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EXHIBIT 10.11
Omnibus Agreement
This Omnibus Agreement ("Agreement") is made and entered into as of this
29th day of August, 2000, by and among Catalytica, Inc. ("Catalytica"),
Catalytica Combustion Systems, Inc. ("CCSI"), Sundance Assets, L.P. ("Sundance")
and Enron North America Corp. ("ENA").
Recitals
A. Catalytica, CCSI and Sundance (successor to Enron Ventures Corp.) are
parties to a Series B Stock Purchase Agreement dated as of December 9, 1997 (the
"Stock Purchase Agreement") pursuant to which Enron Ventures Corp. purchased
shares of Series B Preferred Stock of CCSI, which shares were transferred to
Sundance. Sundance has certain rights to purchase additional shares of capital
stock of CCSI in the future.
B. In connection with Catalytica's merger agreement with DSM, N.V., and
Synotex Company, Inc. (the "Catalytica/DSM Merger Agreement"), CCSI is
contemplating a transaction pursuant to which Catalytica would contribute not
less than $30 million cash to CCSI and receive additional shares of CCSI Common
Stock and immediately thereafter distribute to the Stockholders of Catalytica
all of the outstanding shares of Common Stock of CCSI held by Catalytica (such
contribution and distribution being together herein referred to as the "Spin-
Off").
C. ENA and CCSI have executed an Option Repurchase Agreement dated as of
December 15, 1999 (the "Option Repurchase Agreement") and ENA has repurchased
the Option (as defined in the Option Repurchase Agreement) from CCSI pursuant to
a letter agreement dated May 7, 2000.
D. Subject to the terms and conditions of this Agreement, Catalytica,
CCSI, Sundance and ENA have entered into this Agreement to, among other things,
make certain modifications to the Stock Purchase Agreement, enter into certain
agreements with respect to the Option Repurchase Agreement, obtain Sundance's
consent to Catalytica's transfer of the CCSI stock in the Spin-Off as required
by Section 2.2 of the Stockholder's Agreement dated as of January 14, 1988, by
and among Catalytica, CCSI and Enron Ventures Corp. (the predecessor of
Sundance), and obtain CCSI's consent to the Amendment No. 1 to Xonon Technology
Implementation Agreement attached hereto as Exhibit B (which Agreement as so
amended is referred to herein as the "XTIA") between ENA, General Electric Corp.
("GE") and Westdeutsche Landesbank Girozentrale, New York Branch.
The Parties Agree As Follows:
1. Recapitalization.
Catalytica and CCSI will take all action necessary to approve, adopt and
file with the Secretary of State of the State of Delaware the Amended and
Restated Certificate of Incorporation substantially in the form attached as
an exhibit to the registration statement
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filed in connection with the Spin-Off and hereto as Exhibit A (the
"Restated Certificate") in order to in each case effective concurrently
with the Spin-Off (i) effect a "two-for-one" split in the Company's Common
Stock, (ii) increase the authorized shares of capital stock, and (iii)
remove the rights, preferences and privileges of the Company's preferred
stock. . Catalytica and CCSI will, to the extent contemplated by the
Catalytica/DSM Merger Agreement, continue to pursue the Spin-Off, file the
related registration statement(s) with the SEC and, subject to the
conditions precedent set forth in the Catalytica/DSM Merger Agreement in
effect as of the date hereof, complete the Spin-Off. Sundance agrees to the
recapitalization to be reflected in the Restated Certificate and agrees to
take, and to cause any of its affiliates to whom its CCSI Preferred Stock
(or CCSI Common Stock acquired on the conversion thereof) has been
transferred prior to the Spin-Off to take, any and all actions reasonably
necessary or appropriate to carry out the intent of this section, including
the execution and delivery of any and all stockholder resolutions necessary
to approve and adopt the Restated Certificate effective concurrently with
the Spin-Off. Sundance and ENA also hereby consent to the merger between,
or other combination of, CCSI and Catalytica Advanced Technologies, Inc. as
contemplated by the Catalytica/DSM Merger Agreement, effective concurrently
with the Spin-Off.
2. Conversion of Preferred Stock.
Sundance agrees to convert, and to cause any of its affiliates to whom its
CCSI Preferred Stock (or CCSI Common Stock acquired on the conversion
thereof) has been transferred prior to the Spin-Off to convert, all the
shares of CCSI Class B Preferred Stock held by Sundance as of the date of
this Agreement and acquired thereafter to CCSI Common Stock effective
concurrently with the Spin-Off as permitted by Article IV, 5(a) of CCSI's
Amended and Restated Certificate of Incorporation in effect as of the
execution date of this Agreement (the "Existing Charter"). Catalytica
agrees to convert all the shares of CCSI Class A Preferred Stock held by
Catalytica on or acquired by it after the execution date of this Agreement
to CCSI Common Stock immediately prior to the Spin-Off as permitted by
Article IV, 5(a) of the Existing Charter.
3. Consent to Transfer.
Sundance hereby consents to the transfer of shares of Common Stock of CCSI
pursuant to the Spin-Off.
4. Amendment of Option.
Subject to the terms and conditions of this Agreement, as an alternative to
exercising the option set forth at Section 11 of the Stock Purchase
Agreement by means of a cash payment, the parties hereto agree that the
option also may be exercised in whole at any time on or after the 10th
trading day for CCSI Common Stock subsequent to the completion of the Spin-
Off by giving written notice to CCSI of Sundance's election to make a
"cashless" exercise. Upon receipt of such notice, CCSI shall issue to
Sundance a number of shares of CCSI Common Stock computed using the
following formula:
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X = Y(A-B)
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A
Where X = the number of shares of CCSI Common Stock to be issued to
Sundance;
Y = 535,715, as adjusted pursuant to the Stock Purchase Agreement;
A = the average of the closing sales prices for the CCSI Common
Stock on the Nasdaq Market, or if the Common Stock is not then
traded on the Nasdaq Market, on such other national securities
exchange on which the CCSI Common Stock is then traded, for
the ten (10) consecutive trading days immediately prior to the
date such notice of exercise is given by Sundance; and
B = the exercise price of the option specified in Section 11 of
the Stock Purchase Agreement (as adjusted to the date of
exercise pursuant to the provisions of such Section 11).
5. Price of New Securities, Right of First Refusal. The sale of New
Securities (as defined in the Stock Purchase Agreement) by CCSI to
Catalytica in connection with its proposed cash contribution to CCSI in the
Spin-Off shall be subject to Section 8 of the Stock Purchase Agreement, and
Catalytica shall comply with all of its obligations under Section 8 in
connection therewith, including the giving of the notice required by
Section 8.2, provided that, in the event a "when-issued" trading market for
the CCSI Common Stock develops prior to the Spin-Off, the price at which
the CCSI Common Stock shall be sold to Catalytica shall be equal to the
average closing "when-issued" trading price for CCSI Common Stock for the
10 or fewer "when-issued" trading days preceding the sale of such New
Securities to Catalytica and in the event such price can be determined by
such "when-issued" trading price, Sundance hereby waives and terminates its
right of first refusal set forth at Section 8 of the Stock Purchase
Agreement with respect to the sale of CCSI Common Stock to Catalytica in
conection with the Spin-Off.
6. Modification of Registration Rights.
6.1 The provisions of Section 7 of the Stock Purchase Agreement are
amended as provided below:
(A) Section 7.2(c) shall be amended and restated in its entirety to
provide as follows:
(c) Notwithstanding the foregoing, (i) the Company shall not be
obligated to file a registration statement relating to a Demand
Registration under this Section 7.2 if counsel to the Company renders an
opinion to the effect that registration under the Securities Act is not
required for the proposed transfer of Registrable Securities, (ii) the
Company shall not be required to effect more than two registrations
pursuant to this Section 7.2, (iii) Investor shall not request, and the
Company shall not be required to file any registration statement pursuant
to this Section 7.2 prior to the completion of the Spin-Off (as that term
is defined in that certain Omnibus Agreement among the Company,
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Catalytica, Sundance Assets, L.P. and Enron North America Corp. dated as of
August 29, 2000 (the "Omnibus Agreement")) and (iv) the Company shall not
be required to file a registration statement relating to a Demand
Registration under this Section 7.2 if the amount of Registrable Securities
to be sold pursuant to such registration is less than $7,500,000 in market
value at the time the request for such registration is made to the Company.
In addition, the Company may defer the filing of a registration statement
relating to a Demand Registration if (1) the Company has filed, or is about
to file, a registration statement relating to the offering of or (2) has
undertaken or is about to undertake without a registration statement the
offering of (including, without limitation, a so-called private investment
in public equity securities or "PIPES" offering and an offering pursuant to
Rule 144A under the Securities Act ("Rule 144")) any of the Company's
securities (a "Company Offering"), and the managing underwriter (or
placement agent, initial purchaser or other entity serving in a similar
capacity) of the Company Offering in its sole discretion is of the opinion
that the filing of a registration statement with respect to such Demand
Registration could be expected to adversely affect the Company Offering,
including, without limitation, the price at which the securities to be
offered in the Company Offering may be sold; provided, that the Company
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shall use reasonable efforts to file its proposed registration statement,
if applicable, and to commence and complete the Company Offering in a
diligent manner and, in any event, the Company shall not defer the filing
of a registration statement relating to the Demand Registration for more
than 120 days from the completion of the Company Offering. Furthermore,
the Company may defer the filing of a registration statement relating to a
Demand Registration for up to 120 days after the request for registration
is made if the Board determines in good faith that such registration would
adversely affect or otherwise interfere with a proposed or pending
transaction by the Company, including, without limitation, a material
financing or a corporate reorganization, or during any period of time in
which the Company is in possession of material inside information
concerning the Company or its securities, which information the Company
determines in good faith is not ripe for disclosure. The Company shall not
be required to undergo or pay for any special audit to effect any
registration statement under this Section 7.2, and if such a special audit
would be required in order to file or effect a registration statement
hereunder, the Company shall be entitled to delay the filing or
effectiveness of such registration statement until a reasonable period of
time following the completion of the next audit scheduled in the ordinary
course of the Company's activities; provided, that the Company shall not be
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entitled to further defer the filing or effectiveness of such registration
statement if the Investor agrees in writing to pay for the cost of any such
special audit.
(B) Section 7.2 shall be amended by adding the following as paragraph (g):
(g) If a Demand Registration is in the form of an underwritten
offering, the Company shall (i) enter into an underwriting agreement in
form and substance customary for an underwritten offering of this type,
(ii) use its reasonable best efforts to cause one or more accounting firms
to provide to the underwriters one or more "comfort letters" customary for
an underwritten offering of this type, (iii) use its reasonable best
efforts to cause one or more legal counsel to provide the underwriters one
or more legal opinions customary for an underwritten offering of this type,
(vi) use its reasonable best efforts to
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cause its officers to sign and deliver to the underwriters one or more
officers' or secretary's certificates customary for an underwritten
offering of this type and (v) cause its executive officers to participate
in "road show" presentations customary for an underwritten offering of this
type.
(C) Section 7.3(b) is hereby amended by and restated in its entirety to
provide as follows:
(b) Underwriting. If the registration of which the Company gives
------------
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Investor as a part of the written notice given
pursuant to this Section 7.3. In such event the right of the Investor to
registration pursuant to this Section 7.3 shall be conditioned upon the
Investor's participation in such underwriting and the inclusion of the
Investor's Registrable Securities in the underwriting to the extent
provided herein. The Investor shall (together with the Company and the
other holders distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the managing
underwriter selected for such underwriting by the Company. Notwithstanding
any other provision of this Section 7.3, if the managing underwriter
determines that marketing factors require a limitation of the number of
shares to be underwritten, the underwriter may limit the number of the
Registrable Securities to be included in such registration and
underwriting. In the event of such a limitation by the managing
underwriter, the Company shall so advise all holders distributing their
securities through such underwriting, and the number of shares of
Registrable Securities that may be included in the registration and
underwriting shall be allocated among all holders thereof, including the
Investor, in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by all such holders at the time of
filing the registration statement. If the Investor disapproves of the
terms of any such underwriting, the Investor may elect to withdraw
therefrom by written notice to the Company and the managing underwriter.
Any securities excluded or withdrawn from such underwriting shall be
withdrawn from such registration, but (subject to Section 7.6 hereof) shall
not be transferred in a public distribution prior to ninety (90) days after
the effective date of the registration statement relating thereto.
(D) Section 7.6 shall be amended to and restated in its entirety to read
as follows:
7.6 "Market Stand-Off" Agreement. For so long as the Investor holds
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Registrable Securities equal to or greater than five percent (5%) of the
Total Voting Power of the Company (as defined in Section 11), the Investor
hereby agrees that it shall not, to the extent requested by the Company and
an underwriter of Common Stock (or other securities) of the Company, sell
or otherwise transfer or dispose of any Registrable Securities during the
90-day period following the effective date of any registration statement
filed on behalf of the Company with the Securities and Exchange Commission;
provided, however, that the foregoing provision shall not prohibit the
sale, transfer or other disposition of Registrable Securities or other
securities of the Company (i) from the Investor to an Affiliated Entity, or
from an Affiliated Entity to another Affiliated Entity, if the transferee
thereof agrees in writing with the Company's underwriter representative to
be subject to the provisions of this Section 7.6; or (ii) from the Investor
or from an
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Affiliated Transferee to whom Registrable Securities have been transferred
in accordance with this Section 7.6, to an entity in which the Investor or
an Affiliated Entity has an equity interest in one or more cash-settled
hedging or other risk management transactions (a "Permitted Hedge
Transaction"), provided that, with respect to this clause (ii), Investor or
Affiliated Transferee, as the case may be ("Transaction Party"), represents
to the Company's underwriter representative in an agreement that (a) the
Transaction Party shall not enter into a Permitted Hedge Transaction unless
such entity ("Transaction Counterparty") and its members have first
undertaken in writing to the Transaction Party not to effect any other
transactions in shares of Common Stock of the Company, or options or
warrants to purchase shares of Common Stock of the Company, or securities
convertible into, exchangeable for or that represent the right to receive
shares of Common Stock of the Company, prior to the expiration of the
lockup period then applicable to Transaction Party under such agreement,
(b) the Transaction Counterparty shall not waive, amend, modify or
terminate the undertaking referred to in (a) above by the Transaction
Counterparty without the Company's underwriter representative's prior
written consent, (c) the Transaction Party will not make any public filing
or other public disclosure as a result of or in respect of any Permitted
Hedge Transaction, except that the Transaction Party or any Affiliated
Entity may make such public filings as may be required pursuant to law,
regulation or judicial or administrative order, including the requirements
of the Securities Exchange Act of 1934, as amended, and rules and
regulations of the Securities and Exchange Commission adopted thereunder,
which filings shall include a footnote describing the Permitted Hedge
Transaction as a cash settled risk management transaction.
6.2 Catalytica and CCSI hereby agree that the limitations upon Sundance's
right to dispose of its CCSI Common Stock imposed by Section 7.6 of the
Stock Purchase Agreement (as amended hereby) shall not apply by virtue of
the filing or effectiveness of any registration statement filed with the
Securities and Exchange Commission on behalf of CCSI in connection with the
Spin-Off.
7. Board Representation and Voting Agreement.
The provisions of Section 9 of the Stock Purchase Agreement are amended and
restated in their entirety as follows:
9.1 Board Representation Prior to Spin-Off. Prior to the date of the
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Spin-Off and for so long as Investor shall hold fifty percent (50%) or more
of the Series B Preferred (or such securities issued upon the conversion
thereof) outstanding on the date of this Agreement, Investor shall have the
right to designate a nominee for election to the Company's Board of
Directors and the Compensation Committee of the Company's Board of
Directors reasonably satisfactory to the Company.
9.2 Board Representation After Spin-Off. Subsequent to the Spin-Off, so
-----------------------------------
long as Investor shall beneficially own at least five percent (5%) of the
total outstanding Voting Stock of the Company (as defined in Section 13),
the Company shall include in its proxy statement, as a "nominee"
recommended by the Company's Board of Directors or management to
stockholders for election as a director at each annual meeting of
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stockholders of the Company, commencing with the annual meeting of
stockholders following the Spin-Off, one person designated by the Investor
who is reasonably satisfactory to the Company.
9.3 Vacancy. In the event that any designee nominated and elected as
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provided in Section 9.1 or 9.2 shall cease to serve as a director for any
reason during the period that either such Section is in effect, the vacancy
resulting thereby shall be filled by a designee of the Investor reasonably
acceptable to the Company.
8. Investor's Option to Purchase Additional Shares.
Without limiting Section 2 of this Agreement, the provisions of Section 11
of the Preferred Stock Purchase Agreement are amended and restated in their
entirety as follows:
Option to Purchase. Investor may purchase after the Closing 535,715 shares
------------------
of Series B Preferred (or Common Stock, if such Series B Preferred has been
otherwise automatically converted pursuant to the Restated Certificate)
provided such amount purchased would not increase its ownership of the
Company, as calculated on a fully diluted basis, to 19.9% (or to 20% if the
Company no longer files a consolidated tax return with Catalytica or if the
Company upon its own initiative sells New Securities and as a result of
such sale or sales cannot file a consolidated tax return) of the Company's
total outstanding capital stock on the date of the purchase at a price per
share of $26.88 (as adjusted on the same terms as the Conversion Price);
provided however, Investor's right to purchase such shares shall terminate
at 5:00 p.m., California time on January 14, 2001. If prior to the Spin-
Off, the Company issues shares of stock (except pursuant to exercise of
options granted under CCSI's employee stock option plans) which become
outstanding to employees, officers, directors or consultants of the
Company, then Investor may purchase additional shares of stock to increase
its ownership percentage to the foregoing percentages upon the same terms
as the option to purchase 535,715 shares of Series B Preferred described in
this Section 11. Any such purchase shall be treated as a purchase for
purposes of this Agreement, and the Series B Preferred shares so acquired
shall be purchased under an amendment to this Agreement entered into
between the Company and the Investor in which the representations and
warranties of the Company set forth in this Agreement and its Exhibits may
be revised to reflect any changes to the representations and warranties
occurring after the Closing.
9. SEC Compliance; Approval Right Regarding Description of Enron
Relationships. Prior to the Spin-Off, Catalytica will cause CCSI to, and after
the Spin-Off CCSI will, comply with the Securities Act of 1933, as amended (the
"1933 Act") and the rules and regulations of the SEC adopted thereunder (the
"1933 Act Regulations") in connection with the Spin-Off. Catalytica will cause
CCSI to, and CCSI will, (i) deliver to Sundance and ENA drafts of the SEC
registration and information statement(s) relating to the Spin-Off
(collectively, the "Information Statement") and each amendment or supplement
thereto at least 24 hours prior to the filing there with the SEC, (ii) not file
with the SEC or distribute to any potential distributee of shares of Common
Stock any Information Statement, any other report, document, registration
statement or prospectus to be filed
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with the SEC under the 1933 Act, the 1933 Act Regulation, the Securities
Exchange Act of 1934 (the "1934 Act") or the rules and regulations of the
SEC adopted under the 1934 Act (the "1934 Regulations"), or any amendment
or supplement to any of the foregoing, which contains a description of any
relationship, contract arrangement, understanding or intention involving
Sundance, ENA or any affiliate of Sundance or ENA to which Sundance or ENA
reasonably object on the basis that such description is not an accurate
description of any relationship, contract, arrangement, understanding, or
intention involving any of such entities or that such description would
result in the Information Statement or other report, document, registration
statement or prospectus, as amended or supplemented, containing an untrue
statement of a material fact or omitting to state a material fact necessary
in order to make the statements therein not misleading and (iii) not file
as an exhibit to the Information Statement or other report, document,
registration statement or prospectus any agreement as to which either
Sundance or ENA or any of their affiliates is a party and as to which
either Sundance or ENA reasonably objects to the filing thereof on the
basis that the filing of such exhibit is not required pursuant to the 1933
Act, the 1933 Act Regulations, the 1934 Act or the 1934 Act Regulations;
provided, however, that if either Sundance or ENA reasonably objects to the
filing of an agreement pursuant to clause (iii) above to which CCSI is a
party, then CCSI shall be permitted to file the agreement as an exhibit to
the Information Statement or other report, document, registration statement
or prospectus if CCSI provides to Sundance or ENA a copy of correspondence
of counsel from a nationally recognized law firm setting forth advice that
the filing of such agreement as an exhibit to the Registration Statement is
required by the 1933 Act, the 1933 Act Regulations, the 1934 Act or the
1934 Act Regulations.
10. Amendment of Definition of Affiliated Entity. The definition of Affiliated
Entity in Section 13.1(g) of the Stock Purchase Agreement is hereby amended
to add the words "directly or indirectly" prior to the word "holds" where
it currently appears.
11. Assignability of Rights of Sundance. Notwithstanding any provision to the
contrary in the Stock Purchase Agreement, the rights of Sundance pursuant
to the Stock Purchase Agreement and the rights of Sundance and ENA pursuant
to this Agreement may be assigned in whole, but not in part, to an
Affiliated Entity (as defined in the Stock Purchase Agreement after giving
effect to Section 10 above), or to a purchaser of Shares pursuant to a
sale, transfer or other disposition of Shares to an unaffiliated third
party, and upon any such assignment (i) by Sundance, the assignee of such
rights shall be provided the full benefit of such rights as if it was the
"Investor" under the Stock Purchase Agreement or as if it was Sundance
pursuant to this Agreement or (ii) by ENA, the assignee of such rights
shall be provided the full benefit of such rights as if it was "ENA" under
this Agreement, provided that in no event shall the number of Demand
Registrations afforded Investor (as those terms are defined in the Stock
Purchase Agreement) by Section 7 of the Stock Purchase Agreement exceed two
or shall the number of nominees of Investor to be designated pursuant to
Section 9 of the Stock Purchase Agreement be greater than one.
12. Termination of CCSI Right of First Refusal. The provisions of Section 12 of
the Stock Purchase Agreement shall be terminated effective as of the
execution date of this Agreement.
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13. Transfer Restrictions. No other provision of the Stock Purchase Agreement
shall be construed to prohibit the sale, transfer or other disposition of
CCSI Securities permitted by Section 4.6(a) and (b) of the Stock Purchase
Agreement. The requirement of Section 4.6(b) relating to notification of
the Company of the proposed disposition and the furnishing of a detailed
statement of the circumstances surrounding the proposed disposition shall
not apply to transactions made pursuant to Rule 144. In addition, nothing
in the Stock Purchase Agreement shall be construed to prohibit the sale,
transfer or other disposition of CCSI Securities or the risk management
transactions referred to in the proviso to Section 7.6 of the Stock
Purchase Agreement added by Section 6.1(D) of this Agreement (whether or
not occurring in connection with a registered offering), or the assignments
permitted by Section 11 of this Agreement.
In addition, and without limiting the generality of the foregoing, Section
10.3 of the Stock Purchase Agreement is hereby amended and restated in its
entirety to provide as follows:
10.3 Restrictions on Transfer of Voting Stock
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(a) The Investor (or any Affiliated Entity or Affiliated Transferee or
other person to whom the Voting Stock of the Company has been sold or
transferred as permitted by this Section) shall not, directly or
indirectly, sell or transfer any Voting Stock of the Company except (i) to
the Company or any person or group approved in writing by the Company; or
(ii) to any Affiliated Transferee, so long as such Affiliated Transferee
agrees to hold such Voting Stock subject to all the provisions of this
Agreement, including this Section 10.3; or (iii) pursuant to a bona fide
public offering registered under the Securities Act (which shall be
structured to distribute such shares or rights through an underwriter or
otherwise in such a manner as should not result in a sale or sales of
beneficial ownership of Voting Stock with aggregate voting power of 10% or
more of the Total Voting Power of the Company then in effect being
transferred to a single person or group), or (iv) into the public market
pursuant to SEC Rule 144 (including Section (k) of SEC Rule 144 or a
successor rule) under the Securities Act (which shall be structured to
distribute such shares or rights through an underwriter or otherwise in
such a manner as should not result in a sale or sales of beneficial
ownership of Voting Stock with aggregate voting power of 10% or more of the
Total Voting Power of the Company then in effect being transferred to a
single person or group); or (v) in transactions not otherwise described
herein so long as such transactions do not, directly or indirectly, result,
to the knowledge of Investor, in any single person or group owning or
having the right to acquire Voting Stock with aggregate voting power of 10%
or more of the Total Voting Power of the Company then in effect, and
provided Investor shall not sell Voting Stock to any entity which is an
existing customer (defined as an entity which has ordered a product from
the Company), or a prospective customer (defined as an entity with which
the Company has had bona fide discussions in the prior twelve (12) months
regarding purchase of a product from the Company), or a competitor of the
Company without the written consent of the Company; or (vi) pursuant to a
bona fide pledge of such Voting Stock to an institutional lender to secure
a loan, guarantee or other financial support, provided that such lender
agrees to
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hold such Voting Stock subject to all provisions of this Agreement and any
sale or disposition by such lender of such pledged Voting Stock shall be
subject to the limitations of this Section 10.3; or (vii) in the event of a
merger or consolidation in which the holders of Voting Stock of the Company
prior to the merger or consolidation cease to hold at least 51% of the
Voting Stock of the surviving entity, or pursuant to a plan of liquidation
of the Company; or (viii) to an Affiliated Entity, or from an Affiliated
Entity to another Affiliated Entity; or (ix) subject to Section 7.6(ii) in
the case of a sale, transfer or disposition in the 90 days following the
effective date of any registration statement filed on behalf of the Company
with the Securities and Exchange Commission, to an entity in which the
Investor or an Affiliated Transferee or Affiliated Entity has an equity
interest in one or more cash-settled hedging or other risk management
transactions.
14. Amendment of Section 10.1 of Stock Purchase Agreement. Section 10.1 of the
Stock Purchase Agreement is hereby amended and restated in its entirety to
provide as follows:
10.1 Limitation on Ownership of Voting Stock of the Company. Except as
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set forth in this Agreement, neither the Investor nor any Affiliated Entity
collectively shall directly or indirectly acquire beneficial ownership of
any Voting Stock, any securities convertible into or exchangeable for
Voting Stock (as defined in Section 13), or any other right to acquire
Voting Stock (except, in any case, by way of stock dividends or other
distributions or offerings made available to holders of any Voting Stock
generally) without the written consent of the Company, if the effect of
such acquisition would be to increase the Voting Power of all Voting Stock
then owned by the Investor and any Affiliated Entity or which it has a
right to acquire to an amount equal to 20% or more of the Total Voting
Power of the Company (as defined in Section 13) at such time, provided that
(a) the limitation of "20% or more" shall be changed to "25% or more" upon
either the Spin-Off or after the Company has a fiscal year with pre-tax
income and (b) the limitation shall not apply to the extent Investor is
purchasing New Securities as permitted under Section 8 of this Agreement.
15. Amendment of Section 13.2 of Stock Purchase Agreement.
15.1 Section 13.2 of the Stock Purchase Agreement is hereby amended and
restated in its entirety to provide as follows:
13.2 Termination and Covenants. If not earlier terminated by specific terms
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of such Sections, the provisions of Section 8 shall terminate on the
earlier of (i) the effective date of a Registration Statement filed
with the Securities and Exchange Commission pursuant to the Securities
Act covering securities of the Company, (ii) seven (7) years after the
Closing Date or (iii) such time as Investor and any affiliate or
subsidiary of Investor own in the aggregate less than five percent
(5%) of the then outstanding Voting Stock of the Company and the
provisions of Section 10 shall terminate seven (7) years after the
Closing Date.
15.2 The parties acknowledge and agree that the provisions of Section 5 of
this Agreement shall apply in the event of any issuance of New Securities
in connection with
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the Spin-Off, irrespective of the effective date of the registration
statement filed in connection therewith.
16. Indemnification Agreement. Prior to the completion of the Spin-Off,
CCSI shall enter into an indemnification agreement substantially in the
form attached hereto as Exhibit C, and in definitive form and substance
satisfactory to Sundance or ENA, that provides indemnification from
CCSI, to the fullest extent permitted by the Delaware General
Corporation Law, to any person who has been selected by Sundance to
serve as a director of CCSI pursuant to the provisions of Section 9 of
the Stock Purchase Agreement.
17. Waiver of Exchange Right. Sundance hereby waives its rights under
Section 1.2 of that certain Stockholders' Agreement dated as of January
14, 1988, among Catalytica, CCSI and Sundance (as successor in interest
to Enron Ventures Corp.) arising as a result of the merger of
Catalytica pursuant to the Catalytica/DSM Merger Agreement effective
concurrently with the merger.
18. Effectiveness of Certain Agreements. The agreements of Sundance and
ENA pursuant to Sections 1, 2, 3, 4, 5, 6, 7, 8 and 17 hereof are
subject to and conditioned upon execution of the definitive agreement
referred to in Section 16 above, and, in the case of Sections 3, 4, 5,
6, 7, 8 and 17, completion of the Spin-Off. In the event the Spin-Off
is not consummated by December 31, 2000, all of such agreements in
Sections 1, 2, 3, 4, 5, 6, 7, 8 and 17 shall be of no force and effect.
All other agreements of the parties hereto shall be effective upon the
execution date of this Agreement, unless expressly provided otherwise
herein.
19. CCSI Consent. CCSI hereby consents to Amendment No. 1 to the Xonon
Technology Implementation Agreement in the form attached to this
Agreement as Exhibit B effective upon the execution date of this
Agreement. In addition, CCSI agrees that in the event any credit right
in respect of the purchase of Xonon-equipped GE turbines shall vest or
inure in CCSI or any of its affiliates, CCSI shall assign such rights
to any of the permitted assignees thereof described in Sections 4.5 and
7.2 of the XTIA as directed by ENA, provided that CCSI and any of its
affiliates waive any right to receive the amounts provided for in the
last sentence of Section 1.2 of the Option Repurchase Agreement in
respect of such assignment and neither ENA nor any assignee of the
credits shall have any obligation to CCSI or its affiliates with
respect to such assignment. CCSI and its affiliates further agree to
take such steps as may be required to vest the benefit of any credits
arising under Section 4.3 of the XTIA in the permitted assignees of
such rights described in Sections 4.5 and 7.2 of the XTIA as directed
by ENA.
20 Arbitration/Damages Limitation. Each of the parties hereto shall have
the right to apply to a court to enjoin any breach of this agreement.
Excepting the right of the parties to seek such relief, all claims and
matters in question arising out of this Agreement or the relationship
between the parties created by this Agreement, whether sounding in
contract, tort or otherwise, shall be resolved by binding arbitration
pursuant to the Federal Arbitration Act. The arbitration shall be
administered by the American Arbitration Association ("AAA"). There
shall be three arbitrators. Sundance and ENA on the one hand and CCSI
and Catalytica on the other shall each designate an arbitrator, who
need
11
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not be neutral, within 30 days of receiving notification of the filing
with the AAA of a demand for arbitration. The two arbitrators so
designated shall elect a third arbitrator. If the parties fail to
designate an arbitrator within the time specified or the selected
arbitrators fail to designate a third arbitrator within 30 days of
their appointments, the arbitrators so failed to be selected shall be
appointed by the AAA. It is expressly agreed that the arbitrators
shall have no authority to award punitive, consequential or exemplary
damages, the parties hereby waiving their right, if any, to recover
punitive, consequential or exemplary damages, either in arbitration or
in litigation, in connection with any breach or default by the other
party under this Agreement.
21. Miscellaneous. This Agreement shall be governed by the laws of the
State of Delaware applicable to contracts made and to be performed in
Delaware by Delaware residents. This Agreement sets forth the entire
agreement among the parties relating to the subject matter hereof and
supercedes any and all prior and contemporaneous agreements,
discussions and correspondence among the parties. The parties
acknowledge and agree that any breach of the terms of this Agreement
would give rise to irreparable harm for which money damages would not
be an adequate remedy and accordingly the parties agree that, in
addition to any other remedies, each shall be entitled to enforce the
terms of this Agreement by a decree of specific performance without the
necessity of proving the inadequacy of money damages as a remedy. The
parties shall use all commercially reasonable efforts promptly to take,
or cause to be taken, all other actions and do, or cause to be done,
all other things necessary or desirable to effect the subject matter of
this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
Catalytica, Inc. Catalytica Combustion Systems, Inc.
By: By:
-------------------------------- --------------------------------
Name: Larry w. Briscoe Name: Larry W. Briscoe
------------------------------ ------------------------------
Title: Chief Financial Officer Title: Chief Financial Officer
---------------------------- -----------------------------
Sundance Assets, L.P. Enron North America Corp.
By: Ponderosa Assets, L.P.,
Its General Partner By:
--------------------------------
Name:
------------------------------
By: Enron Ponderosa Management Title:
Holdings, Inc., its General Partner -----------------------------
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
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