AMENDED AND RESTATED MANAGEMENT AGREEMENT
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AMENDED AND RESTATED AGREEMENT (this "Agreement") made as of June 26,
2001 by and between NOVEON, INC., a Delaware corporation (the
"CORPORATION") and DLJ Merchant Banking III, Inc., a Delaware corporation
("DLJMB").
WHEREAS, DLJMB Funding III, Inc., a Delaware corporation and an
affiliate of DLJMB ("FUNDING") is a party to the Stockholders Agreement
dated as of November 28, 2000 (as amended, the "STOCKHOLDERS AGREEMENT")
among PMD Group Holdings Inc., PMD Investors I LLC, PMD Investors II, Inc.,
Funding and DB Capital/PMD Investors, LLC;
WHEREAS, pursuant to the Stockholders Agreement, Funding or other
affiliates of Credit Suisse Group designated by Funding shall be entitled
to receive certain fees as provided in Section 3.6 of the Stockholders
Agreement and Schedule 3.6 thereof;
WHEREAS, DLJMB is the affiliate of Credit Suisse Group that Funding
designated to receive a portion of such fees as provided herein;
WHEREAS, the Corporation and DLJMB are parties to a Management
Agreement dated as of February 5, 2001 (the "Original Agreement");
WHEREAS, the parties wish to amend and restate the Original Agreement
to correct the names of the parties referenced in the Original Agreement,
replacing all references to DLJ Merchant Banking Partners III, L.P. with
DLJMB, and reflecting the change in the Corporation's name from PMD Group
Inc. to Noveon, Inc.;
WHEREAS, the parties have agreed to enter into this agreement to
evidence the Corporation's obligations to pay such fees to DLJMB, upon the
terms and conditions set forth herein.
NOW THEREFORE, it is mutually agreed as follows:
1. The term of this agreement shall commence on November 28, 2000 and
continue for so long as provided in the Stockholders Agreement. As
compensation for the valuable services and advice to the Corporation to be
provided by the directors designated by DLJMB, Funding or any of their
respective affiliates pursuant to the Stockholders Agreement, and for
certain costs associated with the ongoing monitoring and management of the
investment in the Corporation, the Corporation will pay, and DLJMB will
accept, for so long as this Agreement continues in effect and for so long
as payment of interest and principal are being paid on a current basis on
the Corporation's senior subordinated notes, a director and monitoring fee
of $1,075,000 payable per annum quarterly in advance, on the first day of
each calendar quarter, commencing as of April 1, 2001. If at any time the
Corporation is not current with respect to payments of interest and
principal on its senior subordinated notes, no director and monitoring fee
shall be currently payable; rather, such fees shall accrue until such time
as the Corporation is current on such interest and principal payments, at
which time all accrued and unpaid fees hereunder shall be paid by the
Corporation. The Corporation also agrees to the provisions with respect to
indemnifying DLJMB and the other matters set forth in Annex A hereto, which
is incorporated by reference into this Agreement (the "INDEMNIFICATION
AGREEMENT").
It is the understanding of the parties that DLJMB and/or its
affiliates may be involved with potential acquisitions, mergers, financings
or other major transactions involving the Corporation, in which case DLJMB
and/or its affiliates shall be entitled to such compensation, in addition
to the director and monitoring fee provided above, as the Corporation and
DLJMB and/or its affiliates shall mutually agree, in each case consistent
with the Stockholders Agreement.
In addition to the aforementioned fees, the Corporation shall
reimburse DLJMB for its reasonable out-of-pocket costs and expenses
incurred in connection with the performance of the service provided
hereunder.
2. Any notice required to be given hereunder shall be in writing and
shall be deemed sufficient if delivered in person or mailed by certified
mail as follows: if to the Corporation, to it at its office at Noveon,
Inc., 0000 Xxxxxxxxxxx Xxxx, Xxxxxxxxx, Xxxx 00000 or such other address as
the Corporation may hereafter designate for that purpose; and if to DLJMB,
to it at its office x/x XXX Merchant Banking Partners, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, or such other address as DLJMB may hereafter
designate for that purpose.
3. This Agreement, together with the Indemnification Agreement, the
Stockholders Agreement and a separate agreement providing for the payment
of $500,000 per annum to Credit Suisse First Boston Corporation for the
services provided thereunder, constitutes the entire agreement between the
parties and supersedes all prior agreements and understandings, both
written and oral, with respect to the subject matter hereof. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns, including any corporation into
which the Corporation shall consolidate or merge or to which it shall
transfer substantially all of its assets. This Agreement shall be
governed by and construed in accordance with the laws of the State of New
York applicable to contracts made and to be performed entirely within such
state.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date and year first above written.
NOVEON, INC.
By:/s/ Xxxxxxxxxxx X. Xxxxx
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Name: Xxxxxxxxxxx X. Xxxxx
Title: Secretary
DLJ MERCHANT BANKING III, INC.
By:/s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Principal and Controller
AGREED TO AND
ACCEPTED BY:
DLJ MERCHANT BANKING
PARTNERS III, L.P.
BY: DLJ Merchant Banking III, Inc.,
Its General Partner
By:/s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Principal and Controller
ANNEX A - INDEMNIFICATION AGREEMENT
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As part of the consideration for the agreement of DLJMB to furnish its
services under this Agreement, the Corporation hereby agrees to indemnify
and hold harmless DLJMB and its affiliates and the respective managing
directors, officers, directors, investors, shareholders, members, partners,
employees and agents of, and persons controlling, DLJMB or any of its
affiliates within the meaning of either Section 15 of the Securities Act
of 1933, as amended, or Section 20 of the Securities Act of 1934, as
amended, and each of their respective successors and assigns (collectively,
the "indemnified persons") from and against all claims, liabilities,
expenses, losses or damages (or actions in respect thereof) related to or
arising out of actions taken (or omitted to be taken) by DLJMB pursuant to
the terms of this Agreement, or DLJMB's role in connection therewith;
provided, however, that the Corporation shall not be responsible for any
claims, liabilities, expenses, losses and damages to the extent that it is
finally judicially determined that they result primarily from actions taken
or omitted to be taken by DLJMB in bad faith or due to DLJMB's gross
negligence or willful misconduct. If for any other reason (other than the
bad faith, gross negligence or willful misconduct of DLJMB as provided
above) the foregoing indemnity is unavailable to the indemnified persons or
insufficient to hold the indemnified persons harmless, then the Corporation
shall contribute to the amount paid or payable by the indemnified persons
as a result of such claim, liability, expense, loss or damage in such
proportion as is appropriate to reflect not only the relative benefits
received by the Corporation on the one hand and DLJMB on the other, but
also the relative fault of the Corporation and DLJMB, as well as any
relative equitable considerations, subject to the limitation that in any
event DLJMB's aggregate contribution to all claims, expenses, losses,
liability and damages shall not exceed the amount of fees actually received
by DLJMB pursuant to this Agreement. Promptly after receipt by DLJMB of
notice of any complaint or the commencement of any action or proceeding
with respect to which indemnification may be sought against the
Corporation, DLJMB will notify the Corporation in writing of the receipt or
commencement thereof, but failure to notify the Corporation will relieve
the Corporation from any liability which it may have hereunder only if, and
to the extent that, such failure results in the forfeiture of such
substantial rights and defenses, and will not in any event relieve the
Corporation from any other obligation to any indemnified person other than
this Indemnification Agreement. The Corporation shall assume the defense of
such action (including payment of fees and disbursements of counsel)
insofar as such action shall relate to any alleged liability in respect of
which indemnity may be sought against the Corporation. DLJMB shall have the
right to employ separate counsel in any such action and to participate in
defense thereof, but the fees and disbursements of such counsel shall be at
the expense of DLJMB unless employment of such counsel has been
specifically authorized by the Chief Executive Officer of the Corporation
in writing. The Corporation shall pay the fees and expenses of one separate
counsel for DLJMB and any other indemnified persons if the named parties to
any such action (including any impleaded parties) include the Corporation
(or any of the directors of the Corporation) and DLJMB and (i) in the good
faith judgment of DLJMB the use of joint counsel would present such counsel
with an actual or potential conflict of interest or (ii) DLJMB shall have
been advised by counsel that there may be one or more legal defenses
available to it which are different from or additional to those available
to the Corporation (or the director(s)). The Corporation shall not be
liable to indemnify any person for any settlement of any claim or action
effected without written consent of the Chief Executive Officer of the
Corporation, which consent shall not be unreasonably withheld. In addition,
the Corporation hereby agrees to reimburse DLJMB and each other indemnified
person for all expenses (including reasonable fees and disbursements of
counsel if the Corporation does not assume the defense of such action) as
they are incurred by DLJMB, or any indemnified person in connection with
investigating, preparing or defending any such action or claim. DLJMB shall
have no liability to the Corporation or any other person in connection with
the services which they render pursuant to this Agreement, except for
DLJMB's bad faith, gross negligence or willful misconduct judicially
determined as aforesaid. The indemnification, contribution and expense
reimbursement obligation the Corporation has under this paragraph shall be
in addition to any liability the Corporation may otherwise have. ANY RIGHT
TO TRIAL BY JURY WITH RESPECT TO ANY ACTION OR PROCEEDING ARISING IN
CONNECTION WITH OR AS A RESULT OF EITHER DLJMB'S ENGAGEMENT OR ANY MATTER
REFERRED TO IN THIS AGREEMENT IS HEREBY WAIVED BY THE PARTIES HERETO. THE
PROVISIONS OF THIS ANNEX A SHALL SURVIVE ANY TERMINATION OR COMPLETION OF
THE ENGAGEMENT PROVIDED BY THIS AGREEMENT.
