Exhibit 2.1

EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “ Agreement ”), dated as of December 15, 2004, is by and among PQ Corporation, a Pennsylvania corporation (the “ Company ”), Niagara Holdings, Inc., a Delaware corporation (“ Buyer ”), and Niagara Acquisition, Inc., a Delaware corporation and wholly-owned subsidiary of Buyer (“ Acquisition Sub ”).

BACKGROUND

A.             Buyer has formed Acquisition Sub for the purpose of merging it with and into the Company and acquiring the Company as a wholly-owned subsidiary of Buyer for an aggregate merger consideration of Six Hundred Twenty Six Million Dollars ($626,000,000) (the “ Merger Consideration ”).

B.             The Boards of Directors of the Company, Buyer (on its own behalf and as the sole stockholder of Acquisition Sub) and Acquisition Sub have each determined that the transactions contemplated hereby are advisable to and in the best interests of such corporation and, in the case of each of Buyer and Acquisition Sub, its stockholders, have each adopted this Agreement, approved the Merger (as defined below) and have resolved to recommend that their respective shareholders or stockholders vote for the adoption of this Agreement, upon the terms and subject to the conditions set forth in this Agreement.

C.             As a condition to and as an inducement to each of Buyer’s and Acquisition Sub’s willingness to enter into this Agreement, certain shareholders of the Company are, concurrently with the execution and delivery of this Agreement, entering into a voting agreement and irrevocable proxy in their capacities as stockholders in the form attached hereto as Exhibit A (the “ Voting Agreement ”), pursuant to which, among other things, such shareholders are agreeing to vote in favor of the Merger.

AGREEMENT

NOW THEREFORE, in consideration of the respective covenants and promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE 1
DEFINITIONS

1.1            Certain Definitions .

The following is a list of terms used in this Agreement and a reference to the Section hereof in which such term is defined:

2

3

ARTICLE 2
THE MERGER

2.1            The Merger . At the Effective Time and upon the terms and subject to the conditions of this Agreement and in accordance with the Business Corporation Law of 1988 of the Commonwealth of Pennsylvania, as amended and supplemented from time to time (the “ BCL ”), and the Delaware General Corporation Law, as amended and supplemented from time to time (the “ DGCL ”), Acquisition Sub shall be merged with and into the Company (the “ Merger ”).  Following the Merger, the Company shall continue as the surviving corporation (the Company, as the surviving corporation after the Merger, is sometimes referred to as the “ Surviving Corporation ”) and the separate corporate existence of Acquisition Sub shall cease.

2.2            Effective Time . Subject to the terms and conditions set forth in this Agreement, the Articles of Merger substantially in the form attached as Exhibit B hereto (the “ Articles of Merger ”) and the Certificate of Merger substantially in the form attached as Exhibit C hereto (the “ Certificate of Merger ”) shall be duly executed by the Company and the

4

Acquisition Sub and, with respect to the Articles of Merger, thereafter delivered to the Secretary of State of the Commonwealth of Pennsylvania for filing pursuant to the BCL on the Closing Date (as defined below) and, with respect to the Certificate of Merger, thereafter delivered to the Secretary of State of the State of Delaware for filing pursuant to the DGCL on the Closing Date.  The Merger shall become effective at such time as both a properly executed and certified copy of the Articles of Merger is duly filed with the Secretary of State of the Commonwealth of Pennsylvania in accordance with the BCL and a properly executed and certified copy of the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware in accordance with the DGCL or such later time as Buyer and the Company may agree upon and set forth in the Articles of Merger and the Certificate of Merger (such time as the Merger becomes effective, the “ Effective Time ”).

2.3            Closing of the Merger . The closing of the Merger (the “ Closing ”) will take place at a time and on a date (the “ Closing Date ”) to be specified by the parties, which shall be no later than the second (2 ^nd ) Business Day after satisfaction of the latest to occur of the conditions set forth in Article 6 (except for those conditions set forth in Article 6 which cannot be satisfied until the Closing Date), at the offices of Pepper Hamilton LLP, 400 Berwyn Park, 899 Cassatt Road, Berwyn, Pennsylvania, unless another time, date or place is agreed to in writing by the parties hereto.  “ Business Day ” means any day that is not a Saturday, Sunday or other day on which banks are required or authorized by law to be closed in the Commonwealth of Pennsylvania.

2.4            Effects of the Merger . At the Effective Time, the Merger shall have the effects set forth in Section 1929 of the BCL and Section 259 of the DGCL.  Without limiting the generality of the foregoing and subject thereto, at the Effective Time, the Company shall be the Surviving Corporation, all of the properties, rights, privileges, powers and franchises of the Company and Acquisition Sub shall vest in the Surviving Corporation and all debts, Liabilities and duties of the Company and Acquisition Sub shall become the debts, Liabilities and duties of the Surviving Corporation.  “ Liability ” means any liability, indebtedness, obligation, commitment, or expense of or by any Person.

2.5            Articles of Incorporation and Bylaws . The Articles of Merger and the Certificate of Merger shall provide that, at the Effective Time, the Articles of Incorporation of the Company in effect immediately prior to the Effective Time shall be the Articles of Incorporation of the Surviving Corporation (the “ Survivor’s Articles of Incorporation ”).  The Articles of Merger and Certificate of Merger shall provide that, at the Effective Time, the bylaws of the Company in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation (“ Survivor’s Bylaws ” and with the Survivor’s Articles of Incorporation, the “ Survivor’s Constituent Documents ”).

2.6            Board of Directors . The directors of Acquisition Sub at the Effective Time, which are listed on Section 2.6 of the Buyer Disclosure Letter, shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the Survivor’s Constituent Documents from and after the Effective Time until the earlier of each such director’s death or resignation or such director’s successor is duly elected or appointed and qualified.

5

2.7            Officers . The officers of the Company at the Effective Time, which are listed on Section 2.7 of the Company Disclosure Letter, shall be the initial officers of the Surviving Corporation, each to hold office in accordance with the Survivor’s Constituent Documents from and after the Effective Time until such officer’s successor is duly elected or appointed and qualified.

2.8            Conversion of Shares; Redemption of Preferred Stock .

(a)            At the Effective Time, each share of Series A Common Stock, par value $0.50 per share (the “ Series A Common Stock ”), and each share of Series B Common Stock, par value $0.50 per share (the “ Series B Common Stock ” and with the Series A Common Stock, the “ Common Stock ”) issued and outstanding (together, the “ Shares ”) immediately prior to the Effective Time (other than (i) Shares held by Buyer, Acquisition Sub or any other Affiliate of Buyer, including Shares held by Buyer as a consequence of a contribution to Buyer by management of the Company in connection with the Merger, (ii) Shares which are Dissenting Shares (as defined below) shall, by virtue of the Merger and without any action on the part of Acquisition Sub, the Company or the holder thereof, be cancelled and converted into and become, subject to the provisions of Section 2.10 and Section 2.12 , the right to receive an amount in cash equal to (A) the sum of (1) the Common Merger Consideration plus (2) the aggregate exercise price payable in respect of all Options outstanding immediately prior to the Effective Time divided by (B) the sum of (x) the number of Shares issued and outstanding immediately prior to the Effective Time plus (y) the number of Shares issuable upon the exercise of all Options outstanding immediately prior to the Effective Time (the “ Per Share Merger Consideration ”), in cash, without interest.  Notwithstanding the foregoing, if, between the date of this Agreement and the Effective Time, the Shares shall have been changed into a different number of shares or a different class by reason of any dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares, then the Per Share Merger Consideration contemplated by the Merger shall be correspondingly adjusted to reflect such dividend, subdivision, reclassification, recapitalization, split, combination or exchange of Shares in order to provide to holders of the Shares the same economic effect as contemplated by this Agreement prior to any such event.  “ Common Merger Consideration ” means the Merger Consideration minus the Preferred Share Redemption Amount.

(b)            At the Effective Time, each outstanding share of common stock, par value $0.01 per share, of Acquisition Sub shall be converted into one share of common stock, par value $0.50 per share, of the Surviving Corporation.

(c)            The Company shall cause all of the issued and outstanding shares of Preferred Stock (the “ Preferred Shares ”) to be redeemed pursuant to the terms of its Articles of Incorporation, effective immediately prior to the Effective Time, for a redemption price per Preferred Share equal to $137 plus an amount equal to the unpaid dividends thereon at a rate of $4.11 per share per quarter for each quarterly period commencing with the beginning of the fiscal year in which the date fixed for redemption falls to the quarterly payment date preceding the date fixed for redemption (unless such date is a quarterly payment date in which case such dividends shall include the dividends payable on the quarterly payment date).  The date fixed for redemption shall be the Closing Date and the redemption shall occur immediately prior to the Effective Time.  The amount paid in respect of a Preferred Share being redeemed shall be

6

referred to as the “ Preferred Share Redemption Price ” and aggregate amount paid in respect of such redemption shall be referred to as the “ Preferred Share Redemption Amount .”

(d)            At the Effective Time, all shares of Series A Preferred Stock of the Company, without par value (the “ Preferred Stock ”), Shares held in the treasury of the Company and the Preferred Stock and Common Stock Shares held by Buyer, Acquisition Sub or any other Affiliate of Buyer immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of Acquisition Sub, the Company or the holder thereof, be canceled and retired and cease to exist and no payment shall be made with respect thereto.

2.9            Options .

(a)            At the Effective Time, each option to purchase a share of Series A Common Stock issued pursuant to PQ Corporation 1995 Stock Option Plan (the “ 1995 Plan ”) that is exercisable (including by reason of the transactions contemplated by this Agreement) on or immediately prior to the Effective Time (each, a “ 1995 Option ”) shall, by virtue of the Merger and without any action on the part of Acquisition Sub, the Company or the holder thereof, cease to be outstanding, cease to exist, be cancelled and converted into and become, subject to the provisions of Section 2.10 and Section 2.12 , the right to receive an amount in cash equal to the Option Payment Amount.  The “ Option Payment Amount ” means, with respect to any Option outstanding immediately prior to the Effective Time, the remainder, if any, of (i) the Per Share Merger Consideration minus (ii) the exercise price of such Option, in cash, without interest.  Notwithstanding the foregoing, if, between the date of this Agreement and the Effective Time, the Shares shall have been changed into a different number of Shares or a different class by reason of any dividend, subdivision, reclassification, recapitalization, split, combination or exchange of Shares, then the Per Share Merger Consideration contemplated by the Merger shall be correspondingly adjusted to reflect such dividend, subdivision, reclassification, recapitalization, split, combination or exchange of Shares.

(b)            Prior to the Effective Time, the Company shall (i) cause each option to purchase a share of Series A Common Stock issued pursuant to the PQ Corporation 2002 Stock Option and Stock Award Plan (each, a “ 2002 Plan Option, ” and together with the 1995 Plan Options, “ Options ”) to be fully vested immediately prior to the Effective Time by resolution of the Board of Directors of the Company and (ii) either (a) cause the holders of such 2002 Plan Options to fully exercise such 2002 Plan Options prior to the Effective Time, or (b) obtain the consent of each holder of each such unexercised 2002 Plan Option to effect the cancellation of such Option in exchange for the Option Payment Amount payable in respect of such Option pursuant to
Section 2.9(a) .  Prior to the Effective Time, the Company shall take all necessary actions to cause all awards of Series A Common Stock, issued and outstanding as of the Effective Time pursuant to the 2002 Plan, to be fully vested immediately prior to the Effective Time.

(c)            All Options and all plans, programs and arrangements providing for the issuance or grant of any interest in respect of the capital stock of the Company including the 1995 Plan and the 2002 Plan shall terminate as of the Effective Time and from and after the Effective Time no holder of Options or any participant in any such plans, programs or

7

arrangements shall have any rights thereunder to acquire any equity securities of the Company or the Surviving Corporation other than the right to receive the Option Payment Amount payable to such holder in accordance with this Section 2.9, Section 2.10 and Section 2.12 .

2.10          Payment of Merger Consideration .

(a)            On the Closing Date, Buyer shall make (or cause to be made) the following payments:

(i)             to an account, in the name of a financial institution reasonably acceptable to the Company and the Buyer, which shall act as payment agent (the “ Payment Agent ”) in effecting the surrender of certificates representing the Shares and the Preferred Shares, by wire transfer of immediately available funds, an amount equal to –

(A)           the Merger Consideration minus

(B)            the sum of (1) the product of (y) the Per Share Merger Consideration, multiplied by (z) the number of Shares of Common Stock held by Buyer, Acquisition Sub or any other Affiliate of Buyer, including Shares of Common Stock held by Buyer as a consequence of a contribution to Buyer by management of the Company in connection with the Merger, and the number of Shares that are Dissenting Shares, and (2) the aggregate Option Payment Amount payable in respect of all Options pursuant to Section 2.9 ;

(ii)            to an account designated in writing by the Company, by wire transfer of immediately available funds, an amount equal to the aggregate Option Payment Amount payable in respect of Options to be canceled as of the Effective Time pursuant to Section 2.9 ; and

(iii)           to an account designated in writing by the Surviving Corporation, by wire transfer of immediately available funds, an amount equal to the aggregate Per Share Merger Consideration for the Dissenting Shares.

(b)            From and after the Effective Time, upon the surrender to the Payment Agent of each certificate representing Shares and a duly executed Letter of Transmittal in the form attached as Exhibit D hereto (each, a “ Letter of Transmittal ”) related thereto, subject to Section 2.12 , the holder of such certificate shall be entitled to receive in exchange therefor by check or wire transfer (as selected by such holder and set forth in the Letter of Transmittal) an amount in cash equal to the product of (i) the number of Shares evidenced by such certificate multiplied by (ii) the Per Share Merger Consideration, and such certificate shall, after such surrender, be marked as canceled.

(c)            From and after the Effective Time, upon the surrender to the Payment Agent of each certificate representing Preferred Shares and a duly executed Letter of Transmittal related thereto, subject to Section 2.12 , the holder of such certificate shall be entitled to receive in exchange therefor by check or wire transfer (as selected by such holder and set forth in the Letter of Transmittal) an amount in cash equal to the product of (i) the number of Preferred Shares evidenced by such certificate multiplied by (ii) the Preferred Share Redemption Price, and such certificate shall, after such surrender, be marked as canceled.

8

(d)            From and after the Effective Time, the holder of each Plan Option which was outstanding and unexercised immediately prior to the Effective Time shall be entitled to receive in exchange therefor an amount in cash equal to the Option Payment Amount for each such Option, less applicable withholding pursuant to Section 2.12 .

(e)            If any consideration is to be paid to a person other than the person in whose name the certificate representing Shares surrendered in exchange therefor is registered, it shall be a condition to such exchange that the person requesting such exchange shall deliver all documents required to evidence and effect such transfer, as well as such certificate, if applicable, and shall pay to the Surviving Corporation any transfer or other taxes required by reason of the payment of such consideration to a person other than that of the registered holder of the Share, or the certificate, as applicable, so surrendered, or such person shall establish to the reasonable satisfaction of the Surviving Corporation that such tax has been paid or is not applicable.  If any certificate for Shares shall have been lost, stolen or destroyed, the Payment Agent shall pay such portion of the Merger Consideration as may be required pursuant to this Agreement in exchange therefore upon the making of an affidavit of that fact by the holder thereof and, if required by the Surviving Corporation, (a) in the case of Persons holding in excess of 1% of the outstanding shares of Series A Common Stock immediately prior to the Effective Time, the posting of bond, in such reasonable amount as the Surviving Corporation may direct, and (b) in all other cases, an unsecured indemnity in customary form in favor of the Surviving Corporation, in each case against any claim that may be made against the Surviving Corporation with respect to such certificate.

(f)             At the close of business on the day of the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no transfers of any Common Stock or Preferred Stock.  Until surrendered as contemplated by this Section 2.10 , each certificate representing a Share shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Merger Consideration in respect of the Shares, whether or not represented by a certificate, as contemplated by this Article 2 .  If, after the Effective Time, certificates previously representing Dissenting Shares are presented to the Surviving Corporation, they shall be canceled, delivered to the Payment Agent and exchanged for the applicable portion of the Merger Consideration, as provided in this Article 2 .

(g)            On or prior to the Closing Date, the Company shall deliver to Buyer and the Payment Agent a schedule setting forth the applicable Per Share Merger Consideration, Option Payment Amount and the respective portions of the Merger Consideration to which each Equityholder is entitled, including wire instructions in the case of payments to be made by wire transfer.  For purposes of this Agreement, “ Equityholders ” means the Shareholders (as defined below) and the holders of Options, which Equityholders are listed on Schedule I hereto.  “ Shareholders ” means all holders of Common Stock, which holders are listed on Schedule I attached hereto.

(h)            Any portion of the Merger Consideration or the Preferred Share Redemption Amount made available to the Payment Agent pursuant to this Section 2.10 (including any interest received with respect thereto) that remains unclaimed by Equityholders or holders of Preferred Shares one year after the Effective Time will be returned to the Company upon demand; provided , however , that the relevant payment obligation of the Buyer with respect

9

to the amount being returned shall not be discharged.  Neither Buyer nor the Surviving Corporation shall be liable to any Equityholder for cash from the Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or other Applicable Law.  “ Applicable Law ” shall mean, with respect to any Person, such Person’s articles or certificate of incorporation, formation documents, bylaws, trust agreements, or other governing or constitutive documents, if any, and any provision of law, statute, treaty, rule, regulation, ordinance or pronouncement having the effect of law, whether foreign, federal, state or local, in effect on or after the date of this Agreement or any Court Order, whether foreign, federal, state or local to which, in each case, such Person or any of such Person’s properties, operations, business or assets is bound or subject.  Applicable Law includes, without limitation, Antitrust Laws, HSE Laws, Regulations and state and local zoning and building laws.  “ Court Order ” shall mean any judgment, decision, consent decree, injunction, ruling or order of any federal, state or local court or governmental agency, department or authority that is binding on any Person or its property under Applicable Law.

2.11          Dissenters Rights . Notwithstanding anything in this Agreement to the contrary, each share of Common Stock that is issued and outstanding immediately prior to the Effective Time and that is held by a Shareholder who has not voted in favor of the Merger and properly exercised, and otherwise perfected dissenters rights pursuant to the BCL and does not withdraw or lose the right to appraisal and payment made under the BCL (each, a “ Dissenting Share ”) shall not be converted into or exchangeable for the right to receive any portion of the Merger Consideration, but shall be entitled to receive such consideration as shall be determined pursuant to the BCL; provided , however , that if such Shareholder fails to perfect or effectively withdraws or loses the right to appraisal and payment under the BCL, each share of Common Stock held by such Shareholder shall thereupon be deemed to have been converted into and to have become exchangeable for, as of the Effective Time, the right to receive the Per Share Merger Consideration, and each such share of Common Stock shall no longer be a Dissenting Share.  The Company shall give prompt notice to Buyer of any demands received by the Company for appraisals of Shares and Buyer shall have the right to participate in all negotiations and proceedings with respect to holders of Dissenting Shares.  The Company shall not, except with the prior written consent of Buyer, make any payment with respect to, or settle or offer to settle, any such demands.

2.12          Withholding Rights . Each of the Surviving Corporation, Buyer and the Payment Agent shall be entitled to deduct and withhold from the consideration otherwise payable to any Person pursuant to this Article 2 such amounts as it is required to deduct and withhold with respect to the making of such payment under any provision of federal, state, local or foreign Regulations with respect to Taxes (as defined below).  If the Surviving Corporation, Buyer or the Payment Agent, as the case may be, so withholds any such amounts, such amounts shall be treated for all purposes of this Agreement as having been paid to the applicable Person in respect of which the Surviving Corporation, Buyer or the Payment Agent, as the case may be, made such deduction and withholding.  “ Person ” means any person or entity, whether an individual, trustee, corporation, partnership, limited partnership, limited liability company, trust, unincorporated organization, business association, firm, joint venture, governmental agency or authority.  “ Regulations ” means any laws, statutes, ordinances, regulations, rules, notice requirements, court decisions, common law, directives, agency guidelines, principles of law and orders of any foreign, federal, state or local government and any other governmental department

10

or agency, including, without limitation, HSE Laws, occupational safety and health regulations, health codes and laws with respect to insurance, energy, public utilities, employment practices, employment documentation, terms and conditions of employment and wages and hours.

2.13          FIRPTA Affidavit . On the Closing Date, the Company shall furnish to Buyer an affidavit, dated the Closing Date, stating, under penalty of perjury, that the Company is not and has not been a United States real property holding corporation within the meaning of Code Section 897(c)(2) during the applicable period described in Code Section 897(c)(1)(A)(ii).

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as otherwise disclosed to Buyer in a letter (the “ Company Disclosure Letter ”) delivered to it by the Company prior to the execution of the Agreement (either with specific reference to the representations and warranties in this Article 3 to which the information in such letter relates or otherwise where it is reasonably apparent on its face to which representations and warranties such disclosure is reasonably applicable), the Company represents and warrants to Buyer and Acquisition Sub as follows:

3.1            Organization .  The Company is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania, and has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as it is now being conducted.  The Company is duly qualified and licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of its properties owned, leased or operated by it or the nature of its activities makes such qualification or license necessary, except where the failure to be so qualified or licensed has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.  The copies of the Articles of Incorporation of the Company (the “ Articles of Incorporation ”) and the bylaws of the Company (the “ Bylaws ” and with the Articles of Incorporation, the “ Constituent Documents ”) are complete and correct and in full force and effect and have been made available for Buyer’s inspection.  “ Material Adverse Effect ” or “ Material Adverse Change ” means (a) with respect to the Company, any change, event, fact, condition, circumstance or development that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect or change on (i) the condition (financial or otherwise), properties, business, results of operations, assets, Liabilities or operations of the Company and the Company Subsidiaries, taken as a whole, or (ii) the ability of the Company to consummate the transactions contemplated hereby and (b) with respect to Buyer or Acquisition Sub, any change, event, fact, condition, circumstance or development that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect or change on (i) the condition (financial or otherwise), properties, business, results of operations, assets, Liabilities or operations of Buyer and its subsidiaries, taken as a whole, or (ii) the ability of Buyer or Acquisition Sub to consummate the transactions contemplated hereby, provided , however , that the foregoing definitions exclude (i) the effect of any change that is generally applicable to the industry and markets in which the Company and the Company Subsidiaries operate, except to the extent any such effect has a disproportionate effect on the Company and the Company Subsidiaries, (ii) the effect of any change that is generally applicable to the United States economy or securities markets or the world economy or international

11

securities markets, except to the extent any such effect has a disproportionate effect on the Company, (iii) the effect of any change arising in connection with earthquakes, acts of war, sabotage or terrorism, military actions or the escalation thereof, except for any effect resulting from or relating to any such actions or events directly involving the Company or the Company Subsidiaries or their properties, businesses or assets, (iv) the effect of any change in applicable Regulations or accounting rules, (v) any other effect of the public announcement of this Agreement, the transactions contemplated hereby or the consummation of such transactions, (vi) changes in commodity prices, or (vii) any effect which is caused by Buyer’s or Acquisition Sub’s breaches of this Agreement.

3.2            Capitalization .  The total authorized capital stock of the Company consists of 8,800,000 shares of Series A Common Stock, 200,000 Series B Common Stock and 54,224 shares of Preferred Stock.  As of the date of this Agreement, there are 2,499,806 shares of Series A Common Stock, 28,272 Series B Common Stock and 33,426 shares of Preferred Stock outstanding.  All shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and nonassessable and were not issued in violation of any preemptive rights.  No bonds, debentures, notes or other indebtedness of the Company or the Company Subsidiaries having the right to vote on any matters on which the holders of capital stock of the Company may vote are issued or outstanding.  Except for Options to acquire no more than 191,681 shares of Common Stock of the Company issued pursuant to the 1995 Plan and the 2002 Plan, there are no outstanding options, warrants or other rights to acquire capital stock or interests of the Company or the Company Subsidiaries and no preemptive or similar rights, calls, agreements, commitments, arrangements, subscriptions or other rights, convertible or exchangeable securities, agreements, arrangements or commitments of any character, relating to the capital stock of the Company or the Company Subsidiaries, obligating the Company or the Company Subsidiaries to issue, deliver, transfer or sell, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Company or the Company Subsidiaries or obligating the Company or the Company Subsidiaries to grant, extend or enter into any such option, warrant, subscription or other right, convertible or exchangeable security, agreement, arrangement or commitment.  Section 3.2 of the Company Disclosure Letter sets forth a true, correct and complete list of (i) the record and beneficial owners of the outstanding shares of Company Common Stock and Preferred Shares, and (ii) all outstanding options to purchase shares of Common Stock and Preferred Stock of the Company, granted pursuant to the 1995 Plan, the 2002 Plan or otherwise as of the date hereof, which list sets forth the name of the holders thereof and, to the extent applicable, the exercise price or purchase price thereof, the number of shares of Company capital stock subject thereto, the governing stock option plan or other arrangement with respect thereto, the vesting terms thereof, and the expiration date thereof.  Except as required by the terms of any Options or the restricted shareholder agreement or other shareholder agreements described in Section 3.2 of the Company Disclosure Letter, there are no (i) outstanding agreements or other obligations of the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire (or cause to be repurchased, redeemed or otherwise acquired) any shares of capital stock of the Company or the Company Subsidiaries or (ii) voting trusts or other written agreements or written understandings to which the Company or any Company Subsidiary or, to the Best Knowledge of the Company, any of the Company’s directors or executive officers is a party with respect to the voting of capital stock of the Company or any Company Subsidiary.

12

3.3            Company Subsidiaries .

(a)            Section 3.3(a) of the Company Disclosure Letter sets forth the name of each entity, whether incorporated or unincorporated, with respect to which the Company owns more than fifty percent (50%) of the issued and outstanding equity interests or any entity of which at least a majority of the securities or ownership interests having by their terms voting power to elect a majority of the Board of Directors, or other persons performing similar functions, is directly or indirectly owned or controlled by such party or one or more of its respective Subsidiaries (collectively, the “ Company Subsidiaries ”) and the state or jurisdiction of its organization.  Each Company Subsidiary is a corporation, limited liability company or partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has the power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to have such power and authority or necessary governmental approvals would not, individually or in the aggregate, have or be reasonably expected to result in a Material Adverse Effect.  Each Company Subsidiary is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so duly qualified or licensed and in good standing would not reasonably be expected to, individually or in the aggregate, result in a Material Adverse Effect.  Section 3.3(a) of the Company Disclosure Letter sets forth the name of each of the Company Subsidiaries that is a “significant subsidiary” of the Company (as such term is defined in Rule 1-02 of Regulation S-X of the Securities and Exchange Commission) (each, a “ Material Subsidiary ” and collectively, the “ Material Subsidiaries ”).

(b)            The Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock or other equity interests of each of the Company Subsidiaries and the Other Equity Interests (as defined below), there are no proxies with respect to any such shares, and no equity securities of any Company Subsidiary are or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of any capital stock of any Company Subsidiary, and there are no contracts, commitments, understandings or arrangements by which any Company Subsidiary is or may be bound to issue, redeem, purchase or sell additional shares of capital stock of any Company Subsidiary or securities convertible into or exchangeable or exercisable for any such shares.  All of such shares so owned by the Company, including Other Equity Interests, are validly issued, fully paid and nonassessable and are owned by it free and clear of any claim, lien, pledge, option, charge, easement, security interest, deed of trust, mortgage, conditional sales agreement, encumbrance or other right of third parties, whether voluntarily incurred or arising by operation of law, and includes, without limitation, any agreement to give any of the foregoing in the future, and any contingent sale or other title retention agreement or lease in the nature thereof (each, an “ Encumbrance ”), except for Permitted Encumbrances.  “ Permitted Encumbrances ” means (a) liens for taxes, assessments and other governmental charges not yet due and payable, (b) statutory, mechanics’, laborers’, materialmen’s or similar liens arising in the ordinary course of the Company’s business, conducted through the Company and Company Subsidiaries, of (i) producing silicate, zeolite, and other performance materials

13

serving the detergent, pulp and paper, chemical, petroleum, catalyst, water treatment, construction, and food and beverage markets, and (ii) production of engineered glass materials serving the highway safety, polymer additive, metal finishing and conductive product markets (the “ Business ”), consistent with the past practice (the “ Ordinary Course of Business ” or “ Ordinary Course ”) of the Company and the Company Subsidiaries for sums not yet due, (c) statutory and contractual landlord’s liens under leases pursuant to which the Company or a Company Subsidiary is a lessee and not in Default, (d) with regard to Real Property, any and all matters of record in the jurisdiction where the Real Property is located as do not materially detract from the value or otherwise interfere with the present use and occupancy of any of the Company’s or the Company Subsidiaries’ properties or otherwise interfere with or impair the Company’s or the Company Subsidiaries’ operations of the Business, including, without limitation, restrictions, reservations, covenants, conditions, oil and gas leases, mineral severances and liens, (e) with regard to Real Property, any easements, rights-of-way, building or use restrictions, prescriptive rights, encroachments, protrusions, rights and party walls as do not materially detract from the value or otherwise interfere with the present use and occupancy of any of the Company’s or the Company Subsidiaries’ properties or otherwise interfere with or impair the Company’s or the Company Subsidiaries’ operations of the Business, or (f) such other imperfections of title, in each case, as do not materially detract from the value or otherwise interfere with the present use of any of the Company’s or the Company Subsidiaries’ properties or otherwise interfere with, or impair the Company’s or Company Subsidiaries’ operation of the Business.  For purposes of this Agreement, “ Default ” means (a) any actual breach or default, (b) the occurrence of an event that, with the passage of time, the giving of notice or both would, constitute a breach or default or (c) the occurrence of an event that, with or without the passage of time, the giving of notice or both, would give rise to a right of termination, renegotiation or acceleration.  “ Real Property ” means all real property owned or leased by or used, or intended by the Company or a Company Subsidiary for use, in connection with the Business, together with all buildings, improvements, fixtures, easements, licenses, options, insurance proceeds and condemnation awards and all other rights of the Company or a Company Subsidiary in or appurtenant thereto.

(c)            Except for the Company Subsidiaries, Section 3.3(c) of the Company Disclosure Letter sets forth all of the Company’s and the Company Subsidiaries’ equity or similar ownership interests in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest in, whether direct or indirect, any corporation, partnership, joint venture or other business association or entity that is not a wholly-owned Subsidiary of the Company (“ Other Equity Interests ”).

(d)            Complete and correct copies of the Constituent Documents of each Company Subsidiary have been made available for Buyer’s inspection and such Constituent Documents are in full force and effect.

3.4            Authority Relative to this Agreement .  The Company has the corporate power and the authority and has taken all corporate action necessary to enter into and deliver this Agreement and to carry out its obligations hereunder other than as contemplated by this Agreement.  The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly authorized by the Company’s Board of Directors, and no other corporate proceedings on the part

14

of the Company, other than obtaining the Shareholder Approval pursuant to Section 5.2, are necessary to authorize this Agreement or the transactions contemplated hereby.  Subject to the foregoing, this Agreement has been duly and validly executed and delivered by the Company and (assuming this Agreement constitutes a valid and binding obligation of Buyer and Acquisition Sub) constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms.

3.5            Consents and Approvals; No Violations .

(a)            Except for filings, Permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the New Jersey Industrial Site Recovery Act, state securities laws or the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”) or any other applicable anti-trust law or regulation, whether foreign or domestic, (each, an “ Antitrust Law ”, and collectively, the “ Antitrust Laws ”), and except where the failure to make any filing with, or to obtain any Permit, authorization, consent or approval of, any Government Entity would not (i) prevent or delay the consummation of the Merger or the transactions contemplated by this Agreement, or (ii) otherwise prevent or delay the Company from performing its obligations under this Agreement, or (iii), individually or in the aggregate, have or be reasonably expected to result in a Material Adverse Effect, or (iv) have a material adverse effect on the ability of the Surviving Corporation, immediately following the Effective Time, to conduct the Business as presently conducted, no filing with, and no Permit, authorization, consent or approval of, any Government Entity is necessary for the execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby.  “ Government Entity ” shall mean any court, tribunal, arbitrator, authority, agency, commission, official, body, or other instrumentality of the government of the United States or of any foreign country, any state or any political subdivision of any such government (whether state, provincial, county, city, municipal or otherwise).

(b)            Except for filings, Permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the New Jersey Industrial Site Recovery Act, state securities laws or the HSR Act, the filing and recordation of the Articles of Merger as required by the BCL and the Certificate of Merger as required by the DGCL and Shareholder Approval, no consent or approval of any other party is required to be obtained by the Company or any Company Subsidiary for the execution, delivery or performance of this Agreement or the performance by the Company of the transactions contemplated hereby, except where the failure to obtain any such consent or approval would not prevent or delay the consummation of the Merger or the transactions contemplated by this Agreement, or otherwise prevent or delay the Company from performing its obligations under this Agreement or, individually or in the aggregate, have or be reasonably expected to result in a Material Adverse Effect.  Neither the execution, delivery or performance of this Agreement by the Company, nor the consummation by the Company of the transactions contemplated hereby or thereby, nor compliance by the Company with any of the provisions hereof or thereof, will:

(i)             conflict with or result in any breach of any provisions of the Constituent Documents of the Company or any of the Company Subsidiaries;

15

(ii)            result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a Default (or give rise to any right of termination, cancellation, vesting, payment, exercise, acceleration, suspension or revocation) under or result in the creation of an Encumbrance on any property or asset of the Company or any Company Subsidiary pursuant to any of the terms, conditions or provisions of any Company Contract;

(iii)           violate any Court Order, writ, injunction, decree, statute, rule, Applicable Law or Regulation applicable to the Company, of the Company Subsidiaries or any of their properties or assets;

(iv)           cause the suspension or revocation of any material permits, consent or licenses; or

(v)            require the consent, approval, or authorization of, declaration or notice to or filing or registration with, any governmental or regulatory authority or any Person party to any Company Contract (other than the Company or Company Subsidiary), except in the case of clauses (ii), (iii), (iv) and (v) for violations, breaches, defaults, terminations, cancellations, accelerations, creations, impositions, suspensions or revocations which would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect or to prevent or delay the consummation of the Merger or the transactions contemplated by this Agreement or prevent or delay the Company from performing its obligations under this Agreement.

(c)            Except for the Shareholder Approval, no vote of any holder of equity of the Company or of the holders of any other securities of the Company (equity or otherwise), is required by law, the Constituent Documents of the Company or otherwise in order for the Company to consummate the Merger and the transactions contemplated by this Agreement.

3.6            Financial Statements .  “ Financial Statements ” means the Year-End Financial Statements and the Interim Financial Statements (each as defined below).  “ Interim Financial Statements ” means the unaudited balance sheet of the Company as of the Interim Balance Sheet Date (the “ Interim Balance Sheet ”) and the unaudited statements of operations of the Company for the period ended on September 30, 2004 (the “ Interim Balance Sheet Date ”).  “ Year-End Financial Statements ” means the Company’s consolidated audited balance sheet dated as of December 31, 2003, December 31, 2002 and December 31, 2001 and the related consolidated statements of income and retained earnings, comprehensive income and cash flows for the each of the years ended December 31, 2003, December 31, 2002 and December 31, 2001, including all related notes.  The Company has delivered to Buyer complete and correct copies of the Financial Statements.  The Financial Statements have been derived from the accounting books and records of the Company and the Company Subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“ GAAP ”) applied on a consistent basis throughout the periods presented, subject, in the case of interim unaudited Financial Statements, only to normal year-end adjustments and the absence of notes.  The consolidated balance sheets included in the Financial Statements present fairly in all material respects the consolidated financial position of the Company and the Company Subsidiaries as at the respective dates thereof, and the consolidated statements of income,

16

statements of income and retained earnings, comprehensive income and cash flows included in such Financial Statements present fairly in all material respects the consolidated statements of income and retained earnings, comprehensive income and cash flows of the Company and the Company Subsidiaries for the respective periods indicated.

3.7            Absence of Certain Changes or Events .  Since December 31, 2003, (i) the Company and the Company Subsidiaries have, in all material respects, conducted its business in the Ordinary Course of Business, consistent with past practice and (ii) there has not been any event, occurrence, development, fact, condition or circumstance that has had or, would reasonably be expected to result in, a Material Adverse Effect.  Since December 31, 2003 neither the Company nor any of the Company Subsidiaries has (a) changed its accounting methods, principles or practices, except for any such change required by reason of a concurrent change in GAAP; (b) revalued any of its material assets, including without limitation, writing off notes or accounts receivables or inventory in excess of reserves, except in the Ordinary Course of Business; (c) redeemed, purchased or otherwise acquired directly or indirectly any of its equity interests or shares of capital stock other than with respect to the Company in the Ordinary Course of Business; (d) declared, set aside, made or paid dividends or other distributions, in cash, stock, property or otherwise with respect to any of its equity interests or shares of capital stock, other than (I) dividends among the Company and the Company Subsidiaries, or (II) that have been paid to the Shareholders or holders of Preferred Shares; (e) incurred, created, assumed or guaranteed any material Indebtedness other than in the Ordinary Course of Business; or (f) amended or authorized any amendment to its articles of incorporation or bylaws.  Since September 30, 2004 neither the Company nor any of the Company Subsidiaries has (a) sold, assigned, leased, licensed or otherwise transferred any of its material assets or properties other than in the Ordinary Course of Business; (b) materially increased the compensation payable to or the benefits afforded any of its employees, directors or officers or increased the rates or terms of any bonus, pension, insurance, severance, deferred compensation, retirement, profit sharing, or other employee benefit plan or compensation or commission arrangement, other than normal periodic increases in the Ordinary Course of Business; (c) cancelled, waived or released any material Indebtedness (as defined below), or any material right or claim other than the cancellation, waiver or release of any right or claim in the Ordinary Course of Business; (d) suffered any material damage, destruction or casualty loss (whether or not covered by insurance) materially adversely affecting its assets; (e) experienced a material, adverse change in relations with its employees or joint venture partners or the suppliers listed on Section 3.23 of the Company Disclosure Letter with which currently it does business; or (f) except as disclosed in the Company Disclosure Letter, taken any action that, if taken after the date of this Agreement would require the consent of Buyer under Section 5.1 (other than Sections 5.1(a), (b), (g), (k), (p), (q) and (u) as it relates to Sections 5.1(a), (b), (g), (k), (p) and (q)).  “ Indebtedness ” of any Person shall mean, without duplication, (a) all indebtedness of such Person for borrowed money or issued in exchange or substitution for borrowed money (including any pre-payment penalties and costs (including any interest rate swap breakage or associated fees) associated with pre-payment of such indebtedness), (b) all liabilities of such Person evidenced by any note, bond, debenture or other debt security, (c) all liabilities of such Person for the deferred purchase price of property with respect to which such Person is liable, contingently or otherwise, (d) all liabilities under capitalized leases with respect to which such Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or with respect to which obligations another Person ensures a creditor against loss and (e) all liabilities described in clauses (a) through (d) that are

17

guaranteed in any manner by such Person (including guarantees in the form of an agreement to repurchase or reimburse) and any prepayment or other fees and penalties and any accrued and unpaid interest on or in respect of the foregoing.

3.8            Litigation .  There is no suit, action, claim, suit, litigation, proceeding, labor dispute, arbitral action, governmental audit, inquiry, criminal prosecution, investigation or unfair labor practice charge or complaint, whether at law or equity, before or by any Government Entity or before any arbitrator, (each, an “ Action ”) pending or, to the Best Knowledge of the Company, threatened against or affecting the Company or any of the Company Subsidiaries, the outcome of which would reasonably be expected to result in Liability to the Company or any Company Subsidiary in excess of $500,000, nor is there any judgment, decree, injunction, rule or order of any Government Entity or arbitrator outstanding against the Company or any of the Company Subsidiaries which would, individually or in the aggregate, have, or reasonably be expected to result in, a Material Adverse Effect or prevent or delay the consummation of the Merger or the performance by the Company of its obligations under this Agreement.  To the Best Knowledge of the Company, there is no basis for any such Action.  “ Best Knowledge of the Company ” or “ Company’s Best Knowledge’ means the actual knowledge of Stanley W. Silverman, William Levy, Jerry Sheridan, Michael Imbriani, Elaine Simpson, Walter Stickley and Jennifer Bellwoar, and with respect to the Company and Company Subsidiary operations in Europe, Erwin Goede, Warwick Mayall, Jean Philippe Curdy, Alex Ter Sluis and Jerry Sheridan, after reasonable inquiry by such individuals, and does not refer to the knowledge of any other Person.  The inclusion of Walter Stickley and Jennifer Bellwoar as knowledge parties for purposes of the definition of Best Knowledge of the Company and Company’s Best Knowledge shall not waive, or be deemed to be a waiver of, any attorney-client privilege, work-product privilege, or any other applicable privilege which may otherwise exist with respect to confidential attorney-client communications between or among Walter Stickley and Jennifer Bellwoar and Company employees, directors or representatives.

3.9            Absence of Undisclosed Liabilities .  The Company and the Company Subsidiaries do not have any Liabilities, contingent or otherwise, except (a) Liabilities in the respective amounts reflected on or reserved against in the Interim Balance Sheet, (b) Liabilities not required by GAAP to be reflected on a consolidated balance sheet or reflected in the notes thereto, (c) Liabilities incurred in the Ordinary Course of Business consistent with past practice since the Interim Balance Sheet, or (d) Liabilities which would not be material to the Company and the Company Subsidiaries taken as a whole.

3.10          Health, Safety and Environmental Laws and Regulations .

(a)            The Company and each of the Company Subsidiaries and their respective properties and operations (i) have complied with and are in compliance with all applicable Regulations relating to pollution or protection of human safety or health, workplace safety or health, or the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata) (collectively, “ HSE Laws ”), which compliance includes, but is not limited to, the possession by the Company and the Company Subsidiaries of all permits and other authorizations of Government Entities required under HSE Laws, current compliance with the terms and conditions thereof, except for non-compliance which, individually or in the aggregate, is not reasonably likely to result in, a Material Adverse Effect;

18

and (ii) have complied with and are in compliance in all respects with the letter agreement dated as of March 10, 2004 setting forth the plea agreement between PQ Corporation and the United States Attorney’s Office for the District of Maryland (the “ Plea Agreement ”).

(b)            Neither the Company nor any of the Company Subsidiaries has received written notice of, or is the subject of, any actions, causes of action, claims, demands, or, to the Best Knowledge of the Company, investigations by any Person asserting personal injury, property damages, natural resource damages, or other civil damages, or the Company or any Company Subsidiary’s obligation to conduct investigations or clean-up activities under any HSE Laws or alleging Liability under or non-compliance with any HSE Laws (collectively, “ HSE Claims ”) which, individually or in the aggregate, has had, or is reasonably likely to result in, a Material Adverse Effect.

(c)            To the Best Knowledge of the Company, there are no facts, circumstances or conditions in connection with the operation of its business or any currently or formerly owned, leased or operated businesses, facilities or properties or any investment properties or any other properties that have led to or would reasonably be expected to lead to any HSE Claims or impositions of any institutional or engineering controls or restrictions on the use or development of properties in the future in the Ordinary Course of Business which, individually or in the aggregate, has had, or would reasonably be expected to result in, a Material Adverse Effect.

(d)            The Company has made available to Buyer or its counsel true and correct copies of (i) all currently relevant, material environmental audit, assessment or investigation reports, and (ii) all other documentation currently materially bearing on the liability of the Company and the Company Subsidiaries under HSE Laws, which are or have been or, after due and reasonable inquiry, should be in the possession of Elaine Simpson, Vice President-Health, Safety and Environmental of the Company, or to the Best Knowledge of the Company, that exist.

3.11          Taxes .

(a)            (i) The Company and the Company Subsidiaries have duly and timely filed with the appropriate Taxing Authority all Tax Returns required to be filed by them (determined after giving effect to any applicable extensions), (ii) such Tax Returns are true accurate and complete in all material respects, and (iii) all Taxes of the Company and the Company Subsidiaries required to be shown on such Tax Returns have been timely paid and all material Taxes otherwise due have been timely paid.  “ Tax ” or “ Taxes ” shall mean any (i) tax, duty, fee impost, levy and other charge of a similar nature imposed by any Taxing Authority including, without limitation, any net income, alternative minimum tax, gross income, gross receipts, sales, use, ad valorem , transfer, franchise, profits, payroll, employment, social security, unemployment, workers compensation, net worth, withholding, FICA, FUTA, value added, gains tax, customs’ duties, excise, estimated, stamp, occupancy, occupation, property or other similar charges, including any interest or penalties thereon, and additions to tax or additional amounts imposed by a Taxing Authority and (ii) any liability for amounts described in clause (i) of another Person under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise.  “ Tax Return ” shall

19

mean any declaration, return, report, estimate, information return, schedule, statements or other document, including any amendment thereof, filed or required to be filed with or, when none is required to be filed with a Taxing Authority, the statement or other document issued by, a Taxing Authority.  “ Taxing Authority ” shall mean any federal, state, local or foreign governmental authority, domestic or foreign, which imposes Taxes.

(b)            No federal, state, local or non-US audits, actions or administrative or court proceedings are in process, pending or have been announced in writing with regard to any Taxes or Tax Returns of the Company or any Company Subsidiary wherein an adverse determination or ruling in any one such action or proceeding or in all such actions and proceedings in the aggregate would have or are reasonably likely, individually or in the aggregate, to result in a Material Adverse Effect.  The federal income Tax Returns or the foreign income Tax Returns of the Company and the Material Subsidiaries, as applicable, have been examined by the Internal Revenue Service (“ IRS ”) or the applicable Taxing Authorities for the periods listed on Section 3.11 of the Company Disclosure Letter, and no material deficiencies were asserted as a result of such examinations that have not been resolved and fully paid or provided for on the face of the Financial Statements in accordance with GAAP.

(c)            There are no outstanding agreements or waivers extending the period with respect to the filing of any Tax Return of the Company or any Company Subsidiary, the making of any assessment or reassessment of Taxes or the payment of any Tax to which the Company or any Company Subsidiary may be subject.

(d)            As of September 30, 2004, the accruals and reserves for Taxes (other than deferred Taxes) established in the Financial Statements were complete and adequate to cover any liabilities for Taxes of the Company and the Company Subsidiaries that were not yet due and payable, and since September 30, 2004, none of the Company or the Company Subsidiaries has incurred any liability for Taxes outside the ordinary course of business.

(e)            No Taxing Authority in a jurisdiction where the Company or a Company Subsidiary does not file Tax Returns has made a claim, assertion or threat that such entity is or may be subject to Tax in such jurisdiction.

(f)             There are no liens for Taxes upon any of the properties or assets of the Company or any Company Subsidiary except liens for current Taxes not yet due and payable.

(g)            None of the Company or any Company Subsidiary is a party to or bound by (nor will any such entity become a party to or bound by) any tax-indemnity, tax-sharing, or tax-allocation agreement.

(h)            None of the Company or any Company Subsidiary is responsible for the Taxes of any other Person (other than the Company or any Company Subsidiary) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise.

(i)             None of the Company or any Company Subsidiary has distributed any corporation in a transaction intended to qualify under Code Section 355 within the past two

20

years, nor has the Company or any Company Subsidiary been distributed in a transaction intended to qualify under Code Section 355 within the past two years.

(j)             None of the Company or any Company Subsidiary has entered into any transaction which constitutes a “listed transaction” (as defined in Treasury Regulation Section 1.6011-4), and none of the Company or any Company Subsidiary has entered into a “potentially abusive tax shelter” (as defined in Treasury Regulation Section 301.6112-1).

(k)            Each of the United States Company Subsidiaries that is not a corporation has at all times been properly classified for federal and applicable state income tax purposes as a partnership, and not as an association or publicly traded partnership taxable as a corporation.

(l)             None of the Company or any Company Subsidiary has agreed or is required to make any adjustment pursuant to Section 481(a) of the Code (or similar provision of state, local or foreign law) by reason of a change in the accounting method initiated by such entity, and no such entity has knowledge that any Taxing Authority has proposed any such adjustment or change in accounting method.

(m)           Neither the Company nor any of the Company Subsidiaries will be required to include any income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of (i) any change in method of accounting for a taxable period ending on or prior to the Closing Date, (ii) any material intercompany transaction executed on or prior to the Closing Date, (iii) an excess loss account described in Treasury Regulations under Code Section 1502 (or any corresponding or similar provision of state, local or foreign income Tax law), or (iv) any installment sale or open transaction disposition made on or prior to the Closing Date.

3.12          Permits .  Section 3.12 of the Company Disclosure Letter sets forth a list of all material permits, consent or licenses, the absence of such individual permit or permits, consent or license would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect (“ Permit ”), which are used in the operation of the Business or otherwise held by the Company, all of which are as of the date hereof, and all of which will be as of the Closing Date, in full force and effect in all material respects.  Neither the Company nor any Company Subsidiary is in material default, nor has the Company or any Company Subsidiary received any written notice of any claim of default, with respect to any such Permit.

3.13          Contracts .

(a)            Section 3.13 of the Company Disclosure Letter sets forth a list of each contract (collectively, the “ Company Contracts ”) to which the Company or any of the Company Subsidiaries is a party or by which it is bound which:

(i)             provides for annual obligations in excess of $500,000 or is otherwise material to the current business of the Company and the Company Subsidiaries taken as a whole (excluding purchase orders issued or received in the Ordinary Course of Business);

21

(ii)            contains covenants limiting the freedom of the Company or any of the Company Subsidiaries to engage in any line of business in any geographic area or to compete with any person or entity or restricting the ability of the Company or any of the Company Subsidiaries to acquire equity securities of any person or entity;

(iii)           is a joint venture contract, partnership agreement, or limited liability company agreement or other agreement involving a sharing of profits, losses, costs or liabilities by the Company or any of the Company Subsidiaries with any other Person;

(iv)           is an employment or severance contract applicable to any employee of the Company or the Company Subsidiaries, including contracts to employ executive officers and other contracts with officers or directors of the Company or any of the Company Subsidiaries, other than any such contract which by its terms is terminable by the Company or any of the Company Subsidiaries on not more than 60 days’ notice without material Liability;

(v)            relates to, or is evidence of, or is a guarantee of, or provides security for, Indebtedness or the deferred purchase price of property (whether incurred, assumed, guaranteed or secured by any asset of the Company);

(vi)           is a lease of Real Property, or a sublease of leased Real Property or other interest in Real Property, (each, a “ Lease ”), which individually requires an annual payment in cash of $25,000 or more by the Company or any Company Subsidiary to an unaffiliated third party or is otherwise material to the use or operation of any Real Property used by the Company or any Company Subsidiary (the “ Leased Real Property ”);

(vii)          relates to the sale or acquisition, directly or indirectly, of assets in excess of $1,000,000 either in market or book value since December 31, 2003, other than sales of products or services of the Company in the Ordinary Course of Business;

(viii)         is a lease or agreement under which the Company or any Company Subsidiary is a lessor of or permits any third party to hold or operate any Real Property or material Personal Property, owned or controlled by the Company or any Company Subsidiary.  “ Personal Property ” means all machinery, equipment, furniture, fixtures, motor vehicles, other miscellaneous supplies, tools, fixed assets and other tangible personal property owned or leased by or used, or intended by the Company or a Company Subsidiary for use, in connection with the Business;

(ix)            is a license or other agreement of the Company or any Company Subsidiary relating to the use of Intellectual Property, except for any of the foregoing related to the use of generally available computer software; or

(x)             is a written agreement for the purchase or sale of a business or assets not in the Ordinary Course of Business which provides for currently enforceable indemnification obligations of the Company.

(b)            With respect to each of the Company Contracts:

22

(i)             such contract is (assuming due power and authority of, and due execution and delivery by, the other party or parties thereto) valid and binding upon th