EXHIBIT 2.4
TAX SHARING AGREEMENT
TAX SHARING AGREEMENT dated as of December 15, 2000 by and among Synotex
Company, Inc., a Delaware corporation, ("Synotex"), Catalytica Inc., a Delaware
corporation, ("Catalytica") and Catalytica Energy Systems, Inc., a Delaware
corporation ("CES").
RECITALS
A. Pursuant to the Merger Agreement (as defined below), Synotex will
acquire all of the outstanding stock of Catalytica by merging a wholly-owned
subsidiary of Synotex with and into Catalytica (the "Merger").
B. As a condition of the Merger, Catalytica has forgiven over $6 million
of debt of CES and/or Catalytica Advanced Technologies, Inc. ("CAT") which
amounts were treated as capital contributions and, thereafter, has caused CAT to
merge with and into CES and CES is the successor-in-interest to CAT for all
purposes of this Agreement.
C. As a condition of, in contemplation of, and immediately prior to, the
merger, Catalytica will declare a pro rata distribution to its stockholders of
record as of December 15, 2000 of all of the CES stock it owns (the
"Distribution").
D. At the close of the business day on which the Distribution occurs (the
"Distribution Date"), the taxable year of CES will close for United States
federal income tax purposes and CES will cease to be a member of the Catalytica
Consolidated Group (as defined below).
E. As a result of the Distribution the parties hereto wish to provide for
the payment of Income Taxes and other Taxes (as defined herein) and entitlement
to refunds thereof, allocate responsibility and provide for cooperation in
connection with the filing of returns in respect of Income Taxes, and provide
for certain other matters relating to Income Taxes.
NOW, THEREFORE, in consideration of the agreements herein contained and
intending to be legally bound hereby, CES, Catalytica and Synotex hereby agree
as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms shall have the meanings
set forth below (such meanings to be equally applicable to both the singular and
the plural forms of the terms defined).
1.1 "Action" shall mean any action, claim, suit, arbitration, inquiry,
proceeding or investigation by or before any court, any governmental, regulatory
or other administrative agency or commission or any arbitration tribunal.
1.2 "Catalytica Consolidated Federal Return" shall mean any consolidated
federal Income Tax Return or amendment thereof of the Catalytica Consolidated
Group for any Catalytica Consolidated Return Period.
1.3 "Catalytica Consolidated Group" shall mean Catalytica and, with
respect to federal Income Taxes, the other members of the affiliated group of
corporations (within the meaning of Section 1504(a) of the Code) of which
Catalytica was the common parent prior to the Merger, and with respect to state
or local income taxes, any other corporations with whom Catalytica filed or
files a consolidated, combined or unitary return with Catalytica as the common
parent.
1
1.4 "Catalytica Consolidated Returns" shall mean all Catalytica
Consolidated Federal Returns and all Catalytica State and Local Returns.
1.5 "Catalytica Consolidated Return Period" shall mean a taxable period
that ends on or before the Effective Time of the Merger (as defined in Section
1.1(b) of the Merger Agreement) for which a consolidated, combined or unitary
(as applicable) federal, state or local Income Tax Return is filed or required
to be filed by the Catalytica Consolidated Group.
1.6 "Catalytica Consolidated Tax Liability" means, the consolidated,
combined or unitary Income Tax Liability of the Catalytica Consolidated Group.
1.7 "Catalytica State and Local Returns" shall mean any combined,
consolidated or unitary state or local Income Tax Returns or amendments thereof
which are required to be filed by Catalytica or a member of the Catalytica
Consolidated Group for any Catalytica Consolidated Return Period.
1.8 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.9 "CES" shall have the meaning set forth in the preamble and shall
include for all purposes of this agreement its subsidiaries and CAT.
1.10 "Distribution" shall have the meaning set forth in Recital B.
1.11 "Final Determination" shall mean the final resolution of liability
for any Income Tax, which resolution may be for a specific issue or adjustment
or for a taxable period: (i) by Internal Revenue Service Form 870 or 870-AD (or
any successor forms thereto), on the date of acceptance by or on behalf of the
taxpayer, or by a comparable form under the laws of a state or local taxing
jurisdiction, except that a Form 870 or 870-AD or comparable form shall not
constitute a Final Determination to the extent that it reserves (whether by its
terms or by operation of law) the right of the taxpayer to file a claim for
Refund or the right of the Taxing Jurisdiction to assert a further deficiency in
respect of such issue or adjustment or for such taxable period (as the case may
be); (ii) by a decision, judgment, decree, or other order by a court of
competent jurisdiction, which has become final and unappealable; (iii) by a
closing agreement or accepted offer in compromise under Sections 7121 or 7122 of
the Code, or a comparable agreement under the laws of a state or local taxing
jurisdiction; (iv) by any allowance of a Refund or credit in respect of an
overpayment of Income Tax, but only after the expiration of all periods during
which such Refund may be recovered (including by way of offset) by the
jurisdiction imposing such Income Tax; or (v) by any other final disposition,
including by reason of the expiration of the applicable statute of limitations
or by mutual agreement of the parties.
1.12 "Income Tax" (a) shall mean (i) any foreign or any United States
federal, state or local tax, charge, fee, impost, levy or other assessment that
is based upon, measured by, or calculated with respect to (1) net income or
profits (including, but not limited to, any capital gains, gross receipts, or
minimum tax, and any tax on items of tax preference, but not including sales,
use, value added, real property gains, real or personal property, transfer or
similar taxes), or (2) multiple bases (including, but not limited to, corporate
franchise, doing business or occupation taxes), if one or more of the bases upon
which such tax may be based, by which it may be measured, or with respect to
which it may be calculated is described in clause (a)(i)(1) of this definition,
in either case, together with any interest and any penalties, fines, additions
to tax or additional amounts imposed by any Taxing Jurisdiction with respect
thereto and (b) shall include any liability in respect of an amount described in
clause (a) of this definition resulting from the application of Treasury
Regulations Section 1.1502-6 or similar provision under state or local law, or
as a transferee.
1.13 "Income Tax Liabilities" shall mean all liabilities for Income Taxes.
2
1.14 "Income Tax Return" shall mean any return, report, filing, statement,
questionnaire, declaration or other document that has been or is required to be
filed with a Taxing Jurisdiction in respect of Income Taxes.
1.15 "Indemnified Party" shall mean any Person seeking indemnification
pursuant to the provisions of this Agreement.
1.16 "Indemnifying Party" shall mean any party hereto from which any
Indemnified Party is seeking indemnification pursuant to the provisions of this
Agreement.
1.17 "IRS" shall mean the Internal Revenue Service.
1.18 "Losses" shall mean any and all losses, liabilities, claims, damages,
obligations, payments, costs and expenses, matured or unmatured, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, known or unknown
(including, without limitation, the costs and expenses of any and all Actions,
threatened Actions, demands, assessments, judgments, settlements and compromises
relating thereto and attorneys' fees and any and all expenses whatsoever
reasonably incurred in investigating, preparing or defending against any such
Actions or threatened Actions).
1.19 "Merger Agreement" shall mean the Agreement and Plan of Merger dated
as of August 2, 2000, by and among Synotex, Synotex Acquisition Corporation and
Catalytica.
1.20 "Person" shall mean and include any individual, partnership, joint
venture, limited liability company, corporation, association, joint stock
company, trust, unincorporated organization or similar entity or a governmental
authority or any department or agency or other unit thereof.
1.21 "Post-Distribution Taxable Period" shall mean a taxable period that,
to the extent it relates to CES and its Subsidiaries, begins after the
Distribution Date.
1.22 "Pre-Distribution Taxable Period" shall mean a taxable period that,
to the extent it relates to CES and its Subsidiaries, ends on or before the
Distribution Date.
1.23 "Proceeding" shall mean any audit or other examination, judicial or
administrative proceeding relating to liability for, or Refunds or adjustments
with respect to, Income Taxes.
1.24 "Refund" shall mean any refund of Income Taxes, including any
reduction in Income Tax Liabilities by means of a credit, offset or otherwise.
1.25 "Subsidiary" shall have the meaning set forth in Section 1.2(b) of
the Merger Agreement.
1.26 "Tax Attribute" shall mean a consolidated net operating loss, a
consolidated net capital loss, a consolidated unused investment credit, a
consolidated unused foreign tax credit, or a consolidated excess charitable
contribution (as such terms are used in Treasury Regulations (S)(S)1.1502-79 and
1.1502-79A) or analogous provisions of state or local law, or a U.S. federal
minimum tax credit or U.S. federal general business credit or analogous
provisions of state or local law (but not tax basis or earnings and profits)
that arises in a Pre-Distribution Taxable Period (including the taxable period
in which the Distribution Date occurs) and can be carried to a taxable period
ending after the Distribution Date.
1.27 "Taxing Jurisdiction" shall mean the United States and every other
government or governmental unit having jurisdiction to tax Catalytica, CES or
any of their respective affiliates.
3
ARTICLE II
PREPARATION AND FILING OF TAX RETURNS; PAYMENT OF TAX
2.1 Catalytica Consolidated Federal Returns.
(a) General. Synotex shall have sole and exclusive responsibility for
the preparation and filing of all Catalytica Consolidated Federal Returns, and
any amendments thereto, with the IRS. Synotex shall, on a timely basis, file or
cause to be filed all Catalytica Consolidated Federal Returns and estimated tax
returns of the Catalytica Consolidated Group as are required to be filed in its
sole discretion. Synotex shall have the right to: determine the manner in which
all such returns shall be filed; make any elections in connection with any such
returns; contest, compromise and settle any adjustments of deficiency proposed,
asserted or assessed in connection with any such returns; file, pursue,
compromise or settle any claim for refund; and determine whether any refunds to
which the Catalytica Consolidated Group is entitled shall be paid by way of a
refund or credit. Notwithstanding the foregoing, such returns shall be filed in
a manner consistent with an allocation of items of income, gain, loss or
deduction based upon Treasury Regulations Section 1.1502-76(b)(1)(ii) using a
"closing of the books" method, provided, however, that to the extent an election
or return position relates solely to a CES taxable year commencing after the
Distribution Date, such elections or return positions shall be determined by CES
in its sole discretion.
(b) Cooperation. CES shall furnish Synotex, at least sixty (60) days
before the due date (including extensions) of any Catalytica Consolidated
Federal Return, its completed section of such return, prepared in accordance
with this Agreement, and in a manner consistent with prior returns. CES shall
also furnish Synotex work papers and other such information and documentation as
is reasonably requested by Synotex with respect to CES.
2.2 Catalytica State and Local Returns.
(a) General. Synotex shall have sole and exclusive responsibility for
the preparation and filing of all Catalytica State and Local Returns. Synotex
shall, on a timely basis file or cause to be filed all Catalytica State and
Local Returns and estimated tax returns of the Catalytica Consolidated Group as
are required to be filed in its sole discretion. Synotex shall have the right
to: determine the manner in which all such returns shall be filed; make any
elections in connection with any such returns; contest, compromise and settle
any adjustments of deficiency proposed, asserted or assessed in connection with
any such returns; file, pursue, compromise or settle any claim for refund; and
determine whether any refunds to which the Catalytica Consolidated Group is
entitled shall be paid by way of a refund or credit. Notwithstanding the
foregoing, such returns shall be filed in a manner consistent with the
preparation of the relevant Catalytica Consolidated Federal Return provided,
however, that to the extent an election or return position relates solely to a
CES taxable year commencing after the Distribution Date, such elections or
return positions shall be determined by CES in its sole discretion.
(b) Cooperation. Synotex will timely advise CES of the inclusion of
CES in any Catalytica State and Local Returns and the jurisdictions in which
such returns will be filed. CES will evidence its agreement to be included in
such return on the appropriate form(s) and will take such other actions as may
be appropriate to carry out the purposes and intent of this Section 2.2,
provided that such actions are not inconsistent with this Agreement. CES shall
furnish Synotex, at least sixty (60) days before the due date (including
extensions) of any such Catalytica State and Local Returns, its completed
section of such returns, prepared in accordance with this Agreement, and in a
manner consistent with prior returns. CES shall also furnish Synotex work papers
and other such information and documentation as is reasonably requested by
Synotex with respect to CES.
2.3 Tax Liability.
(a) Catalytica Consolidated Federal Return Liability. Except to the
extent otherwise provided herein, Synotex and Catalytica shall be liable for and
indemnify CES against all Taxes due in respect of all Catalytica Consolidated
Federal Returns.
4
(b) Catalytica State and Local Return Liability. Except to the extent
otherwise provided herein, Synotex shall be liable for and indemnify CES against
all Taxes due in respect of all Catalytica State and Local Returns.
2.4 CES Separate Returns and Tax Liability. CES shall prepare, or cause
to be prepared, all Income Tax Returns of CES for, and shall be liable for all
Taxes of CES due in respect of (a) all Post-Distribution Taxable Periods and (b)
any taxable period (whether ending before, on or after the Distribution Date)
for which CES, with respect to such tax, is or was not a member of the
Catalytica Consolidated Group.
ARTICLE III
INDEMNIFICATION FOR INCOME TAXES
3.1 Indemnification by Synotex. Except as otherwise provided in this
Article III, Synotex and Catalytica shall indemnify and hold CES and its
successors and assigns harmless from and against (i) the Catalytica Consolidated
Tax Liability, including the Income Tax Liability with respect to the
Distribution, (ii) any liability for Income Taxes as a result of Treasury
Regulations Section 1.1502-6(a) or any analogous or similar provision under
state or local law or regulation, of any Person which is or has ever been a
member of the Catalytica Consolidated Group, and (iii) any costs and expenses
related to any of the foregoing (including, without limitation, reasonable
legal, accounting, appraisal, consulting or similar fees and expenses).
3.2 Indemnification by CES. From and after the Distribution Date, CES
shall indemnify and hold Synotex and each member of the Catalytica Consolidated
Group (other than CES) harmless from and against all Income Tax Liabilities that
CES is required to pay under Article II hereof.
ARTICLE IV
INCOME TAX CONTESTS
4.1 Notification. CES shall promptly upon receipt of notice thereof notify
Synotex in writing of any communication with respect to any pending or
threatened Proceeding in connection with an Income Tax Liability (or an issue
related thereto) for which Synotex or Catalytica may be responsible pursuant to
this Agreement. CES shall include with such notification a true, correct and
complete copy of any written communication, and an accurate and complete written
summary of any oral communication, so received by CES. The failure of CES timely
to forward such notification in accordance with the immediately preceding
sentence shall not relieve Synotex or Catalytica of their obligation to pay such
Income Tax Liability or indemnify CES therefor, except and to the extent that
the failure timely to forward such notification actually prejudices the ability
of Synotex to contest such Income Tax Liability or increases the amount of such
Income Tax Liability.
4.2 Catalytica Consolidated Return Periods. Synotex (or such member of
the Synotex Consolidated Group as Synotex shall designate) shall have the sole
right to represent the interests of CES in any Proceeding to the extent relating
to Catalytica Consolidated Return Periods and to employ counsel of its choice at
its expense; CES shall be entitled to designate counsel with respect to any such
Proceeding with respect to an Income Tax Return that includes solely CES and
relates solely to items for which CES is responsible hereunder, and CES shall
have the right to resolve any such Proceedings in its sole discretion.
4.3 Power of Attorney. CES shall execute and deliver to Synotex any power
of attorney or other document reasonably requested by Synotex (or a designee) in
connection with any Proceeding described in Section 4.2 hereof.
5
ARTICLE V
APPORTIONMENT OF TAX ATTRIBUTES; REFUNDS
5.1 Apportionment of Tax Attributes.
(a) If the Catalytica Consolidated Group has a Tax Attribute, the
portion, if any, of such Tax Attribute that shall be apportioned to CES and
treated as a carryover to the first Post-Distribution Taxable Period of CES,
shall be determined in accordance with Treasury Regulations Sections 1.1502-79
and 1.1502-79A; provided, however, that the portion, if any, of any consolidated
unused foreign tax credit which shall be apportioned to CES shall be determined
separately with respect to each of the items of income listed in Section 904(d)
of the Code.
(b) Subject to CES's consent, which consent shall not be unreasonably
withheld, Synotex shall determine the portion, if any, of any Tax Attribute
which must (absent a Final Determination to the contrary) be apportioned to CES
in accordance with this Section 5.1 and applicable law, and the amount of tax
basis and earnings and profits to be apportioned to CES in accordance with
applicable law, and shall provide written notice of the calculation thereof to
CES within 180 days of the filing of the Catalytica Consolidated Federal Return
that includes the Distribution Date.
5.2 Refunds. Catalytica shall be entitled to all Refunds (and any interest
thereon received from the applicable Taxing Jurisdiction) in respect of Income
Taxes for all Catalytica Consolidated Return Periods. CES shall be entitled to
all Refunds (and any interest thereon received from the applicable Taxing
Jurisdiction) in respect of Income Taxes paid by CES for all Post-Distribution
Taxable Periods and in respect of any separate returns filed by CES pursuant to
Section 2.4 hereof. A party receiving a Refund to which another party is
entitled pursuant to this Section 5.2 shall pay the amount to which such other
party is entitled within ten days after such Refund is received. Catalytica
shall be permitted to file, and CES shall fully cooperate with Catalytica in
connection with, any claim for Refund in respect of an Income Tax for which any
member of the Catalytica Consolidated Group is responsible pursuant to Article 2
hereof.
ARTICLE VI
COOPERATION AND EXCHANGE OF INFORMATION
6.1 Cooperation.
(a) CES, on behalf of itself and each of its affiliates, agrees to
provide Synotex (or its designee) with such cooperation or information as
Synotex (or its designee) reasonably shall request in connection with the
determination of any other calculations described in this Agreement, the
preparation or filing of any Income Tax Return or claim for Refund, or the
conduct of any Proceeding. Such cooperation and information shall include,
without limitation, (i) promptly forwarding copies of appropriate notices and
forms or other communications (including, without limitation, information
document requests, revenue agent reports and similar reports, notices of
proposed adjustments and notices of deficiency) received from or sent to any
Taxing Jurisdiction or any other administrative, judicial or governmental
authority, (ii) upon reasonable notice, providing copies of all relevant Income
Tax Returns, together with accompanying schedules and related workpapers,
documents relating to rulings or other determinations by taxing authorities, and
such other records concerning the ownership and tax basis of property, or other
relevant information that CES or its affiliates may possess, (iii) upon
reasonable notice, providing of such additional information and explanations of
documents and information provided under this Agreement (including statements,
certificates and schedules delivered by either party) as shall be reasonably
requested by Synotex (or its designee), (iv) upon reasonable notice, the
providing of any document that may be necessary or reasonably helpful in
connection with the filing of an Income Tax Return, a claim for a Refund, or in
connection with any Proceeding, including such waivers, consents or powers of
attorney as may be necessary for Synotex to exercise its rights under this
Agreement, and (v) upon reasonable notice, using reasonable efforts to obtain
any documentation from a governmental authority or a third party that may be
necessary or reasonably helpful in connection with any of the foregoing. Upon
reasonable notice, CES shall make its, or shall cause its affiliates to make
their, employees and facilities available on a mutually
6
convenient basis to provide explanation of any documents or information provided
hereunder. Any information obtained under this Section 6.1 shall be kept
confidential, except as otherwise reasonably may be necessary in connection with
the filing of Income Tax Returns or claims for Refund or in conducting any
Proceeding. It is expressly the intention of the parties to this Agreement to
take all actions that shall be necessary to establish Synotex as the sole agent
for Income Tax purposes with respect to all Catalytica Consolidated Returns.
(b) Synotex, on behalf of itself and each member of the Catalytica
Consolidated Group (including Catalytica), agrees to provide CES (or its
designee) with such cooperation or information as CES (or its designee)
reasonably shall request in connection with the determination of any other
calculations described in this Agreement, the preparation or filing of any
Income Tax Return or claim for Refund, or the conduct of any Proceeding. Such
cooperation and information shall include, without limitation (i) upon
reasonable notice, promptly forwarding copies of appropriate notices and forms
or other communications (including, without limitation, information document
requests, revenue agent's reports and similar reports, notices of proposed
adjustments and notices of deficiency) received from or sent to any Taxing
Jurisdiction or any other administrative, judicial or governmental authority,
(ii) upon reasonable notice, providing copies of all relevant Income Tax
Returns, together with accompanying schedules and related workpapers, documents
relating to rulings or other determinations by taxing authorities, and such
other records concerning the ownership and tax basis of property, or other
relevant information that Synotex or any member of the Catalytica Consolidated
Group may possess, (iii) upon reasonable notice, the provision of such
additional information and explanations of documents and information provided
under this Agreement (including statements, certificates and schedules delivered
by either party) as shall be reasonably requested by CES (or its designee), (iv)
upon reasonable notice, the execution of any document that may be necessary or
reasonably helpful in connection with the filing of an Income Tax Return, a
claim for a Refund, or in connection with any Proceeding, including such
waivers, consents or powers of attorney as may be necessary for CES to exercise
its rights under this Agreement, and (v) the use of Synotex's reasonable efforts
to obtain any documentation from a governmental authority or a third party that
may be necessary or reasonably helpful in connection with any of the foregoing.
Upon reasonable notice, Synotex shall make, or shall cause each member of the
Catalytica Consolidated Group to make, its employees and facilities available on
a mutually convenient basis to provide explanation of any documents or
information provided hereunder. Any information obtained under this Section 6.1
shall be kept confidential, except as otherwise reasonably may be necessary in
connection with the filing of Income Returns or claims for Refund or in
conducting any Proceeding. Notwithstanding any other provision of this
Agreement, neither CES, nor any of its affiliates nor any other Person shall
have any right to receive or obtain any information relating to Income of
Synotex or any of its Affiliates other than information relating to CES.
6.2 Retention of Records. CES agrees to retain all Income Tax Returns,
related schedules and workpapers, and all material records and other documents
as required under Code Section 6001 and the regulations promulgated thereunder
(and any similar provision of state, local, or foreign Income or Transfer Tax
law) existing on the date hereof or created in respect of (i) any taxable period
that ends on or before or includes the Distribution Date or (ii) any taxable
period that may be subject to a claim hereunder, until the later of (x) the
expiration of the statute of limitations (including extensions) for the taxable
periods to which such Income Returns and other documents relate and (y) the
Final Determination of any payments that may be required in respect of such
taxable periods under this Agreement. From and after the end of the period
described in the preceding sentence of this Section 6.2, if CES wishes to
dispose of any such records and documents, then CES shall provide written notice
thereof to Synotex and shall provide Synotex the opportunity to take possession
of any such records and documents within 90 days after such notice is delivered;
provided, however, that if Synotex does not, within such 90-day period, confirm
its intention to take possession of such records and documents, CES may destroy
or otherwise dispose of such records and documents.
7
ARTICLE VII
PAYMENTS
7.1 Method of Payment. All payments required by this Agreement shall be
made by (a) wire transfer to the appropriate bank account as may from time to
time be designated by the parties for such purpose; provided that, on the date
of such wire transfer, notice of the transfer is given to the recipient thereof
in accordance with Section 9.1 hereof, or (b) any other method agreed to by the
parties. All payments due under this Agreement shall be deemed to be paid when
available funds are actually received by the payee.
7.2 Interest. Any payment required by this Agreement that is not made on
or before the date required hereunder shall bear interest, from and after such
date through the date of payment, at the underpayment rate as in effective at
such time under Section 6621 of the Code.
7.3 Characterization of Payments. For all tax purposes, the parties
hereto agree to treat, and to cause their respective affiliates to treat, (i)
any payment required by this Agreement as a contribution by Catalytica to CES
occurring immediately prior to the Distribution and (ii) any payment of interest
or non-federal Income Taxes by or to a Taxing Jurisdiction, as taxable to or
deductible by, as the case may be, the party entitled under this Agreement to
receive such payment or required under this Agreement to make such payment, in
either case except as otherwise mandated by applicable law; provided that in the
event it is determined as a result of a Final Determination that any such
treatment is not permissible, the payment in question shall be adjusted to place
the parties in the same after-tax position they would have enjoyed absent such
Final Determination.
7.4 Time of Indemnification Payment. To the extent an indemnification
obligation arises, the Indemnifying Party shall, upon at least ten (10) days
prior notice, make payment pursuant to such indemnification obligation no later
than five (5) days prior to the date the Indemnified Party makes a payment of
taxes, interest, or penalties with respect to a such Income Tax Liability,
including a proposed adjustment of taxes or an assessment of tax deficiency
asserted or made by any Taxing Jurisdiction that is premised in whole or part on
such Income Tax Liability, or a payment made in settlement of an asserted tax
deficiency.
ARTICLE VIII
RESOLUTION OF DISPUTES
8.1 Arbitrator. In the event of a dispute, controversy or claim relating
to the interpretation, performance, non-performance or breach of this Agreement
(a "Dispute") Synotex and CES shall jointly select an arbitrator, who shall be
an attorney or accountant who is generally recognized in the tax community as a
qualified and competent tax practitioner with experience in the tax area
involved in the issue or issues to be resolved (a "Tax Professional") to resolve
such Dispute. In the event Synotex and CES are unable to agree on a Tax
Professional to resolve such Dispute, each of Synotex and CES shall select one
Tax Professional, and these two Tax Professionals shall select a third Tax
Professional, which third Tax Professional shall resolve such Dispute. The Tax
Professional so selected to resolve such Dispute will be instructed to prepare
and deliver a written, reasoned opinion stating his or her decision within
thirty (30) days after completion of the arbitration. The decision of such Tax
Professional shall be final and non-appealable and may be enforced in any court
of competent jurisdiction.
8.2 Settlement Proposals. In connection with such arbitration, each party
shall present an overall settlement proposal to the Tax Professional that shall
encompass all issues to be resolved, and the two proposals shall set the outer
limits of the range within which the Tax Professional may make a determination
as to the appropriate settlement result.
8
8.3 Costs. All costs of the arbitration process shall be borne by the
party determined by the Tax Professional to have lost the arbitration; provided,
however, (i) in the event the Tax Professional makes a determination that
reflects a 50-50 settlement, Synotex and CES shall share equally the costs of
the arbitration, and (ii) in the event the Tax Professional makes a
determination that reflects a divided settlement, the Tax Professional shall
determine the proportion in which the parties shall share the costs of the
arbitration.
ARTICLE IX
MISCELLANEOUS
9.1 Notices. Notices, offers, requests or other communications required
or permitted to be given by either party pursuant to the terms of this Agreement
shall be given in writing to the respective parties to the following addresses:
If to Catalytica: Catalytica, Inc.
000 Xxxxxxxx Xxxxx, Xxxxxxxx 0
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: President
Fax: (000) 000-0000
With a copy to: Synotex Company, Inc.
Xxx Xxxxxxxx Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Xx., Esq.
Fax: (000) 000-0000
And to: DSM, N.V.
Legal Department
Het Xxxxxxxx 0, Xxxxxxx
Xxx Xxxxxxxxxxx
Attention: Ton C.M. van der Put, Esq.
Fax: 000-00-00-0000000
If to CES: Catalytica Energy Systems, Inc.
000 Xxxxxxxx Xxxxx, Xxxxxxxx 0
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: President
Fax: (000) 000-0000
If to Synotex: Synotex Company, Inc.
Xxx Xxxxxxxx Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Xx., Esq.
Fax: (000) 000-0000
With a copy to: DSM, N.V.
Xxxxx Xxxxxxxxxx
Xxx Xxxxxxxx 0, Xxxxxxx
Xxx Xxxxxxxxxxx
Attention: Ton C.M. van der Put, Esq.
Fax: 000-00-00-0000000
9
Or to such other address as the party to whom notice is given may have
previously furnished to the other in writing as provided herein. Any notice
involving non-performance, termination, or renewal shall be sent by hand
delivery, recognized overnight courier or, within the United States, may also be
sent via certified mail, return receipt requested. All other notices may also
be sent by fax, confirmed by first class mail. All notices shall be deemed to
have been given on the date on which such notice is actually received.
9.2 Designation of Affiliate. Synotex may assign any of its rights or
obligations under this Agreement to any member of its consolidated group as
determined under Section 1504 of the Code it shall designate or to any purchaser
of Catalytica; provided, however, that no such assignment shall relieve Synotex
of any obligation to make a payment hereunder to CES to the extent such designee
fails to make such payment.
9.3 Agent. CES hereby irrevocably appoints Catalytica as its agent and
limited attorney-in-fact to take any action as Catalytica may deem necessary or
appropriate to effect the tax sharing contemplated by this Agreement including,
without limitation, those actions specified in Treasury Regulation (S)1.1502-
77(a) and analogous provisions of state and local law.
9.4 Entire Agreement. This Agreement contains the entire understanding
of the parties hereto with respect to the subject matter contained herein, and
supersedes and cancels all prior tax sharing agreements, negotiations,
correspondence, undertakings and communications of the parties, oral or written,
respecting such subject matter, including but not limited to the tax sharing
agreement dated Xxxxx 0, 0000 xxxxx Xxxxxxxxxx, XXX, Xxxxxxxxxx Bayview, a
Delaware corporation, and CAT, a Delaware corporation.
9.5 Amendment. This Agreement may be amended, modified or supplemented
only by a written agreement signed by both of the parties hereto.
9.6 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without reference to choice
of law principles, as to all matters, including matters of construction,
validity and performance.
9.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same original.
9.8 Titles and Headings. Titles and headings to sections herein are
included for convenience of reference only and are not intended to be a part, or
to affect the meaning or interpretation, of this Agreement.
9.9 Successors and Assigns. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns. Neither party shall engage in any
transaction or series of transactions in which another entity becomes the owner
of 50% or more of the equity securities of such party unless the acquiror and
any ultimate parent entity shall have executed and delivered to the other party
an agreement confirming that such acquiror and/or ultimate parent entity shall,
upon consummation of such transaction or series of transactions, cause the
relevant party to continue to perform under the terms of this Agreement.
9.10 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner.
10
9.11 Termination. This Agreement shall remain in effect and its
provisions shall survive for the full period of all applicable statutes of
limitation (giving effect to any extension, waiver or mitigation thereof),
provided, however, if the Merger fails to occur and the Merger Agreement is
-------- -------
terminated pursuant to Article VII thereof then this Agreement shall become void
and of no effect with no liability on the part of any party hereto.
11
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
day and year first written above.
SYNOTEX COMPANY, INC.
By: /s/ [Illegible]
--------------------------------
Name:
Title:
CATALYTICA INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Chief Financial Officer
CATALYTICA ENERGY SYSTEMS, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Secretary
