Document:

EX-10.3

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:  

 

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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.  

 

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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  

 

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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.  

 

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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 the Ethyl Group or Tredegar Group receives a refund of
taxes to which the other group is entitled under this Article III, such member shall
remit such refund to the other group by promptly sending such refund to Ethyl or
Tredegar, as the case may be.  

        
        Section
3.02. Payment of Certain Income Taxes. Ethyl shall charge Tredegar for each
Tredegar Group member’s share of Ethyl’s consolidated federal income tax
liability attributable to Tredegar Businesses not heretofore paid for any
Pre-Distribution Period, as determined under Ethyl’s current method  

 

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of allocating such tax liability
pursuant to Treasury Regulations §§ 1.1552-1 (a) (2) and 1.1502-33
(d) (2) (ii) (using a percentage of 100 percent to make the allocation under Treasury
Regulation § 1.1502-33 (d) (2) (ii)). Tredegar shall pay promptly each
Tredegar Group member’s share of such tax liability upon receiving written
notification from Ethyl of the amount of such liability. Such payment shall be effected,
as requested by Ethyl, by (i) Tredegar’s delivery to Ethyl of a check payable to the
Internal Revenue Service, which check Ethyl shall forward to the Internal Revenue
Service, or (ii) payment directly to Ethyl. Ethyl shall also charge Tredegar for each
Tredegar Group member’s share of any state income tax attributable to Tredegar
Businesses not heretofore paid but due under a consolidated or combined state income tax
return for any Pre-Distribution Period. Tredegar shall pay promptly each Tredegar Group
member’s share of such tax liability upon receiving written notification from Ethyl
of the amount of such liability. Such payment shall be effected, as requested by Ethyl,
by (i) Tredegar’s delivery to Ethyl of a check payable to the appropriate state tax
authority, which check Ethyl shall forward to such authority, or (ii) payment directly to
Ethyl. Notwithstanding the foregoing, Ethyl shall pay (and shall not charge Tredegar for)
any portion of Ethyl’s income taxes  

 

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attributable to VisQueen and any
other unincorporated division of Ethyl for periods before June 1, 1989 (the effective
date of such divisions’ transfer to Tredegar); provided, however, that Tredegar
shall be liable for subsequent adjustments to such portion of Ethyl’s income taxes
in accordance with Section 3.04 below.  

        
        Section
3.03. Reorganization Taxes. Any tax liability (other than federal or state income
taxes) resulting from transactions undertaken pursuant to the Reorganization Agreement
shall be paid by Tredegar. If any such tax is imposed on Ethyl under applicable law,
Tredegar shall pay the tax in the manner provided in Section 3.02 above.  

        
        Section
3.04. Adjustments to Tax. Ethyl shall be responsible for, and shall indemnify and
hold harmless each Tredegar Group member from and against, all adjustments to taxes
(including, without limitation, additions to tax, interest, and penalties) attributable
to Ethyl Businesses, whether heretofore or hereafter arising or incurred. Ethyl shall be
entitled to any Tax Benefit and shall bear any Tax Detriment resulting from such
adjustments (except adjustments resulting from carrybacks of any Tredegar Group member
from a Post-Distribution Period). If an adjustment to a tax item attributable to Ethyl
Businesses reduces the tax liability of a Tredegar Group member, Tredegar  

 

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shall pay promptly to Ethyl the
amount of the Tax Benefit realized by the Tredegar Group. If an adjustment to a tax item
attributable to Ethyl Businesses increases the tax liability of a Tredegar Group member,
Ethyl shall pay promptly to Tredegar the amount of the Tax Detriment realized by the
Tredegar Group upon receiving written notification from Tredegar of such amount.  

        
        Tredegar
shall be responsible for, and shall indemnify and hold harmless each Ethyl Group member
from and against, all adjustments to taxes (including, without limitation, additions to
tax, interest, and penalties) attributable to Tredegar Businesses, whether heretofore or
hereafter arising or incurred.  Tredegar shall be entitled to any Tax Benefit and shall
bear any Tax Deteriment resulting from such adjustments.  If an adjustment to a tax item
attributable to Tredegar Businesses reduces the tax liability of an Ethyl Group member,
Ethyl shall promptly pay to Tredegar the amount of the Tax Benefit realized by the Ethyl
Group.  If an adjustment to a tax item attributable to Tredegar Businesses increases the
tax liability of an Ethyl Group member, Tredegar shall promptly pay (in the manner
provided in Section 3.2 above) the amount of the Tax Detriment incurred by the Ethyl
Group upon receiving written notification from Ethyl of such amount. 

 

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        Section
3.05. Carrybacks from Post-Distribution Periods to Pre-Distribution Periods. Any loss,
credit, or other item attributable to Tredegar Businesses arising in a Post-Distribution
Period may be carried back to a consolidated or combined return of the Ethyl Group for a
Pre-Distribution Period as permitted under applicable law. Ethyl shall cooperate with any
Tredegar Group member to the extent reasonably necessary (including, without limitation,
amending any return and filing any claim for refund) for such member to realize the Tax
Benefit of carrying such loss, credit, or other item back to such Pre-Distribution
Period. Ethyl shall remit promptly to Tredegar any refund or reduction in tax resulting
from such carryback.  

ARTICLE IV

COOPERATION

        
        Section
4.01. Cooperation in General. Ethyl and Tredegar agree to make available to the
other party records in its custody and in the custody of any member of its group, to
furnish other information, and otherwise to cooperate to the extent reasonably required
for the filing of tax returns and documents relating to the assets or businesses of such
other party. In addition, any Tredegar Group member shall, at Ethyl’s request, join
in any election or statement made by an Ethyl  

 

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Group member under Section 338 of
the Code or regulations thereunder with respect to any acquisition for which the “consistency
period” includes any time during which any Tredegar Group member was a member of
Ethyl’s affiliated group.  

        
        Section
4.02. Notice, Defense, and Settlement of Tax Claims. If a member of the Ethyl Group or
Tredegar Group receives written notice of a deficiency, contest, audit, or other
proceeding with respect to a proposed tax liability for which a member of the other group
is liable under this Agreement (including liability hereunder to indemnify or reimburse a
member of the other group), then the recipient shall notify the other group of such
matter by promptly sending written notice thereof to Ethyl or Tredegar, as the case may
be. Ethyl and Tredegar shall cooperate to contest and defend against any such proposed
tax liability. The corporation that is legally liable for such proposed tax liability
(without regard to this Agreement) shall not settle, compromise, or otherwise agree to
pay such liability without the consent of the corporation that is liable for such tax
under this Agreement. Such consent shall not be unreasonably withheld.  

 

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ARTICLE V

COMPLETE AGREEMENT;
CONSTRUCTION

        This
Agreement shall constitute the entire agreement among the parties with respect to the
subject matter hereof and shall supersede all previous negotiations, commitments, and
writings with respect to such subject matter. Notwithstanding the preceding sentence, this
Agreement shall not affect the application of Section 6.04 of the Reorganization
Agreement, which section shall supersede any contrary provision in this Agreement. 

        IN
WITNESS WHEREOF, Ethyl and Tredegar have caused this Agreement to be duly executed by
their respective officers, each of whom is duly authorized, as of the day and year first
above written. 

 

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			         ETHYL
      CORPORATION

      

      

      

      By        /s/ E. Whitehead Elmore

             ——————————————

               E. Whitehead Elmore

               Vice President, Secretary
      

               and General Counsel

			         TREDEGAR
      INDUSTRIES, INC.

      

      

      

      By        /s/ John D. Gottwald

             ——————————————

               John D. Gottwald

               PresidentEX-10.4

Exhibit 10.4 

INDEMNIFICATION
AGREEMENT

        THIS
INDEMNIFICATION AGREEMENT, dated as of June 1, 1989, 1989, by and between ETHYL
CORPORATION, a Virginia corporation (“Ethyl”), and its wholly-owned subsidiary,
TREDEGAR INDUSTRIES, INC., a Virginia corporation (“Tredegar”), is entered into
in connection with a Reorganization and Distribution Agreement dated as of the date of
this Agreement (the “Reorganization Agreement”). 

        WHEREAS,
the parties desire to indemnify, defend and hold harmless one another under certain
circumstances that may arise in connection with the transactions contemplated in the
Reorganization Agreement; 

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

ARTICLE I

DEFINITIONS

        Terms
used in this Agreement shall have the meanings assigned to them in the Reorganization
Agreement. 

 

 

ARTICLE II

INDEMNIFICATION

        Section
2.01. Indemnification by Ethyl. Except as set forth in the Tax Sharing Agreement, Ethyl
shall indemnify, defend and hold harmless Tredegar and each of its Affiliates, each of
their respective directors, officers, employees and agents and each of the heirs,
executors, successors and assigns of any of the foregoing (the “Tredegar
Indemnitees”) from and against any and all losses, liabilities, claims, damages,
obligations, payments, costs and expenses, matured or not matured, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, known or unknown (including
without limitation, the costs and expenses of any and all Actions, threatened Actions,
demands, assessments, judgments, settlements and compromises relating thereto and
attorneys’ fees and any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any such Actions or threatened Actions)
(collectively, “Indemnifiable Losses” and, individually, an “Indemnifiable
Loss”) of the Tredegar Indemnitees arising out of or due to the failure or alleged
failure of Ethyl or any of its Affiliates to pay, perform or otherwise discharge in due
course any of the Ethyl Liabilities.  

        Section
2.02. Indemnification by Tredegar. Except as set forth in the Tax Sharing
Agreement, Tredegar shall indemnify, defend and hold harmless Ethyl and each of its
Affiliates, each  

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of their respective directors,
officers, employees and agents and each of the heirs, executors, successors and assigns
of any of the foregoing (the “Ethyl Indemnitees”) from and against any and all
Indemnifiable Losses of the Ethyl Indemnitees arising out of or due to the failure or
alleged failure of Tredegar or any of its Affiliates to pay, perform or otherwise
discharge in due course any of the Tredegar Liabilities.  

ARTICLE III

PROCEDURE FOR
INDEMNIFICATION

        Section
3.01. Notice of Third Party Claims. Each party indemnified under Section 2.01 or 2.02,
promptly following the earlier of (i) receipt of notice of the commencement of any
Action, or (ii) receipt of information regarding the alleged existence of a claim, against
such indemnitee with respect to which an indemnity may be sought pursuant to this
Agreement (a “Third Party Claim”), shall give the indemnifying party written
notice thereof. The failure of any indemnitee to give notice as provided in this Section
3.01 shall not relieve the indemnifying party of its obligations under this Agreement,
except to the extent that such indemnifying party is prejudiced by such failure to give
notice.  

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        Section
3.02. Defense of Third Party Claims. In case an Action shall be brought, or such
an Action is threatened, against any indemnitee and it shall notify promptly an
indemnifying party of the existence thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it may wish, to assume the defense thereof,
with counsel satisfactory to such indemnitee. If the indemnifying party so assumes the
defense thereof, it may not agree to any settlement of such action as the result of
which, any remedy or relief, other than monetary damages for which the indemnifying
party shall be responsible hereunder, shall be applied to or against the indemnitee,
without the prior written consent of the indemnitee. If the indemnifying party does not
assume the defense thereof, it shall be bound by any settlement to which the indemnitee
agrees, irrespective of whether the indemnifying party consents thereto. If any
settlement of any claim is effected by the indemnitee prior to commencement of any
action relating thereto, the indemnifying party shall be bound thereby only if it has
consented in writing thereto or has unreasonably withheld its consent. The indemnitee
shall have the right to employ its own counsel in any such case, including circumstances
in which the indemnitee shall have reasonably concluded that there may be defenses
available to it which are different from 

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or in addition to those available to
the indemnifying party (in which case the indemnifying party shall not have the right to
direct any such different or additional defense of such action or claim on behalf of the
indemnitee, but the fees and expenses of such counsel shall be at the expense of such
indemnitee unless the employment of such counsel shall have been authorized in writing in
advance by the indemnifying party in connection with the defense of such action or claim
or the indemnifying party shall not have employed counsel promptly to take charge of the
defense of such action or claim, in any of which events such fees and expenses shall be
borne by the indemnifying party). Except as expressly provided above, the indemnifying
party shall not be liable to any indemnitee for the costs of investigating, preparing or
defending against such action or claim subsequent to such time as the indemnifying party
assumes the defense of such action or claim, unless such investigation, preparation or
defense shall have been conducted at the request of the indemnifying party, its counsel
or the insurer. In the event that any actions or claims could result in both parties
being liable to the other under these indemnification provisions, the parties shall
endeavor, acting reasonably and in good faith, to agree upon a manner of conducting the
defense and/or settlement of such action or claim with a view to minimizing the legal ex- 

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penses and associated costs that
might otherwise be incurred by the parties under the provisions of this Section 3.02. To
the extent possible, the costs of such defense and/or settlement shall be allocated by
the parties on the basis of the eventual determination of liability.  

        Section
3.03. Other Claims. Any claim on account of an Indemnifiable Loss that does not result
from a Third Party Claim shall be asserted by written notice given by the indemnitee to
the indemnifying party within 60 days of the indemnitee’s discovery of such
Indemnifiable Loss. Such indemnifying party shall have a period of 60 days after the
receipt of such notice within which to respond thereto. If such indemnifying party does
not respond within such 60 days’ period, such indemnifying party shall be deemed to
have accepted responsibility to make payment and shall have no further right to contest
the validity of such claim. If such indemnifying party does respond within such 60
days’ period and rejects such claim in whole or in part, such indemnitee shall be
free to pursue such remedies as may be available to such party under applicable law and
this Agreement.  

        Section
3.04. Miscellaneous Provisions Relating to Indemnification. The indemnification
provided for in this Article III shall be subject to the following provisions:  

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        (a)
      any amounts payable from Ethyl to Tredegar and from Tredegar to Ethyl shall be
offset against each other; and 

        (b)
the amounts for which the indemnifying party shall be liable under this Article III shall
be net of insurance proceeds the benefits of which the indemnitee has received in
connection with the facts giving rise to the right of indemnification.  

        IN
WITNESS WHEREOF, Ethyl and Tredegar have caused this Agreement to be duly executed by
their respective officers, each of whom is duly authorized, all as of the day and year
first above written.  

			ETHYL CORPORATION

By: /s/ E. Whitehead Elmore
       ——————————————

       E. Whitehead Elmore
       Vice President, Secretary

       and General Counsel 

			TREDEGAR INDUSTRIES, INC.

By: /s/ John D. Gottwald
       ——————————————

       John D. Gottwald
       President 

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