Exhibit 10.7

TAX AGREEMENT

BETWEEN

CONTRAN CORPORATION

AND

KEYSTONE CONSOLIDATED INDUSTRIES, INC.

This Agreement is dated as of August 16, 2011 by and among Contran Corporation
(“Contran”), a Delaware corporation having its principal executive offices at
Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240 and
Keystone Consolidated Industries, Inc. (“Keystone”), a Delaware corporation
having its principal executive offices at Three Lincoln Centre, 5430 LBJ
Freeway, Suite 1700, Dallas, Texas 75240.

Recitals

A. Contran and Keystone are eligible to file consolidated returns of federal
income taxes and, subject to certain jurisdictional limitations, will be subject
to or continue to be subject to combined state and local tax reporting effective
August 16, 2011.

B. Contran and Keystone wish to provide for the allocation of liabilities, and
procedures to be followed, with respect to federal income taxes of Keystone and
any subsidiaries of Keystone and with respect to certain combined foreign, state
and local taxes on the terms of this Agreement.

Agreement

The parties hereto agree as follows:

Section 1. Definitions. As used in this Agreement, the following terms have the
meanings set forth below:

(a) Code: The Internal Revenue Code of 1986, as amended, and with respect to any
section thereof any successor provisions under such Code or any successor Code.

(b) Combined Foreign, State and Local Taxes: For a taxable period, the amount of
all foreign, state and local taxes, together with all interest and penalties
with respect thereto, for which liability is computed (1) on the basis of a
combined, unitary or consolidated return (whether at the initiative of the tax
authority or of the taxpayer) and (2) by reference to one or more members of the
Keystone Group and one or more members of the Contran Group not included in the
Keystone Group.

(c) Contran Corporation: A Delaware corporation that is the common parent of a
group of corporations electing to file a consolidated federal income tax return
and certain combined state and local returns.

(d) Federal Taxes: All federal income taxes, together with all interest and
penalties with respect thereto.

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(e) Contran Group: Contran and those of its direct and indirect subsidiaries
which join in the filing of a consolidated federal income tax return with its
common parent, Contran (the “Contran Group”), as such Group is constituted from
time to time. For purposes of this Agreement (to the extent related to Combined
Foreign, State and Local Taxes), the term “Contran Group” shall include all
direct and indirect subsidiaries of Contran with reference to which Combined
Foreign, State and Local Taxes are determined.

(f) Keystone Group: Keystone Consolidated Industries, Inc. and each direct or
indirect subsidiary of Keystone which would be a member of an affiliated group,
within the meaning of section 1504(a) of the Code, of which Keystone was the
common parent, as such Group is constituted from time to time. For purposes of
this Agreement (to the extent related to Combined Foreign, State and Local
Taxes) , the term “Keystone Group” shall include all direct and indirect
subsidiaries of Keystone with reference to which Combined, Foreign, State and
Local taxes are determined.

(g) Keystone Group Tax Liability: For a taxable period, the liability for
Federal Taxes and Combined Foreign, State and Local taxes, as applicable, that
the Keystone Group would have had if it were not a member of the Contran Group
during such taxable period (or during any taxable period prior thereto), and
instead filed a separate consolidated return for such taxable period (and during
all prior taxable periods beginning after August 16, 2011); provided, however,
that for purposes of determining such liability for a taxable period all tax
elections shall be consistent with the tax elections made by Contran for such
period. In making such tax elections it is understood the Contran Group will
make those tax elections that are beneficial to the Contran Group on a
consolidated basis. Nevertheless, Contran will use its best efforts in the case
of those elections which affect the computation of the Keystone Group Tax
Liability, to make elections in a reasonable manner so as to minimize the
Keystone Group Tax Liability.

Section 2. Contran as Agent. Contran shall be the sole agent for the Keystone
Group in all matters relating to the Keystone Group Tax Liability. The Keystone
Group shall not (a) terminate such agency or (b) without the consent of Contran,
participate, or attempt to participate, in any matters related to the Keystone
Group Tax Liability, including, but not limited to, preparation or filing of, or
resolution of disputes, protests or audits with the Internal Revenue Service,
state or local taxing authorities concerning, the Contran Group’s consolidated
returns of Federal Taxes, returns of Combined Foreign, State and Local Taxes or
the Keystone Group Tax Liability with respect thereto for any taxable period
beginning after August 16, 2011. The Keystone Group shall cooperate fully in
providing Contran with all information and documents necessary or desirable to
enable Contran to perform its obligations under this Section, including
completion of Internal Revenue Service and state or local tax audits in
connection with such Keystone Group Tax Liability and determination of the
proper liability for such Keystone Group Tax Liability.

Section 3. Liability for Taxes; Refunds.

(a) Contran, as the common parent of the Keystone Group, shall be responsible
for, and shall pay to a taxing authority the consolidated tax liability for the
Cotran Group and has the sole right to any refunds received from a taxing
authority, as applicable, subject to the provisions of Sections 5 and 6 of this
Agreement.

 

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(b) Notwithstanding any other provision of this Agreement, Keystone and each
subsidiary of Keystone which is a member of the Keystone Group shall be
severally liable to Contran for the Keystone Group Tax Liability.

(c) Keystone shall indemnify Contran and hold it and the Contran Group other
than the Keystone Group, harmless from and against any deficiency in the
Keystone Group Tax Liability that may be due to a taxing authority.

(d) Contran shall indemnify Keystone and hold it and the Keystone Group harmless
from and against any Federal Taxes and Combined Foreign, State and Local Taxes
attributable to the Contran Group or any other member of the Contran Group,
other than the Keystone Group, as such taxes are determined under this and other
tax sharing agreements.

Section 4. Tax Returns. Contran shall file on behalf of the Keystone Group any
and all federal, foreign, state and local tax returns that are required as they
pertain to the Keystone Group Tax Liability. The Keystone Group, at Contran’s
request, shall join in any applicable consolidated returns of Federal Taxes and
any returns of Combined State and Local Taxes (for which returns have not been
theretofore filed) and execute its consent to each such filing on any form as
may be prescribed for such consent if such consent is required. The decision of
Contran’s Tax Director (or any other officer so designated by Contran) with
responsibility for tax matters shall, subject to the provisions of this
Agreement, be binding in any dispute between Contran and the Keystone Group as
to what tax position should be taken with respect to any item or transaction of
the Keystone Group. The preceding sentence is limited to the tax positions that
affect the Keystone Group Tax Liability and the Contran Group. In addition,
Contran and members of the Contran Group, including members of the Keystone
Group, shall provide each other with such cooperation, assistance and
information as each of them may request of the other with respect to the filing
of any tax return, amended return, claim for refund or other document with any
taxing authority. Keystone shall be solely responsible for all taxes due for the
Keystone Group with respect to tax returns filed by Keystone or a member of the
Keystone Group that are required to be filed on a separate company basis,
independent of Contran.

Section 5. Payment of Keystone Group Tax Liability for Federal Taxes. On or
before each date, as determined under section 6655 of the Code, for payment of
an installment of estimated Federal Taxes, Keystone shall pay to Contran an
amount equal to the installment which the Keystone Group would have been
required to pay as an estimated payment of Federal Taxes to the Internal Revenue
Service if it were filing a separate consolidated return in respect of the
Keystone Group Tax Liability. Any balance owed with respect to the Keystone
Group Tax Liability for such taxable period shall be paid to Contran on or
before the 15th day of the third month after the close of such taxable period.
If it is not possible to determine the amount of such balance on or before such
day, (a) a reasonable estimate thereof shall be paid on or before such day,
(b) the amount of such balance shall be finally determined on or before the
earlier of; (i) the 15th day of the ninth month after the close of such taxable
period and (ii) the date on which the consolidated tax return containing the
Keystone Group for such period is filed with the Internal Revenue Service, and
(c) any difference between the amount so determined and the estimated amount
paid shall; (i) in the case of an underpayment, be promptly paid to Contran and
(ii) in the

 

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case of an overpayment, be promptly refunded or applied against the estimated
Keystone Group Tax Liability for the immediately following tax period, at the
option of Contran. If the overpayment is not applied to the immediately
following tax period, such overpayment shall be promptly refunded to the
Keystone Group. As between the parties to this Agreement, the Keystone Group
shall be solely responsible for the Keystone Group Tax Liability and shall have
no responsibility for Federal Taxes of the Contran Group other than payment of
the Keystone Group Tax Liability in accordance with the terms of this Agreement.

Section 6. Refunds for Keystone Group Losses and Credits for Federal Taxes. If
the calculation with respect to the Keystone Group Tax Liability for Federal
Taxes results in a net operating loss (“NOL”) for the current tax period that,
in the absence of a Code Section 172(b)(3) election made by Contran, is carried
back under Code Sections 172 and 1502 to a prior taxable period or periods of
the Keystone Group with respect to which the Keystone Group previously made
payments to Contran, then, in that event, Contran shall pay (or credit) Keystone
an amount equal to the tax refund to which the Keystone Group would have been
entitled had the Keystone Group filed a separate consolidated federal income tax
return for such year (but not in excess of the net aggregate amount of the
Keystone Group Tax Liability paid to Contran with respect to the preceding two
taxable periods). If the calculation with respect to the Keystone Group Tax
Liability results in an NOL for the current tax period, that subject to the Code
Section 172(b)(3) election made by Contran, is not carried back under Code
Sections 172 and 1502 to a prior taxable period or periods of the Keystone Group
with respect to which Keystone made payments to Contran or is not carried back
because the Contran Group does not have a consolidated net operating loss for
the current tax period, then, in that event such NOL shall be an NOL carryover
to be used in computing the Keystone Group Tax Liability for future taxable
periods, under the law applicable to NOL carryovers in general, as such law
applies to the relevant taxable period. Furthermore, if the Keystone Group would
have been entitled to a refund of Federal Taxes for any year had the Keystone
Group filed a separate consolidated federal income tax return for the loss year
and the carryback year, Contran shall pay to Keystone the amount which Keystone
would have received as a refund from the Internal Revenue Service. Payments made
pursuant to this Section 6 shall be made on the date that Contran (or any
successor common parent of a tax group to which the Contran Group is a member)
files its consolidated federal income tax return for the taxable period
involved. Principles similar to those discussed in this Section 6 shall apply in
the case of the utilization of all Keystone Group loss and credit carrybacks and
carryovers.

Section 7. Payment of Keystone Group Tax Liability for Foreign, State and Local
Taxes. The foregoing principles contained in Sections 5 and 6 shall apply in
similar fashion to any consolidated or combined foreign, state or other local
income tax returns, containing any member of the Contran Group and any member of
the Keystone Group that is not also a member of the Contran Group, which may be
filed.

Section 8. Subsequent Adjustments. If any settlement with the Internal Revenue
Service, foreign, state or local tax authority or court decision which has
become final results in any adjustment to any item of income, deduction, loss or
credit to the Contran Group in respect of any taxable period subject to this
Agreement, which, in any such case, affects or relates to any member of the
Keystone Group as constituted during such taxable period, the Keystone Tax Group
Liability shall be redetermined to give effect to such adjustment as if it had
been made as part of or reflected in the original computation of the Keystone
Tax Group Liability and proper adjustment of amounts paid or owing hereunder in
respect of such liability and allocation shall be promptly made in light
thereof.

 

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Section 9. Amendments. This Agreement may be amended, modified, superseded or
cancelled, and any of the terms, covenants, or conditions hereof may be waived,
only by a written instrument specifically referring to this Agreement and
executed by both parties (or, in the case of a waiver, by or on behalf of the
party waiving compliance). The failure of either party at any time or times to
require performance of any provision of this Agreement shall in no manner affect
the right at a later time to enforce the same. No waiver by either party of any
condition, or of any breach of any term or covenant, contained in this
Agreement, in any one or more instances, shall be deemed to be or construed as a
further or continuing waiver of any such condition or breach, or a waiver of any
other condition or of any breach of any other term or covenant.

Section 10. Retention of Records. Contran shall retain all tax returns, tax
reports, related workpapers and all schedules (along with all documents that
pertain to any such tax returns, reports or workpapers) that relate to a taxable
period in which the Keystone Group is included in a consolidated or combined tax
return with Contran. Contran shall make such documents available to Keystone at
Keystone’s request. Contran shall not dispose of such documents without the
permission of Keystone.

Section 11. Headings. The headings of this Agreement are for convenience of
reference only, and shall not in any way affect the meaning or interpretation of
this Agreement.

Section 12. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware without regard to its
conflicts of laws provisions.

Section 13. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be an original, but all of which shall
constitute but one agreement.

Section 14. Successors. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective subsidiaries, and their
respective successors and assigns.

Section 15. Effective Date. This Agreement shall be effective as of August 16,
2011.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first above written.

 

CONTRAN CORPORATION

By:  

/s/ Kelly D. Luttmer

 

Kelly D. Luttmer

 

Vice President and Tax Director

 

ATTEST:

/s/ Gregory M. Swalwell

Vice President and Controller Contran Corporation

 

KEYSTONE CONSOLIDATED

INDUSTRIES, INC.

By:  

Bert E. Downing, Jr.

 

Bert E. Downing, Jr.

  Vice President, Chief Financial Officer, Corporate Controller and Treasurer

 

ATTEST:

/s/ Sandra K. Myers

Corporate Secretary Keystone Consolidated Industries, Inc.

 

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