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
consolidate
