Exhibit 10.15


 


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
J.P. Morgan Partners (BHCA), L.P., a Delaware limited partnership (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 Sponsor
Management Entity has entered into a Stockholders Agreement, dated as of February 11,
2005, with Holdings and the other Investors (as defined therein) (as the same may be
amended from time to time hereafter, the “Stockholders Agreement”),
relating to the ownership of the common stock of Holdings by the Investors.


 


3.                                       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.


 


4.                                       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 $7,500,000 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. It is expressly agreed that the services to be performed hereunder
will not include investment banking or other financial advisory services which may be
provided by the Sponsor Management Entity or any of its affiliates to the
Company or Holdings in connection with any specific acquisition, divestiture,
refinancing or recapitalization of the Company or any of its subsidiaries or by
Holdings. The Sponsor Management Entity may be entitled to receive
additional compensation for providing services of the type specified in the
preceding sentence by mutual agreement of the Company or such subsidiary or
Holdings, on the one hand, and the Sponsor Management Entity or its relevant
affiliates, on the other hand. 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 (the “Management Fee”)
in respect of each fiscal year from and including fiscal 2006 in an annual amount
equal to $1,500,000. 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 of the Management Fee shall be paid on
January 1, 2006, in an amount equal to $375,000. On each subsequent
payment date, the Company shall pay to the Sponsor Management Entity $375,000,
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 twelfth anniversary of the
date hereof, (ii) such time as the Sponsor Management Entity and its
affiliates then owning beneficial economic interests in the Company own less in
the aggregate than 20% of the beneficial economic interests in the Company
initially owned by the Sponsor Management Entity 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 


 


2

















 


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.


 


SECTION 5. Reimbursements.


 


(a)                                  In addition to the fees payable
pursuant to this Agreement, the Company will pay directly or reimburse the
Sponsorship Management Entity and its affiliates for their respective
Out-of-Pocket Expenses (as defined below). For the purposes of this Agreement,
the term “Out-of-Pocket Expenses”
means the reasonable out-of-pocket costs and expenses incurred by the Sponsor
Management Entity and its affiliates in connection with the Management Services
provided under this Agreement, including, without limitation, (a) fees and
disbursements of any independent professionals and organizations, including
independent accountants, outside legal counsel or consultants, retained by the
Sponsor Management Entity or any of its affiliates, (b) costs of any
outside services or independent contractors such as couriers, business
publications, on-line financial services or similar services, retained or used
by the Sponsor Management Entity or any of its affiliates and (c) transportation,
per diem costs, word processing expenses or any similar expense not associated
with its or its affiliates’ ordinary operations. All payments or reimbursements
for Out-of-Pocket Expenses will be made by wire transfer in same-day funds to a
bank account designated by the Sponsorship Management Entity or its relevant
affiliate promptly upon or as soon as practicable following request for
reimbursement in accordance with this Agreement.


 


(b)                                 Apart from the Out-of-Pocket
Expenses of the Sponsorship Management Entity, Holdings will also incur
reimbursable expenses from time to time. For each fiscal year, the Company
shall make cash payments to Holdings in an amount equal to the sum of (x) any
fees payable by Holdings in order to maintain its corporate existence and (y)
any amounts attributable to (i) corporate overhead expenses of Holdings
incurred in the ordinary course of business and (ii) salaries or other
compensation of employees who perform services for both Holdings and the
Company (collectively, the “Holdings Expenses”); provided, that
reimbursements for Holdings Expenses made pursuant to this clause shall not be
deemed as part of the Management Fee or the Transaction Fee. Any payments
of Holdings Expenses made pursuant to this Section 5(b) shall be made
as requested by Holdings in its sole discretion, exercised in good faith.


 


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 


 


3

















 


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.


 


SECTION 7. Accuracy of Information. The
Company shall furnish or cause to be furnished to the Sponsor Management Entity
such information as the Sponsor Management Entity believes reasonably
appropriate to its Management Services hereunder and to comply with Securities
and Exchange Commission or other legal requirements relating to the beneficial
ownership by the Investors of equity securities of the Company (all such
information so furnished, the “Information”).
The Company recognizes and confirms that the Sponsor Management Entity (a) will
use and rely primarily on the Information and on information available from
generally recognized public sources in performing the Management Services
contemplated by this Agreement without having independently verified the same, (b) does
not assume responsibility for the accuracy or completeness of the Information
and such other information and (c) is entitled to rely upon the
Information without independent verification.


 


SECTION 8. Effective Time. This
Agreement will become effective at the  “Effective Time”, as defined in
the Merger Agreement.


 


SECTION 9. Permissible Activities. Subject
to applicable law and the restrictions set forth in the Stockholders Agreement,
nothing herein will in any way preclude the Sponsor Management Entity or its
affiliates (other than the Company or its subsidiaries and their respective
employees) or its partners (both general and limited), members (both managing
and otherwise), officers, directors, employees, agents or representatives from
engaging in any business activities or from performing services for its or
their own account or for the account of others, including for companies that may be
in competition with the business conducted by the Company.


 


SECTION 10.                     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 


 


4

















 


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:


 


J.P. Morgan
Partners (BHCA), L.P. and affiliated funds

1221 Avenue of the Americas

39th Floor

New York, New York  10022


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


 


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


 


5

















 


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, the Stockholders
Agreement and the Merger 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.


 


6

















 


[Signature Pages Follow]


 


7

















 


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

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  J.P. MORGAN PARTNERS (BHCA), L.P.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BY:

  	
  JPMP MASTER FUND MANAGER, L.P.,

  
	
   

  	
   

  	
  ITS GENERAL PARTNER

  
	
   

  	
   

  	
   

  
	
   

  	
  BY:

  	
  JPMP CAPITAL CORP.,

  
	
   

  	
   

  	
  ITS GENERAL PARTNER

  
	
   

  	
   

  	
   

  
	
  By:

  	
   /s/ Stephen V. McKenna

  	
   

  
	
   

  	
  Name: Stephen V. McKenna

  	
   

  
	
   

  	
  Title: Partner