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Enron Mail |
Enron North America Corp. Mary Cook 1400 Smith, 38th Floor, Legal Houston, Texas 77002-7361 (713) 345-7732 (phone) (713) 646-3490 (fax) mary.cook@enron.com ----- Forwarded by Mary Cook/HOU/ECT on 09/12/2000 09:13 AM ----- Barton Clark 09/11/2000 07:06 PM To: Lisa King/HOU/ECT@ECT cc: Stuart Zisman/HOU/ECT@ECT, Richard Lydecker/Corp/Enron@Enron, Mary Cook/HOU/ECT@ECT Subject: Project Raptor - Private Hedge Candidates PRIVILEGED AND CONFIDENTIAL. I think I am one of the people who raised the issue about the Asset Description in my mark-up of the Raptor I Derivative Proposal Sheet that I received this am from Stuart and returned to him midday. As I read the memo below, I am instructed to advise you about the nature of the underlying asset. The asset is Series B Preferred Stock of Catalytica Combustion Systems, Inc., and an option to acquire same. Currently, pursuant to a Series B Stock Purchase Agreement among Catalytica Combustion Systems, Inc. ( CCSI), Catalytica, Inc. ( CCSI's parent and currently holder of Series A and common stock of CCSI representing approximately 83% of the ownership of CCSI ) and Enron Ventures Corp. ( predecessor in interest to Sundance Assets, L.P.), Sundance owns 1,339,286 shares of Series B Preferred Stock and an option to purchase 535,715 shares of Series B Preferred Stock. There are provisions calling for the adjustment of the number of option shares subject to the option but I am not aware that any transactions that would cause such adjustment provisions, other that the stock split referred to below, to apply. The Series B stock is convertible to CCSI common stock, is restricted stock, and the Stock Purchase Agreement provides for registration rights. Currently, Tom White and Jack Urquhart both serve on the CCSI Boards of Directors, and Jack serves on the Catalytica Inc. Board. Under an Omnibus Agreement entered into in September 2000, in connection with the restructuring of Enron's transactions with CCSI and in connection with the proposed acquisition of Catalytica, Inc, by a third party ( DSM, a Dutch pharmaceutical company) and the distribution of Catalytica's CCSI shares to Catalytica's stockholders immediately prior to that acquisition, we agreed to convert the Series B to CCSI common, agreed to vote for a 2 for 1 stock split, and negotiated a cashless exercise of the option after the effective date of the spin off. The effectiveness of these provisions is dependent upon the effectiveness of distribution and acquisition The option itself ( as amended by the Omnibus Agreement and otherwise ) expires January 14, 2001. The distribution is expected to occur in the fourth quarter of 2000, but is subject to a variety of conditions. After the distribution and concurrent closing of the Catalyica acquisition transaction, CCSI ( which formerly looked to its parent for financing and much of its administrative and other support) will be a stand- alone public company listed on NASDAQ, with the uncertainties attendant thereto. The Omnibus Agreement also contains provisions amending Sundance's registration rights, the board representation provisions in the original Stock Purchase Agreement, and certain transfer restrictions ( to liberalize them and allow the Raptor transaction to take place). There are also agreements related to Enron North America's Xonon Technology Implementation Agreement with GE and West LB, which do not directly affect the Series B Preferred. These provisions instead go to the development program for CCSI's technology, to which ENA contributes funding, and conform that agreement to a change in CCSI's and GE's strategy for commercializing the technology. The funding obligation itself is interconnected with the turbine purchases for ENA's Pastoria project in California, but I don't believe that transaction needs analysis for these purposes, To comply with SEC rules in connection with the distribution, CCSI has filed an S-1 registration statement registering the CCSI common stock to be distributed to Catalytica's shareholders with the SEC, and Catalytica, Inc. has filed a merger proxy statement with the SEC in connection with its solicitation of Catalytica stockholder approval to the acquisition transaction. Comments are expected from the SEC in 4 to 6 weeks. Please give me a call if you wish to discuss this matter further, and I am instructed to request that you return the revised copy of the Raptor I Proposal Sheet to me and copy Mary Cook and Lisa Mellancamp thereon. The foregoing description may be more than you need for the summary, but it really is a very abbreviated snapshot of the transaction. All the documents related to the Preferred Stock and Option, including the executed Omnibus Agreement and the Stock Purchase Agreement, have been previously delivered to Sara Shackleton and Hope Vargas. ----- Forwarded by Barton Clark/HOU/ECT on 09/11/2000 06:18 PM ----- Stuart Zisman 09/11/2000 05:15 PM To: James Grace/Corp/Enron@ENRON, Barton Clark/HOU/ECT@ECT, Dan Lyons/HOU/ECT@ECT, Peter del Vecchio/HOU/ECT@ECT, Peter Keohane/CAL/ECT@ECT, Anne C Koehler/HOU/ECT@ECT, Travis McCullough/HOU/ECT@ECT, Teresa G Bushman/HOU/ECT@ECT, Lance Schuler-Legal/HOU/ECT@ECT cc: Julia Murray/HOU/ECT@ECT, Lisa Mellencamp/HOU/ECT@ECT, Mary Cook/HOU/ECT@ECT, Sara Shackleton/HOU/ECT@ECT Subject: Project Raptor - Private Hedge Candidates It has come to my attention that questions have been raised in reviewing the Raptor I Derivative Proposal Sheets regarding the type of information that should be set forth in the category entitled "ASSET DESCRIPTION". The Master Derivatives Agreement ("MDA") requires that the Proposal Sheets describe the "Assets" with respect to which the derivative transaction is to be executed. For purposes of the MDA, "Assets" is defined as "assets, including without limitation common stock, partnership interests, member interests. other ownership interests, and other financial and physical assets." Therefore, the description should include both the nature of the "Asset" (i.e. whether it is an equity interest, a loan, working interest, etc.) and a little bit about the company (the entity in which ENA holds the interest or has the loan or working interest). Any comments to the Proposal Sheets should be delivered ASAP to the "Enron person completing this form" (This is the 3rd line under the heading "GENERAL" on each of the Proposal Sheets) along with a request that a revised Proposal Sheet be returned to the lawyer providing comments with copies to both Mary Cook and Lisa Mellencamp. The pressure to complete these Raptor hedges remains high and therefore your immediate attention is greatly appreciated. Many thanks. Stuart
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