Exhibit 10.3
TAX SHARING AGREEMENT
BY AND BETWEEN
ETHYL CORPORATION
AND
TREDEGAR INDUSTRIES, INC.
TAX SHARING AGREEMENT
This Tax Sharing
Agreement (the “Agreement”), dated as of June 1, 1989,
by and between Ethyl Corporation, a Virginia corporation
(“Ethyl”), and Tredegar Industries, Inc., a Virginia
corporation (“Tredegar”), is entered into in connection
with a Reorganization and Distribution Agreement (the
“Reorganization Agreement”), dated as of June 1, 1989,
by and between such parties.
WHEREAS, Ethyl, on
behalf of itself and its present and future subsidiaries, other
than Tredegar and its present or future subsidiaries (the
“Ethyl Group”), and Tredegar, on behalf of itself and
its present and future subsidiaries (the “Tredegar
Group”), have determined that it is necessary and desirable
to provide for allocation between the Ethyl Group and the Tredegar
Group of all responsibilities, liabilities, and benefits relating
to taxes paid or payable by either group for all taxable periods,
whether beginning before, on, or after the Distribution Date, and
to provide for certain other matters;
NOW, THEREFORE, in
consideration of the mutual agreements, provisions, and covenants
contained in this Agreement, the parties hereby agree as
follows:
-2-
ARTICLE I
DEFINITIONS
As used in this
Agreement, terms defined in the Reorganization Agreement but not
defined herein shall have the meanings given in the Reorganization
Agreement, and the following terms shall have the following
meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
Post-Distribution Period : any taxable period ending after
the Distribution Date.
Pre-Distribution Period : any taxable period ending on or
before the Distribution Date.
Tax Benefit
: the tax effect of any loss, deduction, credit, or other item that
decreases taxes paid or payable.
Tax
Detriment : the tax effect of any income, gain, recapture of
credit, or other item that increases taxes paid or
payable.
-3-
ARTICLE II
FILING OF TAX RETURNS
Section 2.01.
Pre-Distribution Income Tax Returns .
(a) Federal
Income Tax Returns . The income and other tax items of each
member of the Tredegar Group, except any foreign entities, for any
Pre-Distribution Period shall be included in Ethyl’s
consolidated federal income tax return. Ethyl shall prepare and
timely file all consolidated federal income tax returns for such
period. Upon the request of Tredegar, Ethyl shall make or cause to
be made a timely “deemed dividend” election under
Treasury Regulation § 1.1502-32 (f) (2) with respect to a
Tredegar Group member.
(b) Returns of
Foreign Entities . Tredegar, and not Ethyl, shall be
responsible for all taxes and tax returns of foreign entities that
are members of the Tredegar Group.
(c) State Income
Tax Returns . Any Tredegar Group member for which a separate
state income tax return is due for a Pre-Distribution Period shall
prepare and timely file such return. If the treatment of a tax item
of a Tredegar Group member for state income tax purposes conforms
to the treatment of such item for federal income tax purposes and
such item is includable in a consolidated federal income tax return
of Ethyl, such Tredegar Group member shall conform the treatment of
such item for state income tax purposes to the treatment of such
item in the Ethyl consolidated federal income tax return. Ethyl
shall prepare and timely file any consolidated or combined
state
-4-
income tax return that includes
an Ethyl Group member and a Tredegar Group member for a
Pre-Distribution Period.
(d)
Amendments . With respect to any return that includes any
Tredegar Business and for which Ethyl has responsibility under this
Section 2.01, Ethyl shall not file an amended return or change any
tax accounting method or election without Tredegar’s consent
(which shall not be unreasonably withheld) if such action would
increase any tax for which any Tredegar Group member is liable
under this Agreement, unless such action is required by law or is
necessary (in Ethyl’s good-faith opinion) to avoid or reduce
any penalty or addition to tax.
Section 2.02.
Post-Distribution Income Tax Returns . Tredegar shall
prepare and timely file all federal and state income tax returns
for each Tredegar Group member for Post-Distribution
Periods.
Section 2.03.
Other Tax Returns . All tax reports or returns not covered
by Sections 2.01 or 2.02 shall be prepared and filed by the
corporation upon which such obligation is imposed by
law.
-5-
ARTICLE III
PAYMENT OF TAXES
Section 3.01.
Payment of Taxes in General . Except as otherwise provided
in this Article III, Ethyl shall pay, and shall indemnify and hold
harmless each Tredegar Group member from and against, all taxes
attributable to Ethyl Businesses, whether heretofore or hereafter
arising or incurred. Ethyl shall be entitled to any reduction in or
refund of such taxes (except any reduction in or refund of taxes
resulting from carrybacks of any Tredegar Group member described in
Section 3.05). Except as otherwise provided in this Article III,
Tredegar shall pay, and shall indemnify and hold harmless each
Ethyl Group member from and against, all taxes attributable to
Tredegar Businesses, whether heretofore or hereafter arising or
incurred. Tredegar shall be entitled to any reduction in or refund
of such taxes. If a member of t
