Exhibit 10.7
TAX SHARING
AGREEMENT
THIS TAX SHARING AGREEMENT
(“Agreement”) is made this 11th day of
February 2005 and shall be effective as of the Effective Time
(as defined below), by and between Niagara Holdings, Inc., a
Delaware corporation (“Holdings”) and PQ Corporation, a
Pennsylvania corporation (“PQ”).
WHEREAS, PQ, Holdings and Niagara Acquisition,
Inc., a Delaware corporation and a wholly-owned subsidiary of
Holdings (“Acquisition Sub”) are parties to that
certain Agreement and Plan of Merger dated as of December 15,
2004 (the “Merger Agreement”), pursuant to which
Acquisition Sub will be merged with and into PQ, with PQ remaining
as the surviving corporation (“Merger”);
WHEREAS, at the Effective Time, PQ will be a
wholly-owned subsidiary of Holdings;
WHEREAS, at the Effective Time, Holdings and PQ
will be members of an affiliated group of corporations within the
meaning of Section 1504(a) of the Internal Revenue Code of
1986, as amended (the “Code”), of which Holdings will
be the common parent corporation (the “PQ Group”);
and
WHEREAS, Holdings and PQ desire to provide for
the sharing and allocation of taxes in accordance with this
Agreement.
WHEREAS, PQ, if it were not a subsidiary of
Holdings and member of the PQ Group, would be the common parent of
an affiliated group of corporations within the meaning of
Section 1504(a) of the Code (such affiliated group of
corporations and any other corporations which may become members of
such group) being the “Subsidiary Consolidated
Group”).
NOW, THEREFORE, in consideration of the mutual
covenants contained herein, the parties hereto agree as
follows:
1.
Filing of Returns .
PQ,
on behalf of itself and each of its domestic subsidiaries, consents
to the filing by Holdings of consolidated federal income tax
returns for all taxable periods in which it is eligible to be a
member of the PQ Group. Holdings agrees to file such consents,
elections, tax returns and other documents, and to take such other
actions as may be necessary or appropriate to file a consolidated
federal income tax return for each taxable period for which the PQ
Group is required or permitted to file a consolidated federal
income tax return. Any taxable period ending after the date
of this Agreement for which PQ is included in a consolidated
federal income tax return filed by the PQ Group is referred to
herein as a “Consolidated Return Year.”
2.
Sharing and Settlement of U.S. Federal Consolidated Income
Taxes .
For
all relevant taxable periods, PQ shall pay to Holdings the amount
of federal income tax liability (including, if applicable,
alternative minimum tax liability) it would have had on such due
date if it had filed a separate consolidated federal income tax
return for the Subsidiary Consolidated Group for all Consolidated
Return Years (the “Group Liability”).
3.
State, Local or Foreign Income Taxes .
In
the event Holdings files combined, unitary or consolidated state,
local or foreign income or franchise tax returns with PQ and any of
its domestic subsidiaries, the provisions of Sections 1 and 2
hereof shall be applicable as if such combined, unitary or
consolidated income tax returns filed were consolidated federal
income tax returns.
4.
Franchise Taxes .
For
all relevant taxable periods, PQ shall pay to Holdings the amount
of any franchise taxes for such periods incurred by Holdings in
excess of the amount described in Section 3.
5.
No Other Tax Sharing Obligations .
No
tax sharing obligations between the parties to this Agreement shall
arise out of any taxes other than those taxes referred to in
Sections 2, 3 and 4 hereof.
6.
Subsequent Return Adjustments
In
applying the calculation referenced in Section 2 above, the
appropriate frame of reference shall be all tax years in which a
consolidated tax return was or is filed by Holdings on behalf of
the PQ Group wherein PQ was a member.
In
the event a consolidated federal income tax return or any combined,
unitary or consolidated state, local or foreign income or franchise
tax return is amended or adjusted (whether by reason of the filing
of an amended return, a claim for refund, or otherwise), the tax
liabilities and benefits of Holdings and PQ will be redetermined,
adjusted and settled on a basis consistent with the above
provisions.
In
the event the federal consolidated tax liability or any combined,
unitary or consolidated state, local or foreign income or
franch
