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 Michael R. Boyce 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
J.P. Morgan 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

c/o Michael R. Boyce 

PQ Corporation

1200 Swedesford Road

Berwyn, PA  19312

Facsimile:  (610) 951-4504


 


if to
Holdings:


 


Niagara
Holdings, Inc.

c/o J.P. Morgan Partners (BHCA), L.P.

1221 Avenue of the Americas

39th Floor

New York, New York 10020

Attention: Timothy J. Walsh


Stephen V. McKenna


Facsimile:
(212) 899-3401


 


with a copy
(which will not constitute notice) to:


 


Latham &
Watkins LLP

885 Third Avenue

Suite 1000

New York, New York  10022

Attention:  David S. Allinson

Facsimile:  (212) 751-4864


 


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if to the
Company:


 


PQ Corporation

1200 Swedesford Road

Berwyn, PA  19312

Attention:  Chief Executive Officer

Facsimile:  (610) 951-4504


 


with a copy
(which will not constitute notice) to:


 


Latham &
Watkins LLP

885 Third Avenue

Suite 1000

New York, New York  10022

Attention:  David S. Allinson

Facsimile:  (212) 751-4864


 


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.


 


	
  NIAGARA
  HOLDINGS, INC.

  
	
   

  
	
   

  
	
  By:

  	
    /s/  WILLIAM
  J. SICHKO

  	
   

  
	
   

  	
  Name:
  William J. Sichko

  	
   

  
	
   

  	
  Title: Chief
  Administrative Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PQ
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/  WILLIAM
  J. SICHKO

  	
   

  
	
   

  	
  Name:
  William J. Sichko

  	
   

  
	
   

  	
  Title: Chief
  Administrative Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PEAK
  INVESTMENTS LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/  MICHAEL
  R. BOYCE

  	
   

  
	
   

  	
  Name:
  Michael R. Boyce

  	
   

  
	
   

  	
  Title: Chief
  Executive Officer