Contract
Exhibit 10.14
THIS FEE AGREEMENT (this “Agreement”) is made as of February 11, 2005, and is effective as of the Effective Time (as defined below), by and among Niagara Holdings, Inc., a Delaware corporation ( “Holdings”), PQ Corporation, a Pennsylvania corporation (“PQ”), and Peak Investments LLC, a Delaware limited liability company (the “Sponsor Management Entity”).
RECITALS
1. Holdings, Niagara Acquisition, Inc., a wholly-owned subsidiary of Holdings (“Niagara”) and PQ are parties to that certain Agreement and Plan of Merger, dated as of December 15, 2004 (the “Merger Agreement”), pursuant to which Niagara was merged with and into PQ, with PQ remaining as the surviving entity and a wholly-owned subsidiary of Holdings (the “Merger”). References in this Agreement to the “Company” refer to PQ as the surviving corporation in the Merger.
2. The parties hereto have agreed that the Company shall pay a Transaction Fee (as defined below) to the Sponsor Management Entity in connection with the closing of the Merger and the capitalization of Holdings.
3. The parties hereto desire that the Company avail itself, for the term of this Agreement, of the Sponsor Management Entity’s expertise in providing financial and structural analysis, due diligence investigations, corporate strategy, other advice and negotiation assistance, which the parties believe will be beneficial to the Company, and the Sponsor Management Entity wishes to provide the services to the Company as set forth in this Agreement in consideration of the payment of a Management Fee (as defined below).
In consideration of the premises and agreements contained herein and of other good and valuable consideration, the sufficiency of which are hereby acknowledged, the parties agree as follows:
AGREEMENT
SECTION 1. Transaction Fee. Upon the consummation of the Merger, the Company shall pay a one-time sponsorship fee (the “Transaction Fee”) in the amount of $2,500,000 to the Sponsor Management Entity, in immediately available funds, in consideration of the consummation of the Merger and the capitalization of Holdings.
SECTION 2. Appointment. The Company hereby engages the Sponsor Management Entity to provide the management services to the Company described in Section 3 (the “Management Services”) for the term of this Agreement on the terms and subject to the conditions of this Agreement.
SECTION 3. Management Services. The Sponsor Management Entity agrees that during the term of this Agreement, it will provide to the Company, by and through itself, its affiliates and such officers, employees, representatives and third parties as the Sponsor Management Entity in its sole discretion may designate from time to time, management,
advisory and consulting services in relation to the affairs of the Company and its subsidiaries, including, without limitation, (a) advice regarding the structure, terms, conditions and other provisions, distribution and timing of debt and equity offerings and advice regarding relationships with the lenders and bankers of the Company and its subsidiaries, (b) advice regarding the strategy of the Company, (c) advice regarding dispositions and/or acquisitions and (d) such other advice directly related or ancillary to the above financial advisory services as may be reasonably requested by the Company. The obligation of the Sponsor Management Entity to provide Management Services shall terminate on the Termination Date (as defined below).
SECTION 4. Management Fee.
(a) In consideration of the Management Services being provided by the Sponsor Management Entity, the Company will pay to the Sponsor Management Entity a management fee in respect of each fiscal year from and including fiscal 2006 in the amount of $500,000 annually (the “Management Fee”). The Management Fee shall be paid quarterly and in advance on the first day of each fiscal quarter of the Company and the first payment to the Sponsor Management Entity in respect thereof shall be paid on January 1, 2006, in the amount of $125,000. On each subsequent payment date, the Company shall pay to the Sponsor Management Entity $125,000, in respect of the fiscal quarter then beginning. The Management Fee will accrue and be payable through the first day of the fiscal quarter in which the Termination Date (as defined below) occurs. All amounts paid by the Company to the Sponsor Management Entity pursuant to this Section 4 shall be made by wire transfer in same-day funds to a bank account designated by the Sponsor Management Entity, and shall not be refundable under any circumstances. For purposes of this Agreement, “Termination Date” means the earliest of (i) the fifth anniversary of the date hereof, (ii) the date on which the Company consummates an initial public offering of its shares of capital stock registered on Form S-1 (or any equivalent or successor form under the Securities Act of 1933 and (iii) such earlier date as the Company and the Sponsor Management Entity may mutually agree upon. For purposes of this Agreement, it is understood that “beneficial economic interests in the Company” and “percentage interests in the Company” shall include indirect interests in the Company through the ownership of interests in Holdings.
(b) To the extent the Company does not pay the Management Fee for any reason, including if prohibited by any agreement or indenture governing indebtedness of the Company or its subsidiaries, the payment by the Company to the Sponsor Management Entity of the Management Fee will be payable immediately on the earlier of (i) the first date on which the payment of such deferred Management Fee, as the case may be, is no longer prohibited under any contract applicable to the Company and the Company is otherwise able to make such payment, and (ii) total or partial liquidation, dissolution or winding up of the Company. Any quarterly payment of the Management Fee that is not paid on the scheduled due date will bear interest, payable in cash on each scheduled due date, at an annual rate of 10%, compounded quarterly, from the date due until paid.
(c) Notwithstanding anything to the contrary herein, (i) the Sponsorship Management Entity shall have no right to receive the Management Fee in the event Xxxxxxx X. Xxxxx is no longer serving as Chief Executive Officer of the Company at the time any portion of the Management Fee is payable under this Agreement and (ii) immediately upon the Sponsorship
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Management Entity’s receipt from the Company of notice thereof (a “Waiver Notice”), in the event and for so long as X.X. Xxxxxx Partners (BHCA), L.P. (“JPMP”) waives its right to receive all or any portion of the management fee payable to JPMP (the “JPMP Management Fee”) under that certain Fee Agreement, dated as of the date hereof (the “JPMP Fee Agreement”), between Holdings, Niagara and JPMP, the Sponsorship Management Entity shall be deemed to have waived, and hereby waives, its right to receive the Management Fee in an amount equal to the product of (x) the quotient of (A) the portion of the JPMP Management Fee waived by JPMP over (B) the portion of the JPMP Management Fee that would otherwise have been payable under the JPMP Fee Agreement during the period covered by JPMP’s waiver, times (y) the Management Fee payable to the Sponsor Management Entity during the period covered by JPMP’s waiver. The Waiver Notice shall be signed by the Company and JPMP and set forth the portion of the JPMP Management Fee waived by JPMP as well as the duration of JPMP’s waiver thereof, and a calculation of the amount of the Management Fee being waived by the Sponsorship Management Entity as provided above, which amount shall not be payable by the Company without any further action on the part of the Company, JPMP or the Sponsorship Management Entity.
SECTION 5. Effective Time. This Agreement will become effective at the “Effective Time”, as defined in the Merger Agreement.
SECTION 6. Indemnification. The Company will indemnify and hold harmless the Sponsor Management Entity, its affiliates and partners (both general and limited), members (both managing and otherwise), officers, directors, employees, agents and representatives (each such person being an “Indemnified Party”) from and against any and all losses, claims, damages and liabilities, including in connection with seeking indemnification, whether joint or several (the “Liabilities”), related to, arising out of or in connection with the Management Services contemplated by this Agreement or the engagement of the Sponsor Management Entity pursuant to, and the performance by the Sponsor Management Entity or its affiliates of the Management Services contemplated by, this Agreement, whether or not pending or threatened, whether or not an Indemnified Party is a party, whether or not resulting in any liability and whether or not such action, claim, suit, investigation or proceeding is initiated or brought by the Company. The Company will reimburse any Indemnified Party for all reasonable costs and expenses (including reasonable attorneys’ fees and expenses) as they are incurred in connection with investigating, preparing, pursuing, defending or assisting in the defense of any action, claim, suit, investigation or proceeding for which the Indemnified Party would be entitled to indemnification under the terms of the previous sentence, or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto. The Company will not be liable under the foregoing indemnification provision with respect to any particular loss, claim, damage, liability, cost or expense of an Indemnified Party that is determined by a court, in a final judgment from which no further appeal may be taken, to have resulted primarily from the gross negligence or willful misconduct of such Indemnified Party. The attorneys’ fees and other expenses of an Indemnified Party shall be paid by the Company as they are incurred upon receipt, in each case, of an undertaking by or on behalf of the Indemnified Party to repay such amounts if it is finally judicially determined that the Liabilities in question resulted primarily from the gross negligence or willful misconduct of such Indemnified Party.
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SECTION 7. Miscellaneous.
(a) No amendment or waiver of any provision of this Agreement, or consent to any departure by any party hereto from any such provision, will be effective unless it is in writing and signed by the parties hereto. Any amendment, waiver or consent will be effective only in the specific instance and for the specific purpose for which given. The waiver by any party of any breach of this Agreement will not operate as or be construed to be a waiver by such party of any subsequent breach.
(b) Any notices or other communications required or permitted hereunder will be sufficiently given if delivered personally or sent by facsimile with confirmed receipt, or by overnight courier, addressed as follows or to such other address of which the parties may have given written notice:
if to the Sponsorship Management Entity:
Peak
Investments LLC
x/x Xxxxxxx X. Xxxxx
XX Corporation
0000 Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
if to Holdings:
Niagara
Holdings, Inc.
c/o X.X. Xxxxxx Partners (BHCA), L.P.
1221 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Xxxxxxx X. XxXxxxx
Facsimile: (000) 000-0000
with a copy (which will not constitute notice) to:
Xxxxxx &
Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
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if to the Company:
PQ Corporation
0000 Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
with a copy (which will not constitute notice) to:
Xxxxxx &
Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
Unless otherwise specified herein, such notices or other communications will be deemed received (i) on the date delivered, if delivered personally or sent by facsimile with confirmed receipt, and (ii) one business day after being sent by overnight courier.
(c) This Agreement will constitute the entire agreement between the parties with respect to the subject matter hereof, and will supersede all previous oral and written (and all contemporaneous oral) negotiations, commitments, agreements and understandings relating hereto.
(d) This Agreement will be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts executed in and to be performed entirely within the State.
(e) The provisions of this Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors. Subject to the next sentence, no Person other than the parties hereto and their respective successors is intended to be a beneficiary of this Agreement. The parties acknowledge and agree that the affiliates of the Sponsor Management Entity and their respective partners (both general and limited), members (both managing and otherwise), officers, directors, employees, agents and representatives are intended to be third-party beneficiaries under Section 6 of this Agreement.
(f) This Agreement may be executed by one or more parties to this Agreement on any number of separate counterparts (including by facsimile), and all of said counterparts taken together will be deemed to constitute one and the same instrument.
(g) Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction will not invalidate or render unenforceable such provision in any other jurisdiction.
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[Signature Pages Follow]
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IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Agreement on the date first written above.
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NIAGARA HOLDINGS, INC. |
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By: |
/s/ XXXXXXX X. XXXXXX |
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Name: Xxxxxxx X. Xxxxxx |
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Title: Chief Administrative Officer |
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PQ CORPORATION |
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By: |
/s/ XXXXXXX X. XXXXXX |
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Name: Xxxxxxx X. Xxxxxx |
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Title: Chief Administrative Officer |
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PEAK INVESTMENTS LLC |
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By: |
/s/ XXXXXXX X. XXXXX |
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Name: Xxxxxxx X. Xxxxx |
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Title: Chief Executive Officer |
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