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NIAGARA HOLDINGS, INC. | J.P. MORGAN PARTNERS (BHCA), L.P. | J.P. MORGAN PARTNERS GLOBAL INVESTORS, L.P. | J.P. MORGAN PARTNERS GLOBAL INVESTORS (CAYMAN), L.P. | J.P. MORGAN PARTNERS GLOBAL INVESTORS (CAYMAN) II, L.P. | J.P. MORGAN PARTNERS GLOBAL INVESTORS (SELLDOWN), L.P. | PQP, LLC. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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Exhibit 10.3
Confidential
STOCKHOLDERS’ AGREEMENT
OF
NIAGARA HOLDINGS, INC.
February 11, 2005
TABLE OF CONTENTS
iii
NIAGARA HOLDINGS, INC.
This STOCKHOLDERS’ AGREEMENT (the “ Agreement ”), dated as of February 11, 2005 and effective as of the Effective Time (defined below), is entered into by and among NIAGARA HOLDINGS, INC., a Delaware corporation (the “ Company ”), and the Investors (defined herein). The definitions of certain capitalized terms used herein are set forth in Section 1 hereto.
RECITALS
WHEREAS, the Company, Niagara Acquisition, Inc., a wholly-owned subsidiary of the Company (“ Niagara ”), and PQ Corporation, a Pennsylvania corporation (“ PQ ”), are parties to that certain Agreement and Plan of Merger, dated as of December 15, 2004 (the “ Merger Agreement ”), pursuant to which Niagara will be merged with and into PQ, with PQ remaining as the surviving entity and a wholly-owned subsidiary of the Company; and
WHEREAS, the Company and the Investors are parties to those certain Subscription Agreements, dated as of the date hereof (the “ Subscription Agreements ”), pursuant to which the Company will, as of the Effective Time, issue, and each Investor party thereto will, purchase the Shares as set forth opposite such Investor’s name on Schedule 1 hereto; and
WHEREAS, the Company and certain Investors are parties to those certain Restricted Stock Agreements, dated as of the date hereof (the “ Restricted Stock Agreements ”), relating to the vesting, sale and other matters involving the Shares received by such Investors; and
WHEREAS, the Investors and the Company desire to promote their mutual interests by agreeing to certain matters relating to the operations of the Company and the transfer of Shares; and
NOW, THEREFORE, in consideration of the foregoing, and the mutual agreements set forth herein and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties hereto, intending to be legally bound, hereby agree as follows:
AGREEMENT
SECTION 1 . DEFINITIONS(a) As used in this Agreement, the following terms have the following meanings:
“ Affiliate ” means with respect to a specified Person, any Person that directly or indirectly controls, is controlled by, or is under common control with, the specified Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.
“ Amended Drag-Along Notice ” has the meaning set forth in Section 4(b).
“ Blockout Period ” has the meaning set forth in Section 3(b).
“ Board ” has the meaning set forth in Section 2(a)(i).
“ Business Day ” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in New York, New York.
“ Change of Control ” means the first occurrence of any one of the following: (i) a change in the ownership or control of the Company effected through a transaction or series of transactions (including by way of merger, consolidation, business combination or similar transaction involving the Company or any of its Subsidiaries) whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) (other than the Company, any of its Subsidiaries, an employee benefit plan maintained by the Company or any of its Subsidiaries, or a “person” that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, the Company) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act), of more than 50% of the total combined voting power of the Company’s Shares outstanding, in either case immediately after such transaction or series of transactions; or (ii) the sale, lease, transfer, conveyance or other disposition (other than by way of a transaction that would not be deemed a Change of Control pursuant to clause (i) above), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole, to any “person” (as defined above).
“ Class A Common Stock ” shall mean the Class A Common Stock, $0.01 par value per share, of the Company.
“ Class B Common Stock ” shall mean the Class B Common Stock, $0.01 par value per share, of the Company.
“ Company ” has the meaning set forth in the preamble.
“ Competitive Opportunity ” has the meaning set forth in Section 2(j).
“ Convertible Securities ” means any evidence of indebtedness, shares of stock or other securities that are directly or indirectly convertible into or exchangeable or exercisable for Shares.
“ Drag-Along Notice ” has the meaning set forth in Section 4(b).
“ Drag-Along Sellers ” has the meaning set forth in Section 4(a).
“ Drag-Along Transferee ” has the meaning set forth in Section 4(a).
“ Effective Time ” has the meaning ascribed to such term in the Merger Agreement.
“ Eligible Shares ” has the meaning set forth in Section 5(b).
“ Equivalent Shares ” means, at any date of determination, (a) as to any outstanding Shares, such number of Shares, (b) as to any outstanding Convertible Securities, the maximum
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number of Shares for which or into which such Convertible Securities may at the time be exercised, converted or exchanged (or which will become exercisable, convertible or exchangeable on or prior to, or by reason of, the transaction or circumstances in connection with which the number of Equivalent Shares is to be determined) and (c) in respect of any Subsidiary of the Company, (i) as to any outstanding shares of stock of any Subsidiary of the Company, such number of shares of stock or (ii) as to any outstanding options, warrants or convertible securities, the maximum number of shares of stock of any Subsidiary of the Company for which or into which such options, warrants or convertible securities may at the time be exercised, converted or exchanged (or which will become exercisable, convertible or exchangeable on or prior to, or by reason of, the transaction or circumstances in connection with which the number of Equivalent Shares is to be determined).
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“ Exit Sale ” has the meaning set forth in Section 4(a).
“ Governmental Approval ” means, with respect to any Transfer of Shares, any consent or other action by, or filing with, any governmental authority required in connection with such Transfer and the expiration or early termination of any applicable statutory waiting period in connection with such action or filing.
“ Independent Directors ” has the meaning set forth in Section 2(a)(ii)(B).
“ Independent Third Party ” means (i) any Person that did not directly or through one or more intermediaries own Shares immediately after the Effective Time and (ii) any Affiliate of any such Person.
“ Initial Public Offering ” means the initial public offering of Shares registered on Form S-1 (or any equivalent or successor form under the Securities Act).
“ Investor ” or “ Investors ” means each of the entities or individuals listed on Schedule 1 attached hereto and, upon the approval of the JPMP Representative, any other subsequent holder of Shares who agrees to be bound by the terms of this Agreement in accordance with the terms hereof.
“ IPO Date ” means the date on which the Company consummates an Initial Public Offering of the Company.
“ JPMP BHCA ” means J.P. Morgan Partners (BHCA), L.P., a Delaware limited partnership.
“ JPMP Global ” means J.P. Morgan Partners Global Investors, L.P., a Delaware limited partnership.
“ JPMP Investors ” means JPMP BHCA, JPMP Global, J.P Morgan Partners Global Investors A, L.P., a Delaware limited partnership, J.P. Morgan Partners Global Investors
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(Cayman), L.P., a Cayman Islands exempted limited partnership, J.P. Morgan Partners Global Investors (Cayman) II, L.P., a Cayman Islands exempted limited partnership, and JPMP Selldown.
“ JPMP Representative ” means JPMP BHCA or such other representative selected by the JPMP Investors following the date hereof.
“ JPMP Selldown ” means J.P. Morgan Partners Global Investors (Selldown), L.P., a Delaware limited partnership.
“ Litigation ” has the meaning set forth in Section 11(d).
“ Merger Agreement ” has the meaning set forth in the recitals.
“ Offered Shares ” has the meaning set forth in Section 3(c).
“ Party ” and “ Parties ” means each of the signatories to this Agreement.
“ Permitted Transfer ” means: (i) a Transfer by an Investor (other than the JPMP Investors) approved by the JPMP Representative or (ii) a Transfer to an Affiliate of an Investor; provided that such transferee remains an Affiliate of such transferor following the Transfer; provided further that such transferee shall agree in writing with the Parties to be bound by, and to comply with, all applicable provisions of, and to be deemed to be an Investor for purposes of, this Agreement. For the avoidance of doubt, (A) any Permitted Transfer made pursuant to clause (i) of this definition is subject to the provisions of Section 3, and (B) a transferee of Shares subsequent to the IPO Date may, but shall not be required to, agree in writing with the Parties to be bound by, and to comply with, all applicable provisions of this Agreement.
“ Permitted Transferee ” means any Person who acquires Shares pursuant to the definition of “Permitted Transfer”.
“ Person ” includes any individual, corporation, association, partnership (general or limited), joint venture, trust, estate, limited liability company, or other legal entity or organization.
“ Regulatory Sideletter ” has the meaning set forth in Section 9(a).
“ Restricted Stock Agreements ” has the meaning set forth in the Recitals.
“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“ Shares ” means (a) all shares of Class A Common Stock and Class B Common Stock, whenever issued, including all shares of Class A Common Stock and Class B Common Stock issued upon the exercise, conversion or exchange of any Convertible Securities and (b) all Convertible Securities (treating such Convertible Securities as a number of Shares equal to the number of Equivalent Shares represented by such Convertible Securities for all purposes of this Agreement except as otherwise specifically set forth herein).
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“ Subscription Agreements ” has the meaning set forth in the Recitals.
“ Subsidiary ” or “ Subsidiaries ” of any Person means any corporation, partnership, joint venture or other legal entity of which such Person (either alone or through or together with any other Person), owns, directly or indirectly, 50% or more of the stock or other equity interests which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity.
“ Successor Entity ” has the meaning set forth in Section 11(j).
“ Tag-Along Election Period ” has the meaning set forth in Section 5(b).
“ Tag-Along Rights ” has the meaning set forth in Section 5(b).
“ Tag-Along Seller ” has the meaning set forth in Section 5(a).
“ Tag-Along Transferee ” has the meaning set forth in Section 5(b).
“ Transfer ” means, with respect to the Shares or other securities, capital shares, membership interests, partnership interests, units or other property, the direct or indirect (through one or more intermediaries or otherwise) transfer, sale, tender, conveyance, assignment, pledge, hypothecation or other disposition or exchange of, or grant of any option or right (voting or otherwise) or interest in, any of such Shares or other securities, capital shares, membership interests, partnership interests, units or other property, whether voluntary, involuntary, by operation of law (whether by merger, consolidation or binding share exchange) or otherwise; and “Transferring” or “Transferred” have correlative meanings.
“ Transfer Notice ” has the meaning set forth in Section 3(c).
(b) Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender; (ii) words using the singular or plural number also include the plural or singular number, respectively; (iii) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement; (iv) the terms “Article” or “Section” refer to the specified Article or Section of this Agreement; (v) the word “including” shall mean “including, without limitation”, and (vi) the word “or” shall be disjunctive but not exclusive.
(c) References to agreements and other documents shall be deemed to include all subsequent amendments and other modifications thereto.
(d) References to statutes shall include all regulations promulgated thereunder and references to statutes or regulations shall be construed as including all statutory and regulatory provisions consolidating, amending or replacing the statute or regulation.
SECTION 2. BOARD OF DIRECTORS AND VOTING
(a) Board of Directors . From and after the Effective Time, at each annual or special meeting at which any directors of the Company are to be elected, and whenever the stockholders of the Company act by written consent with respect to the election of directors, each Investor,
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severally and not jointly, agrees to vote or otherwise give such Investor’s consent in respect of all Class B Common Stock (whether now or hereafter acquired) held of record or beneficially owned by such Investor, and the Company shall take all necessary and desirable actions within its control, in order to cause:
(i) the authorized number of directors on the board of directors of the Company (the “ Board ”) to be at least four (4) but no greater than ten (10) directors, provided , that the number of directors on the Board may be increased or decreased at the direction of the JPMP Investors;(ii) Subject to Section 2(c) below, the election to the Board of :(A) (i) the Chief Executive Officer of the Company and (ii) that number of directors designated by the JPMP Investors (the “ JPMP Directors ”); provided that the JPMP Investors shall have the right to designate each successor JPMP Director and shall be entitled to direct the removal from the Board of any director; provided , however , that for as long as either JPMP Selldown or JPMP Global own any Shares, one such JPMP Director shall be designated by JPMP Selldown (so long as JPMP Selldown owns Shares) and one such JPMP Director shall be designated by JPMP Global (so long as JPMP Global owns Shares). The JPMP Directors shall initially be Richard A. Aube, Stephen V. McKenna, Tim C. Purcell and Timothy J. Walsh; and(B) that number of independent directors designated (and the determination of independence to be made) by the JPMP Investors (the “ Independent Directors ”) (it being understood that the JPMP Investors shall have the right to designate each successor Independent Director and shall be entitled to direct the removal from the Board of any Independent Director).(b) Each designation of or any proposal to remove from the Board any director shall be made by delivering to the Board a notice signed by the party entitled to such designation or proposal. As promptly as practicable, but in any event within five (5) days after delivery of such notice, the Company, the Board and the Investors shall take or cause to be taken such actions as may be reasonably required to cause the designation or removal proposed in such notice. Such actions may include calling a meeting or soliciting a written consent of the Board, or calling a meeting or soliciting a written consent of the Investors. Each Investor shall take all actions required on its behalf to give effect to the agreements set forth in this Section 2.
(c) Voting Agreement . In addition, prior to an IPO Date, as to any matter or action that requires a vote or written consent of the stockholders of the Company, whether by law or pursuant to any agreement, each Investor (other than the JPMP Investors) agrees to vote its shares of Class B Common Stock, or to provide its written consent, only as directed by the JPMP Representative; provided , that no Investor shall be required to vote in favor of, or provide its written consent to, any action that would disproportionately affect such Investor relative to the other Investors in any material and adverse manner. In the event that any Investor (other than the JPMP Investors) entitled to vote on or provide its written consent with respect to a matter shall fail at any time to vote or act by written consent with respect to any shares of Class B Common
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Stock held of record or beneficially owned by such Investor or as to which such Investor has voting control such Investor hereby irrevocably grants to and appoints the JPMP Representative such Investor’s proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of such Investor, to vote or act by written consent with respect to such shares of Class B Common Stock and to grant a consent, proxy or approval in respect of such shares, in each case in such manner as the JPMP Representative shall determine in its sole and absolute discretion. Each Investor (other than the JPMP Representative) hereby affirms that the irrevocable proxy set forth in this Section 2(c) will be valid for the term of this Agreement and is given to secure the performance of the obligations of such Investor under this Agreement. Each such Investor (other than the JPMP Investors) hereby further affirms that each proxy hereby granted shall, for the term of this Agreement, be irrevocable and shall be deemed coupled with an interest.
(d) Committees . The Board may, by duly adopted action of the Board, designate one or more committees, including compensation and audit committees, of one or more directors, including alternates who may replace any absent or disqualified member at any meeting of the committee.
(e) Chairman . A chairman may be appointed by the directors from among themselves. The Chairman, if appointed, will preside over meetings of the Board but shall otherwise have no greater authority than any other director.
(f) Payments to Directors; Reimbursements . No director who is an officer of the Company or otherwise employed by the Company or any of its Subsidiaries shall be entitled to remuneration from the Company for services rendered in his or her capacity as a director (other than for reimbursement of reasonable out-of-pocket expenses of such director in accordance with Company policy and as may be authorized by the Board). The Board may authorize Independent Directors to receive director fees in respect of services rendered as a director of the Company.
(g) Competitive Opportunity . If any director who is not employed by the Company or any of its Subsidiaries acquires knowledge of a potential transaction or matter which may be an investment or business opportunity or prospective economic or competitive advantage in which the Company could have an interest or expectancy (a “ Competitive Opportunity ”) or otherwise is then exploiting any Competitive Opportunity, the Company shall have no interest in, and no expectation that, such Competitive Opportunity be offered to it, any such interest or expectation being hereby renounced so that each director who is not employed by the Company or any of its Subsidiaries (other than any such director who is bound by any employment, consulting or noncompetition agreements that prohibit such actions) shall (i) have no duty to communicate or present such Competitive Opportunity to the Company and (ii) have the right to hold any such Competitive Opportunity for such director’s (and its agents’, partners’ or affiliates’) own account and benefit or to recommend, assign or otherwise transfer or deal in such Competitive Opportunity to Persons other than the Company or any Affiliate of the Company.
(h) Notice of Meetings . Regular meetings of the Board may be held without notice. Special meetings of the Board may be called by any JPMP Director and may be held upon 48 hours’ notice to each director, either personally, by mail, by telegram or by facsimile, or such
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shorter period as approved by the Board; provided , that such notice requirement shall be deemed waived for any special meeting if each director is present at such special meeting.
(i) Subsidiary Directors . The Parties agree to take all necessary action, either directly through the Company or otherwise, to cause the board of directors of PQ and each significant Subsidiary (as determined by the Board) to have at all times a board composition that has the same proportion of Board designees of each of the JPMP Investors as the Company, unless otherwise determined by holders of a majority of outstanding shares of Class B Common Stock, and the Parties further agree that the other board rights set forth in this Section 1 shall be granted, mutatis mutandis , to each of the JPMP Investors in respect of each significant Subsidiary’s boards of directors.
SECTION 3 . TRANSFERS(a) Transfer of Shares . No Investor shall Transfer any Shares other than in accordance with and as expressly permitted by the provisions of this Agreement or any Restricted Stock Agreement applicable to such Investor. Any Transfer or purported Transfer made in violation of this Agreement should be null and void and of no effect.
(b) Transfer Restrictions . Each of the Investors (other than the JPMP Investors) agrees and acknowledges that it will not, directly or indirectly (through one or more of its Affiliates or otherwise), from the date hereof until the IPO Date (such period, the “ Blockout Period ”), Transfer any economic or voting interest in any Shares (or in any other securities, capital shares, membership interests, partnership interests, units or other property of an entity that directly or indirectly holds any such Shares), unless such Transfer is a Permitted Transfer, a Transfer pursuant to Sections 4 or 5 of this Agreement, or a Transfer expressly contemplated or permitted by any Restricted Stock Agreement applicable to such Investor. Notwithstanding the foregoing, no Investor (other than the JPMP Investors) shall be permitted, without the prior written consent of the JPMP Representative, to Transfer any Shares to any Person that competes in any material respect with the businesses conducted by PQ at the time of such proposed Transfer (as determined by the Board). As a condition to any Transfer of Shares prior to the IPO Date, the transferee of such Shares shall become a party to this Agreement and shall be treated as an Investor hereunder (but not as a JPMP Investor unless (A) the transferor was a JPMP Investor, and (B) each JPMP Investor consents in its respective sole discretion) with the same rights and obligations of an Investor (but not as a JPMP Investor unless (A) the transferor was a JPMP Investor, and (B) each JPMP Investor consents in its respective sole discretion) for all purposes of this Agreement. No holder of Shares shall grant any proxy or become party to any voting trust or other agreement which is inconsistent with, conflicts with or violates any provision of this Agreement.
(c) Transfer Notice . Prior to any proposed Transfer of any Shares, the Investor (other than the JPMP Investors in the event of a Transfer to a Permitted Transferee) holding such Shares to be Transferred shall give written notice to the Company and the other Investors of its intention to effect such Transfer (the “ Transfer Notice ”). Such Transfer Notice shall set forth in reasonable detail the terms and conditions of such proposed Transfer, including (i) the percentage of such Investor’s Shares that would be Transferred, (ii) the number of Shares proposed to be Transferred (the “ Offered Shares ”), (iii) the proposed amount and form of consideration to be | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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