to the provisions of the Transition Services Agreement, Tronox shall be solely responsible for the preparation and filing of the Returns of the Tronox Group for all Post-Deconsolidation Periods that begin after the Deconsolidation Date.

SECTION 2.04    Cooperation and exchange of information . In addition to Tronox’s obligation pursuant to Section 2.03(b) hereof, Distributing, on the one hand, and Tronox, on the other, will provide each other with such cooperation and information as either of them reasonably may request of the other in (i) filing any Return, amended return or claim for refund, (ii) determining a liability for Taxes or a right to a refund of Taxes or (iii) participating in or conducting any audit or other proceeding in respect of Taxes. Such cooperation and information shall include providing copies of relevant Returns or portions thereof, together with accompanying schedules and related work papers and documents relating to rulings or other determinations by Tax Authorities. Each party shall make its employees available on a mutually convenient basis to provide explanations of any documents or information provided hereunder. Any information obtained under this Section 2.04 shall be kept confidential, except as may be otherwise necessary in connection with the filing of returns or claims for refund or in conducting an audit or other proceeding. Distributing shall retain (or cause to be retained) all books and records with respect to Tax matters pertinent to any member of the Tronox Group relating to any Pre-Deconsolidation Period until the expiration of the relevant statutory period of limitations for the assessment of Tax, provided that Distributing shall consult with Tronox prior to destroying any such books and records and shall offer Tronox the opportunity to retain any such books and records after such date.

SECTION 3.02    Tax Sharing .

a)    Deconsolidation Payment . On or prior to the Deconsolidation Date, an intercompany payable shall be owed by Tronox to Distributing (the “Intercompany Estimated Tax Payable”) in an amount equal to the sum of the Tronox Federal Tax Liability and the Tronox Combined Tax Liability for the portion of any taxable period that includes but does not, with respect to Distributing or any other member of the Distributing Group, end on the Deconsolidation Date, in both cases as estimated by Distributing in its sole, good-faith discretion. The Intercompany Estimated Tax Payable shall be subject to the treatment of intercompany obligations provided for pursuant to Section 2.4(b) of the Master Separation Agreement.

b)    Pro Forma Returns . On the date that is five (5) business days prior to the due date for the Distributing Consolidated Group’s 2005 consolidated federal income tax return, including extensions, Distributing shall deliver to Tronox a pro forma federal income tax return (the “2005 Pro Forma Federal Tax Return”) of the Tronox Group reflecting the Tronox Federal Tax Liability for the portion of such taxable year in which members of the Tronox Group were included in the Distributing Consolidated Group. On the date that is five (5) business days prior to the due date for each Combined Tax Return, including extensions, for any taxable period that includes, but does not, with respect to Distributing or any member of the Distributing Group, end on the Deconsolidation Date, Distributing shall deliver to Tronox the relevant pro forma Combined Tax Return (each a “Pro Forma Combined Tax Return” and together with the 2005 Pro Forma Federal Tax Return, the “Pro Forma Returns”) of the Tronox Group reflecting the relevant Tronox Combined Tax Liability for the portion of such taxable period in which members of the Tronox Group were included in the Distributing Consolidated Group wit