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Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Barton Clark X-To: Brad Nebergall, Chris Holmes, sean black, dao@catalytica-inc.com, lwb@mv.catalytica-inc.com, pevans@catalytica-inc.com, crainey@lockeliddell.com, btaylor@wsgr.com, dsummers@wsgr.com, Roger Ondreko, Matthew Berry, Sheila Tweed, Sara Shackleton, Susan Flynn, hwendell@mdbe.com, robtaylor@andrews-kurth.com, Don Miller, Jordan Mintz, Matthew F Gockerman, Randy Petersen, Esben Pedersen, David Parquet, Samuel Wehn, Dean Russell X-cc: X-bcc: X-Folder: \Sara_Shackleton_Dec2000_June2001_1\Notes Folders\Catalytica X-Origin: SHACKLETON-S X-FileName: sshackle.nsf Attached please find the latest versions of the above-referenced documents, marked to show changes from the versions distributed 12/9, except in the case of Annexes C ( Guaranty and Indemnification Agreement) and D ( form of the drawing certificate to the CCSI letter of credit, the complete letter to be supplied by CCSI on Monday) to Exhibit A to the Option Repurchase Agreement. I incorporated the Guaranty and Indemnification Agreement and form of drawing certificate as received from CCSI counsel on Friday night into version 7f in order that our revisions to these documents would be reflected in these marked versions.The changes are summarized as follows: Xonon Technology Implementation Agreement. Section 4.1 was modified at Brad's request to clarify the payment provisions, and to clarify that the Milestone 4 Refund Amount is not intended to be an exclusive remedy( ie, liquidated damages provision) with respect to the failure to complete Milestone 4 or subsequent Milestones or other obligations. Section 4.2 was modified, at the request of West LB, to cause West LB not to be involved in any decision to revise the milestones. Section 9.2 (b) was revised to delete an incorrect reference to Texas law in arbitration ( more consistent with fact that New York law applies to the agreement) and the insert in (iii) was made to reflect that selection of arbitrators is dealt with in (a) and should not be overriden by any supplemental procedures of the AAA. Section 11.2 was modified to add a reference to Article 10 ( to make clear the survival of pending claims at 12/31/06 provision in that Article was not in conflict with Section 11.2). All other changes were pretty self evident clarifications or corrections of typographical errors. Option Repurchase Agreement. Remember that Annexes A and B to Exhibit A are in a separate document because of format and need to be inserted in behind Exhibit A and before Annex C. Section 1.1 of the Agreement was revised to clarify that the Paid Premium amount payable by ENA was such amount at the Option Repurchase Date, to correct a date reference to the date the Milestone 4 Refund Amount becomes payable by GE, to clarify that the vested value of the Xonon Credits equal to the Paid Premium applies in the assignment of credits to ENA pursuant to Section 1.2, and to clarify that ENA may withhold from the Milestone 4 Refund Amount payable to CCSI any unpaid premium plus any other amounts owed by CCSI to ENA ( eg, legal expenses incurred by ENA in seeking to collect Unpaid Premium). Section 2.2 was revised to add a new defined term "Operative Agreements" to refer to the Exhibits and Annexes to the Agreement and the notion of Operative Agreements was worked into Section 2.2 to make it clear that ENA was released from its obligations under the Confirmantion and Guaranty ( if any, since it is a party) when released from the Agreement. Section 2.2 also makes clear that ENA cannot assign rights under Section 7.2 of the Xonon Agreement to CCSI ( consistent with the limitations on ENA's rights in Section 4.5 of the Xonon Agreement). Article 3 was amended to incorporate the Operative Agreements into the representations and warranties of the parties. Article 4 was revised to clarify that the 30 day cure period did not apply to failures to pay the Premium Payment installments and to add nonpayment under the Guaranty or failure by the bank to advance funds under the Letter of Credit upon presentation of a proper drawing certificate as Events of Default outside the cure period. The bankruptcy Event of Default was modified to incorporate the bankruptcy of the guarantor, Catalytica , Inc. Article 5 was modified to incorporate the Operative Agreements so we have consistent assignment terms. Article 7 indemnification now applies for Catalytica's default under the guaranty. Article 9 was modified to make clear all the Operative Agreements must be in place for the Option Repurchase Agreement to become effective, and Article 10 incorporates the Operative Agreements so that we have consistent terms for the miscellaneous provisions.Since the confidentiality agreement was never signed, Section 10.8 has been supplemented to include some of the key concepts from the proposed confidentiality agreement, including CCSI's requested modification that disclosure not be made to any person without consent unless the person had agreed to confidentiality restrictions as least as stringent as those in Section 10.8. The changes to the Guaranty and Indemnification Agreement are intended to clarify that ENA is not required to make demand under the Guaranty before proceeding to collect under the letter of credit, and to clarify that the condition to payment is CCSI's failure to pay upon a Joint Concurrence. Similarly, the drawing certificate conditions are limited to those in the Confirmation and the requirement that there be no Event of Default or possible event of default is deleted as adding unnecessary ambiguity to the draw procedures. CCSI will have notice of any such event ( see Section 3.2 (h) of the Option Repurchase Agreement) and ENA will have no incentive to cause West LB to advance funds if GE is not performing. However, to the extent West LB may advance and ENA subsequently learn of a default, it is my understanding CCSI would still have to advance if the Joint Concurrence were delivered to it. This is consistent with the understanding that the Paid Premium will mirror in amount and be paid at least concurrently with the West LB advances under the Xonon Agreement. The Confirmation is revised to incorporate the change you suggested, although we need to discuss the cap on the LC since under the Confirmation CCSI is obligated to pay interest and expenses above the cap. The Confirmation also eliminates references to a Master Agreement signed in the future to supplement the terms of the option ( could be disruptive to say the least) and CCSI's right to object to the terms of the confirm ( unnecessary in this closely negotiated transaction). The other changes are typos or self-evident. If you have any questions let me know. The legend following the signatures will be removed in the execution version.
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