Document:

<PAGE>

                                                                     EXHIBIT 4.1

Number                  Catalytica Energy Systems, Inc.               Shares

COMMON STOCK                                                        COMMON STOCK

             INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

                                            SEE REVERSE FOR CERTAIN RESTRICTIONS

                                            CUSIP 148884 10 9
This certifies that         is the owner of

  fully paid and non-assessable shares of common stock, $.001 PAR VALUE, of

                        Catalytica Energy Systems, Inc.

transferable only on the books of the Corporation by the holder hereof, in
person or by duly authorized attorney, upon surrender of this certificate
properly endorsed. This certificate is not valid unless countersigned and
registered by the Transfer Agent and Registrar.

   In Witness Whereof, the Corporation has caused this certificate to be signed
with the facsimile signatures of its duly authorized officers and to be sealed
with the facsimile seal of the Corporation.

   Dated:

                                    [SEAL]

                Secretary                       Chief Executive Officer

COUNTERSIGNED AND REGISTERED:
                   CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
                                                    TRANSFER AGENT AND REGISTRAR

                                         BY:

                                             AUTHORIZED SIGNATURE

<PAGE>

                        CATALYTICA ENERGY SYSTEMS, INC.

     THE CORPORATION IS AUTHORIZED TO ISSUE TWO CLASS OF STOCK, COMMON STOCK AND
PREFERRED STOCK. THE BOARD OF DIRECTORS OF THE CORPORATION IS AUTHORIZED TO
DETERMINE OR ALTER THE POWERS, PREFERENCES AND RIGHTS AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS GRANTED TO OR IMPOSED UPON ANY WHOLLY UNISSUED
SERIES OF PREFERRED STOCK, AND WITHIN THE LIMITATIONS OR RESTRICTIONS STATED IN
ANY RESOLUTION OR RESOLUTIONS OF THE BOARD OF DIRECTORS ORIGINALLY FIXING THE
NUMBER OF SHARES CONSTITUTING ANY SERIES, TO INCREASE OR DECREASE (BUT NOT BELOW
THE NUMBER OF SHARES OF ANY SUCH SERIES THEN OUTSTANDING) THE NUMBER OF SHARES
OF ANY SUCH SERIES SUBSEQUENT TO THE ISSUE OF SHARES OF THAT SERIES, TO
DETERMINE THE DESIGNATION OF ANY SERIES AND TO FIX THE NUMBER OF SHARES OF ANY
SERIES. THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS A STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES
THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES
AND/OR RIGHTS.

     The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

<TABLE>
<S>                                                      <C>
  TEN COM   -as tenants in common                        UNIP TRF MIN ACT__________ custodian (until age ______________)
  TEN ENT   -as tenants by the entireties                                   (Cust)
  JT TEN    -as joint tenants with right of                                        _____________ under Uniform Transfers
             survivorship and not as tenants                                       Minors
                            in common                                              to Minors Act________________________
  COM PROP  -as community property                                                                      (State)
</TABLE>

    Additional abbreviations may also be used though not in the above list.

  FOR VALUE RECEIVED,____________________________ hereby sell, assign and
transfer unto

  PLEASE INSERT SOCIAL SECURITY OR OTHER
  IDENTIFYING NUMBER OF ASSIGNEE
  ------------------------------

  ------------------------------

________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

________________________________________________________________________________

________________________________________________________________________________

__________________________________________________________________________shares
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint

________________________________________________________________________Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.

Dated ________________________________

             ___________________________________________________________________
             NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
                     NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN
                     EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY
                     CHANGE WHATEVER.

Signature(s) Guaranteed:

By_________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
PURSUANT TO S.E.C. RULE 17Ad-15.<PAGE>

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                                                                   EXHIBIT 10.12
                                                                   -------------

             COLLABORATIVE COMMERCIALIZATION AND LICENSE AGREEMENT

                                     among

                      CATALYTICA COMBUSTION SYSTEMS, INC.,

                                      and

                          GENXON POWER SYSTEMS, LLC.,

                                      and

                           GENERAL ELECTRIC COMPANY,

                         dated as of November 19, 1998

                                      -1-
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COLLABORATIVE COMMERCIALIZATION AND LICENSE AGREEMENT
-----------------------------------------------------

THIS COLLABORATIVE COMMERCIALIZATION AND LICENSE AGREEMENT dated as of November
19, 1998 (this "Agreement"), is entered into among CATALYTICA COMBUSTION
SYSTEMS, INC., a Delaware corporation ("CCSI"), having a place of business
located at 430 Ferguson Drive, Mountain View, California 94043, including its
affiliate, GENXON POWER SYSTEMS LLC., a Delaware limited liability company
("GPS"), also with offices at 430 Ferguson Drive, Mountain View, California
94043, and GENERAL ELECTRIC COMPANY, a New York corporation ("GE"), having a
place of business located at 1 River Road, Schenectady, New York 12345.

                             W I T N E S S E T H:

WHEREAS, CCSI has developed expertise and technology directed to its proprietary
XONON(TM) Combustion System in the field of catalytic combustion; and

WHEREAS, GE manufactures and sells heavy duty industrial gas turbines, and has
developed technology relating thereto; and

WHEREAS, CCSI and GE desire to design, develop and commercialize heavy duty
industrial gas turbine components employing catalytic combustion through the use
of various elements of the XONON Combustion System; and

WHEREAS, in addition to collaborating in the development and commercialization
of such components, GE, with CCSI's cooperation and assistance, will lead an
effort to obtain funding for such development and commercialization, in exchange
for certain considerations as more particularly described in this Agreement;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants contained in this Agreement, CCSI, GPS and GE hereby agree as follows:

                                   ARTICLE 1
                                   ---------

                                  DEFINITIONS
                                  -----------

For purposes of this Agreement, the terms defined in this Article 1 shall have
the respective meanings set forth below:

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1.1.  "Additional Period" shall mean the time period commencing upon the date of
       -----------------
      expiration or earlier termination of the Incentive Term relating to Gas
      Turbines (as such Incentive Term may be modified pursuant to Sections 7.3,
      7.4, 7.5 or 6.2.2 below), and ending on the fifth (5th) anniversary of
      such expiration date.

1.2.  "Affiliate" shall mean, with respect to any Person, any other Person which
       ---------
      directly or indirectly controls, is controlled by, or is under common
      control with, such Person. A Person shall be regarded as in control of
      another Person if it owns, or directly or indirectly controls, at least
      fifty percent (50%) of the voting stock or other ownership interest of the
      other Person, or if it directly or indirectly possesses the power to
      direct or cause the direction of the management and policies of the other
      Person by any means whatsoever.

1.3.  "Background" shall mean, with respect to Patents, Technical Information
       ----------
      and Technology, that as to which a party has acquired or acquires prior to
      the Effective Date or otherwise not (i) in connection with its work under
      this Agreement, or (ii) from the other party.

1.4.  [*] shall mean, with respect to any item sold to a [*] by CCSI or any CCSI
      licensee licensed to manufacture XONON Modules, the [*] charged from time
      to time for the same item or a comparable item.

1.5.  "CCSI" shall mean Catalytica Combustion Systems, Inc. and/or its
       ----
      affiliate, GENXON Power Systems, LLC.

1.6.  "CCSI Technology" shall mean all Technology relating to the XONON
       ---------------
      Combustion System, including Background and Commercialization Program
      Technology which is now or hereafter may be owned by CCSI and/or possessed
      by CCSI with rights to sublicense.

1.7.  "Commercialization" shall mean the offering to sell, and/or the actual
       -----------------
      sale, of an item.

1.8.  "Commercialization Phase" shall mean the second phase of the
       -----------------------
      Commercialization Program, during which the parties shall pursue
      Commercialization of the Products, as more particularly described in
      Article 7 below.

1.9.  "Commercialization Plan" shall mean a plan in accordance with the outline
       ----------------------
      attached to this Agreement as Exhibit B for the Commercialization of the
      Products during the Commercialization Phase, including estimated funding
      amounts and

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      dates for certain milestones, as such plan may be modified pursuant to the
      provisions of Section 5.1.3 below.

1.10. "Commercialization Program" shall mean the collaborative program of
       -------------------------
      research, development and Commercialization, to develop and adapt the
      XONON Combustion System and/or XONON Modules to Gas Turbines, and to
      supply GE with XONON Combustion System units and/or XONON Modules, for
      incorporation into Gas Turbines to be sold to GE's customers, all as more
      particularly described in the Development Workplan and the
      Commercialization Plan. The Commercialization Program shall be divided
      into a Technology Development Phase and a Commercialization Phase.

1.11. "Commercialization Program Technology" shall mean Technology conceived
       ------------------------------------
      during the Commercialization Program.

1.12. "Development Costs" shall mean the costs to GE or CCSI of performing its
       -----------------
      development obligations during the Technology Development Phase in
      accordance with the Development Workplan, including without limitation all
      costs of direct labor and benefits, raw materials, overhead, and all other
      direct and indirect costs, fees and out-of-pocket and other expenses
      incurred, paid or accrued by GE or CCSI, all as determined in accordance
      with generally accepted accounting principles, consistent with such
      party's internal cost accounting practices, allocated on a reasonable and
      consistent basis and charged for the performance of such activities.

1.13. "Development Funds" shall mean any and all amounts raised by the parties
       -----------------
      under Section 4.1 below or expended by GE under Section 4.2 below, for the
      purpose of funding Development Costs.

1.14. "Development Workplan" shall mean the detailed work plan for the
       --------------------
      technological development of the Products during the Technology
      Development Phase, which shall be (i) based on the Program Schedule and
      Milestones attached as Exhibit A, and (ii) agreed upon by the parties on
      or before December 15, 1998 and modified or updated by the parties on at
      least an annual basis by mutual agreement on or before December 15th
      preceding the year in question.

1.15. "Effective Date" shall mean the date of this Agreement as first set forth
       --------------
      above.

                                      -4-
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1.16. "Executive Committee" shall mean the joint committee composed of one
       -------------------
      representative of GE and one representative of CCSI as described in
      Section 5.2 below.

1.17. "Gas Turbine(s)" shall mean the heavy duty industrial gas turbines rated
       --------------
      at ** 70MW, both new and retrofit (that is, installed).

1.18. "GE" shall mean General Electric Company acting through its GE Power
       --
      Systems business, including its Affiliates.

1.19. "GE Components" shall mean the fuel/air mixer package, the preburner and
       -------------
      other elements (excluding the XONON Module) supplied by GE that have
      performance acceptable to operate with the XONON Module and equivalent to
      performance offered by XONON Components.

1.20. "Incentive Term" shall mean (a) with respect to the Commercialization of
       --------------
      the Products in the 7E Market Segment and the 7F Market Segment, the
      period commencing on the Effective Date and ending on December 31, 2003,
      subject to modification as provided in Sections 7.3, 7.4, 7.5 and 6.2.2
      below, and (b) with respect to the Commercialization of the Products in
      the Syntroleum Market Segment, the period commencing on the Effective Date
      and ending on December 31, 2001.

1.21. "Initial Term" shall mean the period commencing on the Effective Date and
       ------------
      ending with either the first Gas Turbine test, or upon the first
      anniversary of the Effective Date, whichever occurs first.

1.22. "Management Committee" shall mean the joint committee composed of two
       --------------------
      representatives of GE and two representatives of CCSI as described in
      Section 5.1 below.

1.23. "Market Segments" shall mean all, and "Market Segment" shall mean any one
       ---------------                       --------------
      of, the following: the 7E Market Segment, the 7F Market Segment, and the
      Syntroleum Market Segment.

1.24. "Maximum GE Required Expenditure" shall mean, for each Market Segment, the
       -------------------------------
      maximum dollar amount that GE shall be required to expend under Section
      4.2 for the funding of the Technology Development Phase due to a failure
      of the parties to raise sufficient funds from Third Parties with respect
      to such Market Segment.

** Greater than or equal to
                                      -5-
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1.25. "Patents" shall mean patents (including patents of importation, patents of
       -------
      confirmation, patents of improvements, patents and certificates of
      addition and utility models, as well as divisions, reissues,
      continuations, continuations-in-part, renewals and extensions of any of
      the foregoing) and applications therefore, and patents which may be issued
      on such applications covering inventions with respect to which the first
      application for patent anywhere was filed prior to the date of any
      termination of the Agreement.

1.26. "Person" shall mean an individual, corporation, partnership, trust,
       ------
      business trust, association, joint stock company, joint venture, pool,
      syndicate, sole proprietorship, unincorporated organization, governmental
      authority or any other form of entity not specifically listed herein.

1.27. "Pre-Commercial Activities" shall mean activities with a Person regarding
       -------------------------
      an item, where such activity does not involve the sale or field testing of
      the item.

1.28. "Products" shall mean the XONON Module, the XONON Components, and/or the
       --------
      XONON Combustion System.

1.29. "Program Schedule and Milestones" shall mean the schedule for the
       -------------------------------
      development milestones (GE "Tollgates")leading up to and including the
      first gas turbine firing date at a customer site for each Market Segment
      as set forth in Exhibit A which is attached to this Agreement.

1.30. "7E Market Segment" shall mean the worldwide market for the Products for
       -----------------
      GE Frame 7E Gas Turbines.

1.31. "7F Market Segment" shall mean the worldwide market for the Products for
       -----------------
      GE Frame 7F Gas Turbines.

1.32. "Syntroleum" shall mean Syntroleum Corporation.
       ----------

1.33. "Syntroleum Market Segment" shall mean the worldwide market for the
       -------------------------
      Products where the Products will be incorporated into a gas turbine
      (including, but not limited to, GE's Frame 7E and Frame 7F Gas Turbines)
      utilized in the Syntroleum Mod-2 Process.

1.34. "Syntroleum Mod-2 Process" shall mean Syntroleum's process for conversion
       ------------------------
      of gaseous hydrocarbons to liquids using an auto thermal reformer in
      combination with a Fischer-Tropsch reactor wherein a gas turbine
      incorporating a XONON

                                      -6-
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      Combustion System, having the capability to operate on natural gas on
      process start up and on low Btu tail gas from the Fischer-Tropsch reactor
      after process start up, is employed.

1.35. "Target Funding Amount" shall mean, for each Market Segment, the amount
       ---------------------
      that the parties must raise, either from Third Parties or expended by GE
      (totaling up to the Maximum GE Required Expenditure), in order to fund the
      Technology Development Phase expenses with respect to such Market Segment,
      as estimated in the Yearly Development Budgets for each Market Segment.

1.36. "Technical Information" shall mean all technical information, know-how,
       ---------------------
      manufacturing techniques, software and other copyrightable works,
      engineering and other data, drawings, material and process specifications,
      whether patented or unpatented, whether in written, printed, oral or other
      form, relating to, in the case of GE, heavy duty industrial gas turbines,
      and, in the case of CCSI, the XONON Combustion System.

1.37. "Technology" shall mean Patents and Technical Information.
       ----------

1.38. "Technology Development Phase" shall mean the first phase of the
       ----------------------------
      Commercialization Program, during which the parties shall cooperate in the
      development of the Products in accordance with the Development Workplan,
      as more particularly described in Article 3 below.

1.39. "Third Party" shall mean any Person other than CCSI, GE and their
       -----------
      respective Affiliates.

1.40. "Yearly Development Budget(s)" shall mean the budgets prepared by the
       ----------------------------
      Management Committee and approved by the parties, concurrent with the
      Development Workplan or updates thereof, pursuant to the provisions of
      Section 3.1.1 below for each year during the term of the Technology
      Development Phase, as the same may be modified pursuant to the provisions
      of Section 5.1.3 below. The Yearly Development Budgets shall be approved
      on or before each December 15 for the following year (except that the
      Yearly Development Budget for calendar year 1999 shall include any
      expenditures during 1998).

1.41. "XONON Combustion System" shall mean the XONON Module and XONON
       -----------------------
      Components.

                                      -7-
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1.42. "XONON Components" shall mean the fuel/air mixer package, the preburner,
       ----------------
      and other elements supplied by CCSI to be agreed upon by the Parties, such
      as combustor hardware components, which are necessary combustion system
      modifications to enable optimum operation of the XONON Module.

1.43. "XONON Control Algorithm(s)" shall mean the logic developed by or on
       --------------------------
      behalf of CCSI (outside of the scope of work done pursuant to the
      Agreement) as of the Effective Date hereof to provide necessary control of
      the start up, operation, management and protection of the XONON Combustion
      System or XONON Module in a Gas Turbine.

1.44. "XONON Module" shall mean the CCSI catalyst structure as used in Gas
       ------------
      Turbines, including its container and supporting structure for fixing the
      catalyst structure in the container, and replacement XONON Modules.

                              ARTICLE 2
                              ---------

                        REPRESENTATIONS AND WARRANTIES
                        ------------------------------

2.1.  Representations and Warranties. Each party hereby represents and warrants
      ------------------------------
      to the other Party except to the extent that a deviation from a
      representation or warranty would not have a material adverse effect on the
      properties, business, financial, technological or other condition of such
      party and would not materially adversely affect such party's ability to
      perform its obligations under this Agreement, as follows:

      2.1.1  Corporate Existence and Power. Such party (a) is a corporation duly
             -----------------------------
             organized, validly existing and in good standing under the laws of
             the state in which it is incorporated; (b) has the corporate power
             and authority and the legal right to own and operate its property
             and assets, to lease the property and assets it operates under
             lease, and to carry on its business as it is now being conducted
             and (c) is in compliance with all requirements of applicable law.

      2.1.2  Authorization and Enforcement of Obligations. Such party (a) has
             --------------------------------------------
             the corporate power and authority and the legal right to enter into
             this Agreement and to perform its obligations hereunder and (b) has
             taken all necessary corporate action on its part to authorize the
             execution and delivery of this Agreement and the performance of its
             obligations hereunder. This Agreement has been duly executed and
             delivered on

                                      -8-
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             behalf of such party, and constitutes a legal, valid, binding
             obligation, enforceable against such party in accordance with its
             terms.

      2.1.3  Consents. All necessary consents, approvals and authorizations of
             --------
             all governmental authorities and other Persons required to be
             obtained by such party in connection with this Agreement have been
             obtained.

      2.1.4  No Conflict. The execution and delivery of this Agreement and the
             -----------
             performance of such party's obligations hereunder (a) do not
             conflict with or violate any requirement of applicable laws or
             regulations and (b) do not conflict with, or constitute a default
             under, any contractual obligation of such party.

2.2.  Representations and Warranties of CCSI. CCSI hereby represents and
      --------------------------------------
      warrants to GE, as of the Effective Date, except to the extent that a
      deviation from a representation or warranty would not materially adversely
      affect either party's ability to perform its obligations under this
      Agreement, as follows:

      2.2.1  CCSI is the owner or co-owner of record of all patents, copyrights,
             trademarks, service marks, logos, slogans, and trade names
             (collectively, "Intellectual Property") for which registrations
             have been issued to CCSI by the United States Patent and Trademark
             Office or any similar office of a foreign country with respect to
             the CCSI Intellectual Property.

      2.2.2  CCSI (i) owns on an exclusive basis, or has the exclusive right to
             use, all of the Products and the Technology relating to the
             Products necessary to perform its obligations under this Agreement,
             and (ii) has the exclusive right to sell and commercialize, and
             license the sale and commercialization of, the Products to the
             extent required to perform its obligations under this Agreement, in
             each case without any limitations or restrictions of any kind, and
             without known conflict or asserted conflict with intellectual
             property rights of others.

      2.2.3  Neither the execution and delivery of this Agreement nor the
             consummation of the transactions contemplated by this Agreement
             will conflict in any way with, result in a breach of, constitute a
             default under, or create in any party the right to terminate,
             modify or cancel any agreement, contract, license, instrument or
             other arrangement relating to the CCSI Intellectual Property.

                                      -9-
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      2.2.4  CCSI has sufficient rights under the CCSI Intellectual Property to
             permit CCSI to perform its obligations under the Agreement.

      2.2.5  CCSI has not given or received any notice of any pending conflict
             with, or infringement of, the rights of others with respect to any
             CCSI Intellectual Property or with respect to any license of CCSI
             Intellectual Property under which CCSI is licensor or licensee.

      2.2.6  There are no pending causes of action, claims, actions, suits,
             judgments, orders, decrees, rulings, charges, hearings or
             investigations involving CCSI or the CCSI Intellectual Property
             (collectively, "Legal Proceedings") or threatened Legal Proceedings
             of, in, or before any court or quasi-judicial or administrative
             agency of any federal, state, local, or foreign jurisdiction or any
             arbitrator which could impair CCSI's ability to perform its
             obligations under this Agreement. There are no interference,
             opposition or cancellation proceedings or infringement suits
             pending, or to the knowledge of CCSI, threatened with respect to
             the CCSI Intellectual Property. CCSI is not subject to any
             judgment, order, writ, injunction or decree of any governmental
             authority, and has not entered into or become a party to any
             contract, which restricts or impairs its use of the CCSI
             Intellectual Property or right to sell or commercialize, and
             license the sale and commercialization of, the Products, as
             contemplate by the Agreement.

      2.2.7  CCSI has not entered into any consent or settlement agreement with
             respect to any CCSI Intellectual Property and no claim has been
             asserted and, to CCSI's knowledge, no claim is threatened or
             contemplated by any person with respect to the validity of, or
             CCSI' s ownership of or right to use, the CCSI Intellectual
             Property, or any of the Patents relating to the CCSI Intellectual
             Property.

      2.2.8  CCSI has complied with its contractual obligations relating to the
             protection of the CCSI Intellectual Property used pursuant to
             licenses whereby CCSI has licensed CCSI Intellectual Property or
             portions thereof to or from Third Parties.

      2.2.9  None of the licenses or other rights granted by, contemplated to be
             granted by, or claimed to have been granted by CCSI to any person
             or entity conflict in any way with the licenses and other rights
             granted by

                                      -10-
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             CCSI to GE under the terms of this Agreement and the performance by
             CCSI of the transactions contemplated by this Agreement.

      2.2.10 CCSI has delivered to its legal counsel, Wilson Sonsini Goodrich &
             Rosati ("CCSI Counsel"), true and correct copies of all the
             agreements of CCSI which relate to the CCSI Intellectual Property,
             and redacted versions of such agreements are attached as exhibits
             to the copy of CCSI Counsel's legal opinion of even date herewith
             delivered to counsel for GE (provided that such redacted versions
             shall not be delivered to GE).

      2.2.11 Upon execution, this Agreement will be enforceable against CCSI in
             accordance with its terms.

                                   ARTICLE 3
                                   ---------

                           COMMERCIALIZATION PROGRAM
                           -------------------------

3.1.  Technology Development Phase. The first phase of the Commercialization
      ----------------------------
      Program shall be the Technology Development Phase, during which GE and
      CCSI will pursue the technological development of the Products so as to
      enable their Commercialization. GE and CCSI will conduct their respective
      development efforts in accordance with the Program Schedule and Milestones
      attached hereto as Exhibit A, the Development Workplan and the Yearly
      Development Budgets approved by the Management Committee, as such
      Development Workplan and Yearly Development Budgets may be modified by the
      Management Committee under Section 5.1.3 below.

      3.1.1  Preparation of Yearly Development Budgets and Development
             ---------------------------------------------------------
             Workplans. Within sixty (60) days from the Effective Date and each
             ---------
             October 1 thereafter during the Technology Development Phase, the
             Management Committee shall jointly prepare the Yearly Development
             Budget and Development Workplan for the next calendar year. CCSI
             and GE shall approve such Yearly Development Budget and Development
             Workplan with such changes as CCSI and GE mutually deem necessary,
             prior to December 15, 1999 and each December 15 thereafter.

      3.1.2  Technology Development Phase Activities. Consistent with the
             ---------------------------------------
             Development Workplan, the Yearly Development Budgets, and any
             directives issued by the Management Committee:

                                      -11-
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                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
               OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
           CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

               3.2.1.1.  Conduct of Commercialization Program Activities. CCSI
                         -----------------------------------------------
                         and GE each shall conduct the Commercialization Program
                         in a sound scientific manner, and in compliance in all
                         material respects with all requirements of applicable
                         laws and regulations and all applicable good research
                         and manufacturing practices to attempt to achieve the
                         Development Workplan objectives efficiently and
                         expeditiously. CCSI and GE each shall proceed
                         diligently with the work set out in the Development
                         Workplan by using their respective good faith efforts
                         to provide, among others, the following resources: (a)
                         allocation of sufficient time, effort, equipment and
                         facilities to the Commercialization Program as each
                         reasonably believes is necessary carry out its
                         obligations under the Development Workplan and to
                         accomplish the objectives thereof; and (b) use of
                         personnel with sufficient skills and experience as are
                         required to carry out its obligations under the
                         Development Workplan and to accomplish the objectives
                         thereof.

               3.2.1.2.  Subcontracts. CCSI and GE each may subcontract portions
                         ------------
                         of the Commercialization Program to be performed by it
                         in the normal course of its business without the prior
                         consent of the other; provided, however, that every
                         subcontracted party shall enter into a confidentiality
                         agreement with the subcontracting party in accordance
                         with Article 10 below and each party shall be fully
                         responsible for any activities of its subcontractors
                         under this Agreement.

     3.1.3     Project Leaders. CCSI and GE each shall appoint a person (a
               ---------------
               "Project Leader") to coordinate its part of the Commercialization
               Program. The Project Leaders shall be the primary contacts
               between the parties with respect to the Commercialization
               Program. Each party shall notify the other within thirty (30)
               days after the date of this Agreement of the appointment of its
               Project Leader and shall notify the other party as soon as
               practicable upon changing this appointment. A Project Leader may
               be, but shall not be required to be, a member of the Management
               Committee.

     3.1.4     Availability of Employees. Each party shall make its employees
               -------------------------
               and relevant reports of nonemployee consultants available, upon
               reasonable notice during normal business hours, at each party's
               respective places of employment to consult with the other party
               on issues arising during the

                                      -12-
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                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEENEEN
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           CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

               Commercialization Program and in connection with any request from
               any regulatory agency, including regulatory, scientific, and
               technical testing issues.

       3.1.5   Quarterly Reports. GE and CCSI each shall keep the other informed
               -----------------
               of the progress of such party's research and development
               activities under the Development Workplan during the Technology
               Development Phase. Within thirty (30) days following the end of
               each quarter during the term of the Commercialization Program, GE
               and CCSI shall each prepare, and provide to the Management
               Committee, a written summary report which shall describe the
               development activities performed for by such party during such
               quarter. In addition, each party shall respond informally to any
               reasonable inquiry from the other party as to such progress and
               any other matters relevant to the Commercialization Program.

3.2.   Commercialization Phase. The second phase of the Commercialization
       -----------------------
       Program shall be the Commercialization Phase, during which GE and CCSI
       will jointly pursue the Commercialization of the Products as developed
       during the Technology Development Phase. GE and CCSI will conduct their
       respective efforts in accordance with the Commercialization Plan attached
       hereto as Exhibit B, as such Commercialization Plan may be modified by
       the Management Committee under Section 5.1.3 below, Article 7, and any
       other relevant terms of this Agreement.

                              ARTICLE 4
                              ---------

                  FUNDING OF THE TECHNOLOGY DEVELOPMENT PHASE
                  -------------------------------------------

4.1.   Joint Efforts to Obtain Funding. GE and CCSI shall use best efforts to
       -------------------------------
       obtain, with respect to each Market Segment, funding from Third Parties
       equal to or greater than the Target Funding Amount established in the
       Yearly Development Budgets. GE shall determine from which Third Parties
       such funding shall be accepted, and upon what terms; provided any
       material adverse impact on CCSI is agreed to in advance by CCSI.

4.2.   GE Required Expenditures. If the parties are unable to obtain, with
       ------------------------
       respect to any Market Segment, funding equal to or greater than the
       Target Funding Amount for such Market Segment on or before the date set
       forth in the applicable Yearly Development Budget, then GE will fund the
       Development Workplan in an amount equal to the difference between the
       Target Funding Amount and the funding

                                      -13-
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                             THE OMITTED PORTIONS.

     actually obtained from Third Parties, not to exceed the following amounts
     (each, a "Maximum GE Required Expenditure") with respect to each Market
     Segment:

     Market Segment                       Maximum GE Required Expenditure
     --------------                       -------------------------------
     7E Market Segment                    $2,000,000 in any 12-month period,
                                          each such 12 month period starting on
                                          the annual anniversary of the
                                          Effective Date, not to exceed
                                          $4,000,000 in the aggregate over the
                                          term of this Agreement.

     7F Market Segment                    $1,000,000 in any 12 month period,
                                          each such 12 month period starting on
                                          the annual anniversary of the
                                          Effective Date, not to exceed
                                          $2,000,000 in the aggregate over the
                                          term of this Agreement.

     Syntroleum Market Segment            GE shall have no obligation to expend
                                          funds to make up any shortfall in
                                          funding with respect to the Syntroleum
                                          Market Segment.

4.3. Failure to Obtain Target Funding. In the event the aggregate amount raised
     --------------------------------
     by the parties from Third Parties and expended by GE pursuant to Sections
     4.1 and 4.2 above with respect to any Market Segment is less than the
     Target Funding Amount for such Market Segment, then the Parties shall
     consider, in good faith, alternative funding arrangements which would
     provide an equitable sharing of risks and benefits in view of any
     Development Cost overruns, and shall in good faith pursue such alternative
     funding. In the event the parties are unable to obtain or agree on
     alternative funding, then each will have its termination rights under
     Section 13.2 below.

     In the event of a funding shortfall with respect to the Syntroleum Market
     Segment, in addition to triggering termination rights under Section 13.2
     below, the exclusive license under CCSI Technology granted to GE in Section
     6.2.1 below shall become non-exclusive with respect to the Syntroleum
     Market Segment only.

4.4. Funding Contributions by Customers of GE. The parties acknowledge that the
     ----------------------------------------
     ability of the parties to obtain Commercialization Program funding from
     customers of GE stems from the existing relationship between such customers
     and GE and such customers' confidence in GE's ability to successfully
     pursue the

                                      -14-
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        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
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           CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

     Commercialization Program. Accordingly, any funding obtained from customers
     of GE shall be deemed to be funding provided by GE (except that such
     customer funding shall not be counted toward the Maximum GE Required
     Contribution), and shall constitute a material part of the consideration
     being provided by GE for the performance of CCSI's obligations under this
     Agreement.

                              ARTICLE 5
                              ---------

                  MANAGEMENT OF THE COMMERCIALIZATION PROGRAM
                  -------------------------------------------

5.1. Management Committee.
     --------------------

     5.1.1  Composition of the Management Committee.  The Commercialization
            ---------------------------------------
            Program shall be conducted under the direction of the Management
            Committee composed of two (2) named representatives of CCSI and two
            (2) named representatives of GE. The CCSI representatives to the
            Management Committee shall consist of the CCSI Project Leader and a
            Vice President of CCSI. The GE representatives to the Management
            Committee shall consist of the GE Project Leader and a General
            Manager of GE. Each party shall appoint its respective
            representatives to the Management Committee from time to time, and
            may substitute one or more of its representatives, in its sole
            discretion, effective upon notice to the other party of such change,
            provided the replacements hold positions with the parties which are
            consistent with the functional roles set forth above.

     5.1.2  Meetings.  The Management Committee shall meet at least semiannually
            --------
            during the term of this Agreement, on such dates and at such times
            and places as agreed to by CCSI and GE, alternating between Mountain
            View, California and Schenectady, New York, or such other locations
            as the parties shall agree.

     5.1.3  Committee Responsibilities.  The Management Committee is responsible
            --------------------------
            for ensuring efficient and effective management of the
            Commercialization Program, including the establishment and approval
            of the Development Workplan, the Yearly Development Budgets and the
            Commercialization Plan. Any approval, determination or other action
            agreed to by a majority of the members of the Management Committee
            shall be the approval, determination or other action of the
            Management Committee.

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5.2.   Disagreements: Executive Committee. Within thirty (30) days after any
       ----------------------------------
       acknowledged deadlock, all disagreements within the Management Committee
       shall be submitted to the Executive Committee for resolution. GE's
       representative to the Executive Committee shall be a functional vice
       president. CCSI's representative to the Executive Committee shall be the
       President of CCSI. Each party shall appoint its respective
       representatives to the Executive Committee from time to time, and may
       substitute its representatives, in its sole discretion, effective upon
       notice to the other party of such change, provided the replacement holds
       a position and title with the replacing party which is consistent with
       the functional role set forth above.

5.3.   Management Committee Reports. Within thirty (30) days following each
       ----------------------------
       Management Committee meeting during the term of this Agreement, the
       Management Committee shall prepare and provide minutes to each party
       which shall include a reasonably detailed written summary report
       describing collaboration activities and plans as well as any committee
       decisions.

5.4.   Day-to-Day Control.  Each party shall have day-to-day control over its
       ------------------
       development and Commercialization activities, subject to compliance with
       the Development Workplan and the Commercialization Plan.

                              ARTICLE 6
                              ---------

                  CONTRIBUTION OF TECHNOLOGY AND LICENSE RIGHTS
                  ---------------------------------------------

6.1.   Technology Transfer.  Promptly following the Effective Date and
       -------------------
       thereafter as such information becomes available, GE and CCSI each shall
       disclose to the other party all Technical Information in its possession
       that is relevant to the Commercialization Program, to the extent deemed
       necessary by the disclosing party, in its reasonable discretion, to
       enable the other party to perform its obligations and to conduct its
       activities contemplated by this Agreement.

6.2.   Licenses.
       --------

       6.2.1  License Under CCSI Technology.  As partial consideration for GE's
              -----------------------------
              contribution to the Commercialization Program, CCSI hereby grants
              to GE for the term of this Agreement a paid up, worldwide license
              under all CCSI Technology:

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                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
               OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
           CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

               (a)  to purchase the Products from CCSI for application to Gas
                    Turbines and the Syntroleum Mod-2 Process, and

               (b)  To use, sell and offer to sell the Products for Gas Turbines
                    and the Syntroleum Mod-2 Process.

               The license granted in this Section 6.2.1 shall be exclusive
               during the Incentive Term and subject to (i) CCSI's reservation,
               during the Incentive Term, of the right and license under the
               CCSI Technology only to conduct Pre-Commercial Activities with
               Third Parties relating to catalytic combustion equipment for
               Third Party Gas Turbines, and (ii) with respect to exclusivity,
               GE purchasing all of its requirements for heavy duty gas turbines
               for catalytic combustion systems (as used in this Agreement, the
               term "catalytic combustion system" means a gas turbine combustion
               system that employs a catalyst upstream of the turbine inlet and
               integrated with the combustion process and shall not include SCR,
               SNCR, SCONOx or other catalytic devices employed in pollution
               clean-up) from CCSI during the term of any license rights granted
               under this Section 6.2.1 (otherwise, GE's license rights shall be
               non-exclusive).

     6.2.2     Upon the expiration of the Incentive Term relating to Gas
               Turbines, the exclusive license granted in Section 6.2.1 shall be
               limited to GE-designed Gas Turbines so that CCSI can thereafter,
               itself or through its licensees, sell and offer to sell the
               Products to Third Parties for non GE-designed Gas Turbine
               applications under the CCSI Technology.

               Furthermore, and in the alternative, GE may, in its sole
               discretion (after giving due regard to CCSI's concerns), elect to
               terminate the Incentive Term prior to its expiration date by
               written notice to CCSI setting forth such expiration date, and in
               such event, the length of the Additional Period shall be
               increased on an equivalent basis to compensate GE for any such
               reduction in the Incentive Term (such that the Additional Period
               shall commence on the date of termination of the Incentive Term
               and expire on the same date it would have expired if the
               Incentive Term (including any modifications pursuant to Sections
               7.3, 7.4 and 7.5) had not been terminated early). In addition, in
               a timely fashion after the Effective Date, or from time to time
               thereafter as appropriate, CCSI and GE shall consider in good
               faith other modifications of the Incentive Term, including
               elimination of all or any part of the Incentive Term in exchange
               for appropriate compensating expansions of the Additional Term
               and a

                                      -17-
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        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
               OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
           CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

            reconsideration of the continuing existence or structure of Section
            8.1 hereof.

            As partial consideration for the rights being granted back to CCSI
            under this Section 6.2.2, GE shall receive either (a) a fixed
            payment in an amount to be mutually agreed upon by CCSI and GE or
            (b) the right during the Additional Period to purchase the Products
            from CCSI or its licensees [*]. CCSI shall, at its sole option,
            elect which consideration GE shall receive, either (a) or (b)
            specified above, at least 60 days prior to the end of the Incentive
            Term and, if CCSI elects option (a) and the parties agree on the
            amount of the payment, shall pay GE the mutually agreed upon amount
            in full by wire transfer upon the expiration of the Incentive Term;
            otherwise, CCSI shall elect option (b). The grant back of rights to
            CCSI shall not be effective until payment under option (a) is
            received by GE or until CCSI notifies GE in writing that it elects
            to compensate GE under option (b) set forth in this Section 6.2.2.

     6.2.3  License Under XONON Trademark.  CCSI hereby grants to GE for the
            -----------------------------
            term of this Agreement, a royalty-free, non-exclusive, worldwide
            license under CCSI's XONON trademark for GE's marketing and sales
            activities related to the Products. In this regard, GE agrees to
            market the XONON Modules and/or XONON Components under CCSI's XONON
            trademark. This agreement on the part of GE to use the XONON
            trademark does not require GE to use the trademark directly on any
            gas turbine. In connection with this trademark license, GE agrees
            that it will submit samples of all XONON trademark usage to CCSI for
            approval prior to use in GE advertising, promotion and/or sales
            activities and that GE will promptly discontinue any usage of the
            XONON trademark which CCSI specifically objects to and so informs GE
            in writing in a timely manner.

     6.2.4  License for XONON Control Algorithms. CCSI hereby grants to GE for
            ------------------------------------
            the term of this Agreement, a non-exclusive, royalty-bearing
            worldwide license (with rights to sub-license) to copy, have copied,
            use, sublicense and offer to sub-license the XONON Control
            Algorithm(s) for use with the Products applied to Gas Turbines
            (including any gas turbines employed in the Syntroleum Market
            Segment), at a royalty of [*] for a paid up license for each gas
            turbine sold incorporating a XONON Control Algorithm, not to exceed
            total royalty payments of [*] for a fully paid up, irrevocable,
            perpetual worldwide license (with right to sublicense) for the XONON
            Algorithms.

                                      -18-
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                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
               OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
           CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

       6.2.5  License for Sale of GE Components.  CCSI hereby grants to GE for
              ---------------------------------
              the term of this Agreement, a non-exclusive, worldwide license to
              make, have made, use, and sell and offer to sell GE Components
              employing or otherwise based upon CCSI Background Technology for
              incorporation into GE gas turbines and GE shall pay CCSI a royalty
              of [*] per MW (ISO natural gas rating) for each gas turbine sold
              by GE incorporating a XONON module and GE Components irrespective
              of whether CCSI Background Technology is actually used in such GE
              Components, [*] for any individual gas turbine and a fully paid-up
              irrevocable, perpetual worldwide license with a [*] for such
              license. In connection with such license, CCSI shall provide to GE
              any and all CCSI Background Technology in CCSI's possession
              relevant to and useful in the design, manufacture and use of GE
              Components, including, without limitation, the following: (i)
              Computational Fluid Dynamics (CFD) models for analyzing and
              designing aerodynamic mixers and preburners, flow fields and flow
              paths to preclude recirculation zones; (ii) performance test data
              on fuel/air mixers and preburners; (iii) fuel/air mixers and
              preburner designs; and (iv) technical information, art, knowledge
              and training to use CCSI Background Technology.

6.3.   GE Audit Rights.  In the event CCSI elects to compensate GE under option
       ---------------
       (b) set forth in paragraph 6.2.2 (that is by giving GE the right during
       the Additional Period to purchase Product [*], which shall hereinafter be
       referred to as [*]), then CCSI shall use its best efforts to keep books
       and records accurately showing all CCSI pricing of Products to [*] during
       the term of this Agreement. Such books and records shall be subject to
       inspection by an independent auditor acceptable to CCSI at reasonable
       times, but not more frequently than once every twelve months, for the
       purpose of verifying the accuracy of [*] under the aforesaid Section
       6.2.2. The fees and expenses of the auditor performing such an
       examination shall be borne by GE. These books and records shall be
       preserved for at least two (2) years from the date [*] to which they
       pertain. Further, if the independent audit reveals to GE that CCSI has
       not given GE [*] for any Products, as required in Section 6.2.2 then CCSI
       shall promptly (within thirty (30) days) after receipt of written notice
       from GE of the Shortfall ("Shortfall" being defined as the sum of the
       difference between the prices actually paid by GE and [*] in question)
       either a) refund to GE the Shortfall plus [*] of such Shortfall as a
       penalty (at GE's option, either as a credit against future Product sales
       or as a cash payment) or, b) if CCSI in good faith disagrees with the
       independent auditor's report, immediately request binding arbitration
       solely on the issue of the correctness of the Shortfall

                                      -19-
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                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
               OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
           CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

       amount as reported by GE's independent auditor. Within thirty (30) days
       after any written request by CCSI for arbitration on the Shortfall issue,
       CCSI and GE shall agree on an independent expert arbitrator to review all
       of the relevant evidence including the GE auditor's report and render a
       decision on the correctness of the Shortfall reported by the independent
       auditor. The site of arbitration shall be New York, NY, unless otherwise
       agreed. Both parties shall use all reasonable efforts to select the
       independent arbitrator and complete the arbitration within sixty (60)
       days after GE's written notice of the Shortfall as set forth above. The
       decision of the independent expert arbitrator shall be final and binding,
       and the party found to be in error shall pay all of the costs of the
       independent arbitrator in reaching his/her decision. In the event CCSI is
       found to be in error and CCSI does not immediately compensate GE for the
       Shortfall as set forth above, or if CCSI does not immediately pay GE in
       cases where CCSI does not dispute the Shortfall amount, GE shall have the
       immediate right to terminate for cause as set forth in Sections 13.1 and
       13.4 below for CCSI failure to pay any Shortfall amounts.

                                   ARTICLE 7
                                   ---------

                               COMMERCIALIZATION
                               -----------------

The  Commercialization of the Products shall be subject to the Commercialization
Plan attached hereto as Exhibit B and the provisions of this Article 7.

7.1.   Supply Agreement.  During the Incentive Term and during the Additional
       ----------------
       Period provided in this Article 7, CCSI shall supply all of GE's
       requirements for the Products for incorporation into Gas Turbines,
       provided that CCSI can meet GE's quality, quantity and schedule
       requirements, pursuant to the Purchase Terms and Conditions set forth in
       Exhibit C. During this period, GE reserves the right to engage in Pre-
       commercial Activities with Third Parties regarding catalytic combustion
       systems for use on any GE gas turbine, provided CCSI shall have the right
       to treat any purchase or accepted written offer to purchase by GE of
       catalytic combustion systems for heavy duty gas turbines from a Third
       Party or other obtaining by GE, through license or otherwise, of
       catalytic combustion systems for such heavy duty gas turbines during the
       Incentive Term, as a material breach of this Agreement, triggering CCSI's
       rights under Sections 8.1, 13.1.3 and 13.3 hereof.

7.2.   Purchase Terms.  All GE purchases from CCSI of the Products shall be
       --------------
       subject to the Purchase Terms and Conditions as set forth on Exhibit C.

                                      -20-
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                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
               OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
           CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

       7.2.1   During the Incentive Term, such purchases will be subject to
               "value pricing", meaning that the Products shall be priced so
               that CCSI receives an equitable share of the value, based on
               market advantages offered by the Products, which GE is able to
               obtain in pricing Gas Turbines incorporating the Products, in a
               pricing strategy which takes into account the price of competing
               technologies such as DLN and SCR. If the parties cannot agree on
               a price for GE's purchase of the Products using the above value
               pricing approach, CCSI shall have the option of setting a sales
               price which incorporates a value price which GE may accept or
               reject. In all cases, GE shall retain the right to establish, in
               its sole discretion, the prices of its products, including
               products incorporating the Products.

       7.2.2   In any event and as further consideration for GE's contribution
               to the Commercialization Program, to the extent GE procures all
               of its requirements for Gas Turbine catalytic combustion systems
               from CCSI, [*]

       7.2.3   To assist CCSI in planning its manufacturing activities, GE shall
               promptly provide CCSI with its best estimate of its requirements
               for goods over the next annualized or consecutive twelve (12)
               month period broken down by one (1) month periods. Further GE
               shall update this twelve (12) month estimate on a calendar
               quarter basis, such that CCSI receives a revised estimate of GE's
               requirements for the goods for the next four (4) calendar
               quarters. If GE places any firm orders which exceeds by more than
               fifty percent (50%) the rolling twelve (12) month estimates, CCSI
               shall use all reasonable efforts to fill such order but shall not
               be in breach for failure to do so unless GE gives CCSI at least
               six months written notice of the revised estimate.

       7.2.4   For the purposes of Article 7 of Exhibit C, Terms & Conditions of
               Purchase, GE and CCSI shall agree upon CCSI's process and control
               system and such agreed upon system shall be deemed acceptable to
               GE for purposes of Article 7 of Exhibit C, Terms & Conditions of
               Purchase.

7.3.   Extension of the Incentive Term - Year 2003 Deliveries. If, on or before
       ------------------------------------------------------
       January 1, 2002, GE commits in writing to purchase XONON Modules for
       delivery in calendar year 2003 in the following quantities, the Incentive
       Term for Gas Turbines only shall be extended as follows:

                                      -21-
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                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
               OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
           CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

     (a)  A commitment to purchase XONON Modules for at least twenty-five
          percent (25%) of the Gas Turbines shipped by GE during calendar year
          2003 having firing temperatures in excess of 2300(degree)F (excluding
          Gas Turbines shipped during such time period for which the customers
          do not require a Selective Catalytic Reduction Unit (SCR) or
          equivalent NOx control systems) shall result in an extension of the
          Incentive Term through December 31, 2004.

     (b)  A commitment to purchase XONON Modules for either:

          (1)  at least fifty percent (50%) of the Gas Turbines shipped by GE
               during calendar year 2003 having firing temperatures in excess of
               2300(degree)F (excluding Gas Turbines shipped during such period
               for which the customers do not require SCR or equivalent NOx
               control systems); or

          (2)  at least fifty percent (50%) of all Gas Turbines shipped by GE
               during calendar year 2003; shall result in an extension of the
               Incentive Term through December 31, 2005.

     7.4. Extension of the Incentive Term - Year 2002 Deliveries. If GE commits
          ------------------------------------------------------
          in writing on or before January 1, 2002 to purchase XONON Modules for
          delivery in calendar year 2002 for ten percent (10%) of the Gas
          Turbines shipped by GE during the calendar year 2002 having firing
          temperatures in excess of 2300(degree)F (excluding Gas Turbines
          shipped for which the customers do not require SCR or equivalent NOx
          control systems), or six (6) such Gas Turbines (whichever is greater),
          then the Incentive Term shall be extended by one (1) year, over and
          above any extension provided for in Section 7.3 above.

     7.5. Reduction of Incentive Term. If GE fails, through no fault of CCSI, to
          ---------------------------
          meet the target dates for first Gas Turbine firings as set forth in
          the Commercialization Plan attached hereto as Exhibit B, then the
          Incentive Term for each Market Segment (excluding the Syntroleum
          Market Segment, if funding from Syntroleum or other Third Party
          funding to fully fund the Syntroleum Program cannot be obtained in
          timely fashion) shall be reduced as follows:

          Delay in Meeting Target Dates:       Reduction in the Incentive Term:
          -----------------------------        -------------------------------
          0-3 months                           no reduction
          4-6 months                           1 year reduction
          7-11 months                          2 year reduction

                                      -22-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
[*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
        SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
                REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

         more than 12 months                loss of any remaining Incentive Term

         On the other hand, if the target dates for first Gas Turbine firings
         are not met because of CCSI's fault, or if CCSI is unable to commit to
         the deliveries contemplated by Sections 7.3 and 7.4 in quantities that
         would extend the Incentive Term due to XONON Module technical, quality
         or delivery reasons, then GE and CCSI will consider in good faith a
         revised schedule for extension of the Incentive Term that would provide
         GE with the benefits contemplated in Sections 7.3 and 7.4.

7.6.     Purchase of Products for Application to Smaller Turbines. As further
         --------------------------------------------------------
         consideration for GE's contribution to the Commercialization Program,
         GE shall have the right to purchase from CCSI, on a non-exclusive basis
         (but exclusive as to GE designed gas turbines), Products for
         application to GE designed and manufactured gas turbines in the 2 to
         70MW size range, and to use, sell and offer to sell Products for such
         applications, subject to reasonable purchase terms and conditions to be
         negotiated at the time, but in any event at [*].

7.7.     Alternative Products Source. If CCSI is unable to consistently meet
         ---------------------------
         GE's requirements for Products from a quality, quantity or delivery
         standpoint, CCSI shall promptly establish a second source of supply (as
         a vendor to CCSI) with a Third Party manufacturer designated by CCSI
         and approved by GE (which approval shall not be unreasonably withheld),
         solely for the purpose of satisfying CCSI's obligations to supply
         Products to GE under this Agreement.

                                   ARTICLE 8
                                   ---------

                                   ROYALTIES
                                   ---------

8.1.     Royalties Upon Certain Terminations. In the event of a termination of
         -----------------------------------
         this Agreement by CCSI under Section 13.1, or 13.2 subparagraph
         b)including, in each case, any termination by individual Market Segment
         under Section 13.6, and subject to any surviving terms of this
         Agreement, if GE elects thereafter to continue to sell and offer to
         sell Products to new customers, with respect to any such Market
         Segment, then CCSI shall grant to GE a non-exclusive, royalty-bearing,
         irrevocable, worldwide license under CCSI's Commercialization Program
         Technology, CCSI's Background Technology and XONON Control Algorithms
         to sell and offer to sell Products and sublicense XONON Control
         Algorithms, and GE shall pay to CCSI fees and royalties with respect to
         such Market Segment, payable in the form of (a) a one-time fee in the
         amount set forth below, payable

                                      -23-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
[*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
        SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
                REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

         upon the first sale of a gas turbine incorporating such Product in such
         Market Segment; and (b) a royalty in the amount set forth below for
         each subsequent sale of a gas turbine incorporating such Product [*].

         Market Segment        [*]     One-Time Fee      Royalty Per Sale
         --------------        ---     ------------      ----------------
         7F                    [*]          [*]                 [*]
         7E                    [*]          [*]                 [*]
         Syntroleum            [*]          [*]                 [*]

8.2.     Royalties on XONON Control Algorithms. If GE sublicenses the XONON
         -------------------------------------
         Control Algorithms in connection with its sales of Gas Turbines
         incorporating the Products, then GE shall pay to CCSI the royalty
         provided in Section 6.2.4.

8.3.     Royalties on Sale of GE Components Employing CCSI Technology. If GE
         ------------------------------------------------------------
         sells or leases GE gas turbines incorporating a XONON Module and GE
         Components, GE shall pay to CCSI the royalty provided in Section 6.2.5.

8.4.     Royalty Accrual. For purposes of royalty payments hereunder, GE Gas
         ---------------
         Turbines or GE Components shall be considered sold when title is
         transferred to a Third Party, or upon lease execution if leased to a
         Third Party.

8.5.     Royalty Payment. Any and all royalties accruing to CCSI under this
         ---------------
         Agreement, shall be paid by GE within forty-five (45) days following
         the end of each quarter year period of the calendar year during which
         the royalties have accrued. In this regard, all monies due as royalty
         payments under this Agreement shall be payable in the United States
         funds collectible at par in San Francisco, California.

8.6.     Royalty Accounting. GE shall within forty-five (45) days after the end
         ------------------
         of each quarter year during which royalties are due under this
         Agreement forward to CCSI a written statement showing the quantities of
         royalty bearing GE Gas Turbine(s) or GE Components which have been sold
         (in U.S. dollars) during each quarter year of this Agreement and a
         computation of royalties payable thereon and shall accompany each
         statement by payment of the amount due. If no sales of such royalty
         bearing Gas Turbines or Component has been made during any reporting
         period, a statement to this effect shall be required.

8.7.     Royalty Records & Audits. GE shall use its best efforts to keep books
         ------------------------
         and records accurately showing all GE gas turbines and/or GE Components
         sold or leased by it and subject to royalties under the terms of this
         Agreement. Such books and

                                      -24-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
[*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
        SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
                REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

         records shall be open to inspection by an independent auditor
         acceptable to GE at reasonable times, but not more frequently than once
         every twelve months, for the purpose of verifying the accuracy of the
         quarterly reports and the royalties due. The fees and expenses of the
         auditor performing such an examination shall be borne by CCSI. These
         books and records shall be preserved for at least two (2) years from
         the date of the royalty payment to which they pertain.

                                   ARTICLE 9
                                   ---------

                            PATENT INFRINGEMENT AND
                     TECHNOLOGY RIGHTS ENFORCEMENT ACTIONS
                     -------------------------------------

9.1.     CCSI Indemnification. CCSI shall indemnify and hold GE, its Affiliates,
         --------------------
         customers and sublicensees harmless, and hereby forever releases and
         discharges GE, its Affiliates, customers, and sublicensees, from and
         against all liabilities, damages and expenses, including attorneys' and
         experts' fees and costs, arising out of any claim of patent or
         copyright infringement brought by a Third Party because of the
         manufacture, use or sale of, or offer to sell, any Product supplied by
         CCSI to GE, its Affiliates, customers or sublicensees, provided such
         use is in accordance with Product or XONON Control Algorithm
         specifications and CCSI is notified promptly of receipt of the Third
         Party claim and CCSI is given full control of any defense against such
         claim. If as a result of the claim, the use by GE of the Product or
         XONON Control Algorithm is enjoined, then CCSI shall at its option (i)
         obtain the appropriate license from the Third Party claimant to enable
         GE and its customers to continue such Product or XONON Control
         Algorithm use, (ii) modify the Product or XONON Control Algorithm so
         that it no longer is infringing, but still satisfies agreed upon
         performance specifications, or (iii) replace the Product or XONON
         Control Algorithm with a non-infringing Product or XONON Control
         Algorithm which satisfies agreed upon performance specifications. In
         the event CCSI is unable to eliminate the infringement by any of the
         aforementioned measures, then CCSI and GE shall meet and agree on
         possible alternatives which, as a last resort, shall include CCSI
         taking back any infringing Product or XONON Control Algorithm and
         refunding the purchase price for such Product or XONON Control
         Algorithm, subject to GE's agreement which shall not be unreasonably
         withheld.

9.2.     GE Patent Indemnification. GE shall indemnify and hold CCSI and its
         -------------------------
         Affiliates harmless and forever releases and discharges CCSI and its
         Affiliates from and against all liabilities, damages and expenses,
         including attorney's and experts fees and costs arising out of any
         claim of patent infringement brought by a Third Party

                                      -25-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
[*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
        SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
                REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

         because of the manufacture, use or sale of, or offer to sell, any GE
         Components incorporating Technology licensed by CCSI to GE under
         Section 6.2.5 hereof (other than claims based solely on Products
         supplied by CCSI) by GE, its Affiliates, customers or sublicensees,
         provided CCSI notifies GE promptly of receipt of the Third Party claim
         and GE is given full control of any defense against such claim.

9.3.     Enforcement of Patents and Other Technology Rights.  CCSI shall, at its
         --------------------------------------------------
         sole expense, use its best efforts to enforce CCSIowned Patents and
         other Technology rights relating to any Products purchased by GE
         against any infringement of such Patents or unauthorized use or
         misappropriation of such Technology rights by a Third Party of which
         CCSI becomes aware. GE shall promptly notify CCSI if GE becomes aware
         of any such infringement or Technology misappropriation. In the event
         such action includes the bringing of a suit against such Third Party,
         GE shall provide such assistance as CCSI shall reasonably request,
         provided that CCSI shall reimburse GE for all reasonable expenses
         thereby incurred. All costs and expenses, including attorney's fees of
         any lawsuit instituted by CCSI shall be born by CCSI. The amount of
         recovery paid to CCSI shall belong to and be the sole property of CCSI.

                                  ARTICLE 10
                                  ----------

                                CONFIDENTIALITY
                                ---------------

10.1.    Nondisclosure and Use Obligations. Except as otherwise provided in
         ---------------------------------
         this Article 10, during the term of this Agreement and for a period of
         ten (10) years thereafter, all information of a confidential nature
         disclosed pursuant to this Agreement by one party to another and, in
         the case of documents, designated by the disclosing party by an
         appropriate stemp, marking or legend as being confidential to the
         disclosing party shall be used by the receiving party only for the
         purposes of this Agreement and shall be maintained as confidential by
         the receiving party, using the same safeguards as it uses to protect
         its own confidential information of a similar character. The receiving
         party will not publish or disclose to Third Parties any such received
         information of a confidential nature without the prior express written
         consent of the disclosing party. The foregoing obligations on use and
         disclosure of confidential information shall not apply to any
         information which:

         (a)  is shown by objective evidence to be already in the possession of
              the receiving party at the time of first receipt from the
              disclosing party; or

                                      -26-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
[*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
        SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
                REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

         (b)  is shown by objective evidence to be developed independently by
              employees of the receiving party who had not had access to the
              confidential information; or

         (c)  is or becomes part of the public domain without breach of this
              Agreement by the receiving party; or

         (d)  is made available by the disclosing party to a third party without
              like obligations on disclosure; or

         (e)  is rightfully obtained by the receiving party from third person
              without restriction or breach of this Agreement by the receiving
              party; or

         (f)  in the case of documents, is not designated by an appropriate
              stamp, marking or legend as being confidential to the disclosing
              party at the time of disclosure.

         Oral information disclosed by one party to the other shall be confirmed
         as confidential by a written summary to be submitted by the disclosing
         party to the receiving party within ten (10) days after the oral
         transmission thereof. For purposes of this Article 10, information and
         data described above shall be referred to as "Information".

10.2.    Permitted Disclosures.  To the extent it is reasonably necessary or
         ---------------------
         appropriate to fulfill its obligations or exercise its rights under
         this Agreement, (a) a party may disclose Information it is otherwise
         obligated under this Article 10 not to disclose to its directors,
         officers, employees, attorneys, accountants, consultants and
         sublicensees, on a need-to-know basis on the condition that such
         Persons agree to keep the Information confidential for the same time
         periods and to the same extent as such party is required to keep the
         Information confidential; (b) a party may disclose Information,
         described in Section 10.1 above, that it is otherwise obligated under
         this Article 10 not to disclose to its Affiliates and outside
         contractors, on a need-to-know basis on the condition that such Persons
         agree to keep the Information confidential for the same time periods
         and to the same extent as such party is required to keep the
         information confidential; and (c) a party may disclose such Information
         to government or other regulatory authorities to the extent that such
         disclosure is required by applicable law, regulation or court order, or
         is reasonably necessary to obtain patents and to commercially market
         the Products, provided that the disclosing party shall provide written
         notice to the

                                      -27-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
[*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
        SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
                REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

         other party and sufficient opportunity to object to such disclosure or
         to request confidential treatment thereof.

10.3.    Terms of this Agreement. CCSI and GE shall not disclose any terms or
         -----------------------
         conditions of this Agreement to any Third Party without the prior
         consent of the other party, except as required by applicable law.

                                  ARTICLE 11
                                  ----------

                                  PUBLICATION
                                  -----------

11.1.    Notice of Publication.  During the term of this Agreement, CCSI and GE
         ---------------------
         each acknowledge the other party's interest inpublishing certain of its
         results to obtain recognition within the scientific and investment
         communities and to advance the state of scientific knowledge. Each
         party also recognizes the mutual interest in obtaining valid patent
         protection and protecting business interests. Consequently, either
         party, its employees or consultants wishing to make a publication
         (including any oral disclosure made without obligation of
         confidentiality) relating to work performed by such party as part of
         the Commercialization Program (the "Publishing Party") shall transmit
         to the other party (the "Reviewing Party") a copy of the proposed
         written publication at least forty-five (45) days prior to submission
         for publication, or an outline of such oral disclosure at least fifteen
         (15) days prior to presentation. The Reviewing Party shall have the
         right (a) to propose modifications to the publication for patent
         reasons or to protect or delete proprietary information, and (b) to
         request a reasonable delay in publication in order to protect
         patentable or proprietary information.

11.2.    Timing of Publication. If the Reviewing Party requests such a delay,
         ---------------------
         the Publishing Party shall delay submission or presentation of the
         publication for a period of ninety (90) days to enable patent
         applications protecting each party's rights in such information to be
         filed. Upon the expiry of forty-five (45) days, in the case of proposed
         written disclosures, or fifteen (15) days, in the case of proposed oral
         disclosures, from transmission to the Reviewing Party, the Publishing
         Party shall be free to proceed with the written publication or the
         presentation, respectively, unless the Reviewing Party has requested
         the delay described above.

11.3.    Disclosure Regarding Agreement. Neither party shall make a press
         ------------------------------
         release or other public disclosure of the fact that this Agreement has
         been entered into or any details of its terms without the other party's
         prior consent, unless such disclosure

                                      -28-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
[*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
        SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
                REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

         is required, on the advice of counsel, to comply with any local, state
         or federal law or regulation, in which case disclosure can be made upon
         prior written notice to the other party.

                                  ARTICLE 12
                                  ----------

                         TECHNOLOGY AND PATENT RIGHTS
                         ----------------------------

12.1.    Ownership of Background Technology. The entire right, title and
         ----------------------------------
         interest in all Background Technology shall be retained by the party
         owning it. To the extent a party is granted any right to use Background
         Technology under this Agreement, the use of such Background Technology
         shall be limited to the express purposes of this Agreement.

12.2.    Ownership of Commercialization Program Technology.  The entire right,
         -------------------------------------------------
         title and interest in all Commercialization Program Technology (a)
         conceived by employees or others acting solely on behalf of CCSI or its
         Affiliates shall be owned solely by CCSI, (b) conceived by employees or
         others acting solely on behalf of GE or its Affiliates shall be owned
         solely by GE. Inventions conceived during the term of this Agreement by
         employees of CCSI and GE, or their respective Affiliates, shall be
         owned jointly by CCSI and GE based on employees or agents of both
         parties being named as inventors in accordance with laws of
         inventorship of the United States (the "Jointly Owned Technology").
         Such ownership rights of each party with respect to the Technology are
         subject to the licenses granted under Article 6 above and this Article
         12. CCSI and GE each hereby represents that all employees performing
         its obligations under this Agreement shall be obligated under a binding
         written agreement to assign to it, or as it shall direct, all
         Technology conceived by such employees.

12.3.    Commercialization Program Technology Cross-Licenses.
         ---------------------------------------------------

         12.3.1   GE License. In the event GE conceives inventions or exchanges
                  ----------
                  Technical modifications to the XONON Module during the period
                  of ten (10) years following the Effective Date of this
                  Agreement and/or if GE conceives, by means of GE employees who
                  had access to CCSI Technology, any invention comprising an
                  improvement or modification to the XONON Module or develops
                  Technology which is derived from CCSI owned Technology, during
                  such period, then GE shall grant to CCSI a non-exclusive
                  royalty-free, perpetual, world-wide, irrevocable license (with
                  unrestricted rights

                                      -29-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
[*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
        SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
                REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

                  to sublicense) to make, have made, use, sell, lease and/or
                  export Products under both the aforesaid Technical Information
                  and any Patents which result from the aforesaid inventions;
                  said non-exclusive license being restricted in field-of-use to
                  Products for gas turbines employing catalytic combustion,
                  other than aircraft gas turbines of the type manufactured by
                  GE Aircraft Engines.

         12.3.2   CCSI License. In the event CCSI conceives inventions or
                  ------------
                  exchanges Technical Information comprising improvements and/or
                  modifications to the XONON Components or GE Components or any
                  other portion of the combustion system (excluding the XONON
                  Module) during the period of ten (10) years following the
                  Effective Date of this Agreement and/or if CCSI conceives, by
                  means of CCSI employees who had access to GE Technology, any
                  invention relating to the aforesaid XONON Components or GE
                  Components or any other portion of the combustion system or
                  develops Technology which is derived from GE owned Technology,
                  during such period, then CCSI shall grant to GE a non-
                  exclusive royalty-free, perpetual, world-wide, irrevocable
                  license (with unrestricted right to sublicense) to make, have,
                  made, use, sell, lease and/or export XONON Components, GE
                  Components, and any other portion of the combustion system
                  (excluding the XONON Module) under both the aforesaid
                  Technical Information and any Patents which result from the
                  aforesaid inventions, said non-exclusive license being
                  restricted in field-of-use to gas turbines employing catalytic
                  combustion.

12.4.    Patent Filing Procedure.  In all cases, the inventing party shall
         -----------------------
         retain the sole right to determine whether or not Patent applications
         will be filed, and whether Patents and Patent applications will be
         maintained, on any such inventions which are conceived by its
         employees. With regard to inventions conceived jointly by both parties
         during work under this Agreement and Patents arising from such joint
         inventions which shall be the joint property of GE and CCSI, each party
         shall be free to utilize the same and to license third parties of its
         own choosing thereunder without consultation with the other party, and
         without an accounting or sharing of licensing income thereby received,
         if any. The parties agree to select mutually acceptable Patent
         attorneys to file and prosecute Patent applications based on such joint
         patentable inventions and to share equally the cost of such services
         and expenses reasonably incurred by such attorneys, including the
         payment of Patent maintenance fees, and without further compensation,
         to give such attorneys all reasonable assistance, to cause all
         necessary papers to be executed and do all things that may reasonably
         be required to obtain and maintain Patents on such

                                      -30-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
[*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
        SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
                REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

         joint inventions. Each party shall be kept fully advised of the status
         of the prosecution of each such Patent application and shall be
         consulted in advance with respect to the advisability of continuing
         said prosecution in the event of any final rejection, appeal,
         interference, or the like, and each party may, at any time by ten (10)
         days' notice to the other party, elect not to continue to pays its
         share of such services and expenses incurred after the date of said
         election with respect to any such Patent or Patent application;
         provided, however, that the party making such election shall, at the
         time of so notifying the other party, immediately assign to the other
         party all rights to the Patent or Patent application with respect to
         which the election is being made. Neither party hereto shall be
         obligated to make any payments for or on account of proceedings before
         any court or any other tribunal or agency in connection with the
         maintenance or assertion of any Patents based on joint inventions.

12.5.    No Other Technology Rights. Except as otherwise provided in this
         --------------------------
         Agreement, under no circumstances shall a party, as a result of this
         Agreement, obtain any ownership interest or other right in any
         technology, know-how, patents, pending patent applications or products
         of the other party, including items owned, controlled or developed by
         the other, or transferred by the other to such party at any time
         pursuant to this Agreement.

                                  ARTICLE 13
                                  ----------

                                  TERMINATION
                                  -----------

13.1.    Termination for Cause.  Either party may terminate this Agreement for
         ---------------------
         cause upon the occurrence of any of the following:

         13.1.1  The other party shall (a) seek the liquidation, reorganization,
                 dissolution or winding up of itself (other than dissolution or
                 winding up for the purposes of reconstruction or amalgamation)
                 or the composition or readjustment of all or substantially all
                 of its debts, (b) apply for or consent to the appointment of,
                 or the taking of possession by, a receiver, custodian, trustee
                 or liquidator of itself or substantially all of its assets, (c)
                 make a general assignment for the benefit of its creditors, (d)
                 commence a voluntary case under the Bankruptcy Code, (e) file a
                 petition seeking to take advantage of any other law relating to
                 bankruptcy, insolvency, reorganization, winding-up or
                 composition or readjustment of debts, or (f) adopt any
                 resolution of its Board of Directors or stockholders for the
                 purpose of effecting any of the foregoing; or

                                      -31-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
[*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
        SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
                REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

         13.1.2  A proceeding or case shall be commenced without the application
                 or consent of the other party and such proceeding or case shall
                 continue undismissed, or an order, judgment or decree approving
                 or ordering any of the following shall be entered and continue
                 unstayed in effect, for a period of ninety (90) days from and
                 after the date service of process is effected upon the other
                 party, seeking (a) its liquidation, reorganization, dissolution
                 or winding up, or the composition or readjustment of all or
                 substantially all of its debts, (b) the appointment of a
                 trustee, receiver, custodian, liquidator or the like of itself
                 or of all or substantially all of its assets, or (c) similar
                 relief under any law relating to bankruptcy, insolvency,
                 reorganization, winding up or composition or readjustment of
                 debts; or

         13.1.3  Except as otherwise provided in Article 15 below, upon or after
                 the breach of any material provision of this Agreement, if the
                 breaching party has not cured such breach within ninety (90)
                 days after notice thereof from the other party, this Agreement
                 shall terminate for cause, at the option of the other party,
                 upon the expiration of such ninety (90) day cure period.
                 Notwithstanding the foregoing, GE shall have the right to
                 terminate this Agreement for cause upon thirty (30) days notice
                 if GE has terminated any three (3) purchase orders due to CCSI
                 material default in performing those purchase orders during any
                 twelve (12) month period.

                 In addition, GE may terminate this Agreement for cause in
                 accordance with Article 16 due to an assignment of this
                 Agreement, or a transfer of control of CCSI, to a Competing
                 Manufacturer.

         13.1.4  In the event that either GE or CCSI elects to terminate this
                 Agreement under the provisions of this Section 13.1 or Section
                 13.2, the other party shall have the right, within thirty (30)
                 days of receipt of a termination notice, to request binding
                 arbitration on the issue. In such event, CCSI and GE shall
                 agree on an independent arbitrator to review the relevant
                 evidence and render a decision on whether termination is
                 justified under the circumstances. The site of arbitration
                 shall be New York, NY if requested by CCSI and in San
                 Francisco, CA if requested by GE, unless otherwise agreed. Both
                 parties shall use all reasonable efforts to select the
                 independent arbitrator and complete the arbitration within
                 sixty (60) days after the notice of request for arbitration.
                 The decision of the arbitrator shall be final and binding, and
                 the non-prevailing party shall pay all of the costs of the
                 arbitrator. If arbitration is requested hereunder,

                                      -32-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
[*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
        SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
                REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

                 in no event shall any remedies provided in this Agreement and
                 triggered by default under this Section 13.1 be implemented
                 until after the decision of the arbitrator has been rendered.

13.2.    Termination Without Cause. Either party shall have the unilateral right
         -------------------------
         to terminate this Agreement by giving written notice to the other party
         (a) at any time, if the parties are unable, after best efforts, to
         raise funds from Third Parties within a Market Segment in at least an
         amount equal to the difference between (i) the Target Funding Amount
         for such Market Segment, and (ii) the Maximum GE Required Contribution
         for such Market Segment, excluding the Syntroleum Market Segment, or
         (b) after the end of the Initial Term, upon the terminating party's
         written notice to the other party of significant technical issues which
         indicate that the technical objectives of the Commercialization Program
         are not achievable or cannot be achieved within the timetable
         established in the Development Workplan or any extension thereof agreed
         to by the parties; with GE having the right to terminate under (b)
         above only if the technical issues relate to the XONON Module or XONON
         Components, and CCSI having the right to terminate under (b) above only
         if the technical issues relate to the GE Components.

13.3.    Consequences of Termination -- CCSI Not in Default. In the event this
         --------------------------------------------------
         Agreement is terminated by GE under Section 13.2, or by CCSI under
         Section 13.1: (a) CCSI shall have no obligation to make improvements to
         the XONON Combustion System available to GE beyond those developed in
         the Commercialization Program prior to such termination; (b) GE's
         licenses under CCSI Technology pursuant to Section 6.2.1 shall become
         non-exclusive, (c) GE's right to [*] under Article 6 shall be
         extinguished, (d) GE's rights to [*], rights to purchase and sole
         distribution rights under Article 7 shall all terminate, and (e) if GE
         elects to pursue its options under Section 8.1, GE shall pay CCSI the
         predetermined royalty or fee as provided therein.

13.4.    Consequences of Termination -- GE Not in Default. In the event this
         ------------------------------------------------
         Agreement is terminated by CCSI under Section 13.2, or by GE under
         Section 13.1: (a) GE's licenses under CCSI Technology pursuant to
         Article 6 shall continue in effect and CCSI shall promptly arrange with
         GE for a Third Party source of supply (as a vendor to CCSI) of the
         XONON Combustion System using the procedure set forth in Section 7.7
         above which assures GE of a continuing and uninterrupted source of
         supply for the XONON Modules and/or XONON Components, and (b) GE's
         rights to [*] under Articles 6 and 7 as well as GE's rights to [*],
         rights to purchase and sole distribution rights under Article 7 shall
         all survive such termination.

                                      -33-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
              OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
          CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

         Further, if GE terminates under Section 6.3 above because of failure on
         the part of CCSI to pay any Shortfall under Section 6.3 which CCSI is
         obligated to pay under said Section 6.3, CCSI shall immediately set up
         and license, at CCSI's cost, a Third Party source of Product under the
         procedure set forth in Section 7.7 above except in this case the Third
         Party shall be a vendor to GE, provided the Third Party license is
         limited to manufacture and sale of Products solely to GE at the
         Discount Price and not to Third Parties. In the event the Third Party
         source of supply established above under clause (a) as a vendor to CCSI
         fails to supply GE with Product in a timely fashion pursuant to this
         Agreement, then GE shall, upon written notice to CCSI, also have the
         right to have a Third Party Product vendor to GE established pursuant
         to the procedure set forth in the preceding sentence.

13.5.    Effect of Termination.  Termination of this Agreement shall not relieve
         ---------------------
         the parties of any obligation  accruing prior to such termination.  The
         provisions  of  Sections  9.1,  9.2 and  this  13.5,  and  Articles  10
         [Confidentiality],  11 [Publication], 12 [Technology and Patent Rights]
         and 14  [Indemnity],  in  addition  to  those  rights  and  obligations
         specifically  noted in Section 13.3 or 13.4, to the extent  applicable,
         shall survive the termination of this Agreement.  Each party shall bear
         its own termination costs. There will be no liquidated damages.

13.6.    Termination  by Market  Segment.  Any right to terminate this Agreement
         -------------------------------
         under this  Article 13 may,  at the  election  of the party  seeking to
         terminate, be exercised as to one or more individual Market Segments as
         specified in such party's written notice of termination. In such event,
         this  Agreement  shall continue in full force an effect with respect to
         the remaining Market Segments.

                                  ARTICLE 14
                                  ----------

                                   INDEMNITY
                                    --------

14.1.    Direct Indemnity. Each party shall indemnify and hold the other party,
         ----------------
         its Affiliates and sublicensees harmless, and hereby forever releases
         and discharges the other party, its Affiliates and sublicensees, from
         and against all claims demands, liabilities, damages and expenses,
         including attorneys fees and costs (all "Liabilities") arising out of
         any breach of a representation or warranty contained in Section 2
         hereof, negligence, recklessness or intentional wrongful acts or
         omissions of the indemnifying party, its Affiliates or sublicensees in
         connection with the work performed by such party during the term of
         this Agreement except in each case to the extent such Liabilities
         resulted from negligence, recklessness or intentional wrongful acts or
         omissions of the other party. Neither party shall be

                                      -34-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
              OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
          CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

         liable to the other for any indirect, incidental or consequential
         damages arising out of any terms or conditions in this Agreement or
         with respect to the performance thereof.

14.2.    Procedure. A party (the "Indemnitee") that intends to claim
         ---------
         indemnification under this Article 14 shall promptly notify the other
         party (the "Indemnitor") of any Liability or action in respect of which
         the Indemnitor or any of its Affiliates intend to claim such
         indemnification, and the Indemnitor shall have the right to participate
         in, and, to the extent the Indemnitor so desires, jointly with any
         other Indemnitor similarly noticed, to assume the defense thereof with
         counsel selected by the Indemnitor. The indemnity obligations under
         this Article 14 shall not apply to amounts paid in settlement of any
         loss, claim, damage, liability or action if such settlement is effected
         without the consent of the Indemnitor, which consent shall not be
         withheld unreasonably. The failure to deliver notice to the Indemnitor
         within a reasonable time after the commencement of any such action, if
         materially prejudicial to its ability to defend such action, shall
         relieve such Indemnitor of any liability to the Indemnitee under this
         Article 14, but the omission so to deliver notice to the Indemnitor
         will not relieve it of any liability that it may have to any Indemnitee
         otherwise than under this Article 14. The Indemnitor may not settle the
         action or otherwise consent to an adverse judgment in such action that
         diminishes the rights or interests of the Indemnitee without the
         express written consent of the Indemnitee. The Indemnitee, its
         employees and agents, shall cooperate fully with the Indemnitor and its
         legal representatives in the investigation of any action, claim or
         liability covered by this indemnification at Indemnitor' s expense.

                                  ARTICLE 15
                                  ----------

                                EXCUSABLE DELAY
                                ---------------

Neither party shall be held liable or responsible to the other party nor be
deemed to have defaulted under or breached this Agreement for failure or delay
in fulfilling or performing any term of this Agreement to the extent, and for so
long as, such failure or delay is caused by or results from causes beyond the
reasonable control of the affected party including but not limited to fire,
floods, embargoes, war, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority or the other party. The foregoing shall be subject to the
delayed party using reasonable efforts to mitigate the adverse consequences of
such delay.

                                      -35-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
              OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
          CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

                                  ARTICLE 16
                                  ----------

                                  ASSIGNMENT
                                  ----------

This Agreement may not be assigned or otherwise transferred, nor, except as
expressly provided hereunder, may any right or obligations be assigned or
transferred by either party without the consent of the other party; provided
further, however that (i) each party may assign its rights and interests, and
delegate its obligations, hereunder, effective upon written notice thereof, to
any Affiliate, and (ii) either party may assign its rights and interests, and
delegate its obligations, hereunder, effective upon written notice thereof, to
any Third Party which acquires all or substantially all of the assets of CCSI or
GE, as the case may be, or which is the surviving third party in a merger or
consolidation with CCSI or GE as the case may be, if such Third Party assumes
all of the obligations of CCSI or GE, as the case may be, hereunder. Subject to
the foregoing, any reference to CCSI or GE hereunder shall be deemed to include
the successors thereto and assigns thereof. Notwithstanding anything to the
contrary contained in this Article 16, if, without GE's prior written consent,
either (a) CCSI assigns or otherwise transfers its rights and interests under
this Agreement to any Competing Manufacturer (defined below) including any
transfer by merger or asset sale; or (b) any Competing Manufacturer purchases or
otherwise obtains a controlling ownership interest (defined as 50% or more
ownership interest) in CCSI; then this Agreement shall terminate upon GE's
election and written notice thereof to CCSI, and such termination shall be
deemed a termination for cause under Section 13.1, resulting in the consequences
to the parties described in Section 13.4. For the purposes of this Agreement,
"Competing Manufacturers" shall mean only companies that design, manufacture and
sell gas turbines of greater than 2 MW for power generation or mechanical drive
applications. Further, in the event the assignment or transfer of rights under
clause a) above or the sale or transfer of controlling interest under clause b)
above are to a company (other than a Competing Manufacturer) that designs,
manufactures and sells gas turbines of greater than 2 but less than 70MW for
power generation or mechanical drive applications (herein "Other Turbine
Manufacturer") then the Parties hereby agree that GE has the right after good
faith consideration of any CCSI concerns, to Terminate under Section 13.1 with
consequences set forth in Section 13.4. Notwithstanding the foregoing, GE may
assign its rights and obligations with respect to intellectual property to GE
Power Systems Licensing, Inc., a wholly-owned subsidiary of GE.

                                      -36-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
              OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
          CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

                                  ARTICLE 17
                                  ----------

                                 SEVERABILITY
                                 ------------

Each party hereby acknowledges that it does not intend to violate any public
policy, statutory or common laws, rules, regulations, treaty or decision of any
government agency or executive body thereof of any country or community or
association of countries. Should one or more provisions of this Agreement be or
become invalid, the parties shall substitute, by mutual consent, valid
provisions for such invalid provisions which valid provisions in their economic
effect are sufficiently similar to the invalid provisions that it can be
reasonably assumed that the parties would have entered into this Agreement with
such provisions. In case such provisions cannot be agreed upon, the invalidity
of one or several provisions of this Agreement shall not affect the validity of
this Agreement as a whole, unless the invalid provisions are of such essential
importance to this Agreement that it is to be reasonably assumed that the
parties would not have entered into this Agreement without the invalid
provisions.

                                  ARTICLE 18
                                  ----------

                                 MISCELLANEOUS
                                 -------------

18.1.    Notices. Any consent, notice or report required or permitted to be
         -------
         given or made under this Agreement by one of the parties to the other
         shall be in writing, delivered personally or by facsimile (and promptly
         confirmed by personal delivery, U.S. First class mail or courier), U.S.
         first class mail or courier, postage prepaid (where applicable),
         addressed to such other party at its address indicated below, or to
         such other address as the addressee shall have last furnished in
         writing to the addressor and (except as otherwise provided in this
         Agreement) shall be effective upon receipt by the addressee.

                    If to CCSI:           Catalytica Combustion Systems, Inc.
                                          430 Ferguson Drive
                                          Mountain View, CA 94043
                                          Attention:  President

                    If to GPS:            GENXON Power Systems, LLC
                                          430 Ferguson Drive
                                          Mountain View, CA 94043
                                          Attention:  President

                                      -37-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
              OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
          CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

                    If to GE:             GE Power Systems
                                          1 River Road
                                          Schenectady, New York 12345
                                          Attention: VP, Power Plants

18.2.    Applicable Law. This Agreement shall be governed by and construed in
         --------------
         accordance with the laws of the State of New York, without regard to
         the conflicts of law principles thereof.

18.3.    Agreement Limited to Express Terms. Except as otherwise expressly
         ----------------------------------
         provided in this Agreement, the parties agree that the
         Commercialization Program contemplated herein, and any discussions or
         communications between the parties relating thereto, shall not restrict
         either party's right to take whatever future actions such party
         unilaterally determines to be in its best interest, including the right
         to undertake similar programs or relationships with Third Parties
         covering subjects related to the matters covered herein and neither the
         holding of any discussions between the parties, nor the exchange of any
         information shall diminish or restrict in any way the right that any
         party has to market, lease, sell or otherwise make available its
         products and services to any customer or Third Party.

18.4.    Entire Agreement. This Agreement contains the entire understanding of
         ----------------
         the parties with respect to the subject matter hereof. All express or
         implied agreements and understandings, either oral or written,
         heretofore made are expressly superseded by this Agreement. This
         Agreement may be amended, or any term hereof modified, only by a
         written instrument duly executed by both parties.

18.5.    Headings. The captions to the Articles and Sections hereof are not a
         --------
         part of the terms but are merely guides or labels to assist in locating
         and reading the Articles and Sections hereof.

18.6.    Independent Contractors. It is expressly agreed that CCSI and GE shall
         -----------------------
         be independent contractors and that the relationship between the two
         parties shall not constitute a partnership, joint venture or agency.
         Neither CCSI nor GE shall have the authority to make any statements,
         representations or commitments of any kind, or to take any action or
         undertake any obligation, which shall be binding on the other party,
         without the prior consent of the other party.

18.7.    Waiver. The waiver by either party of any right hereunder or the
         ------
         failure to perform or of a breach by the other party shall not be
         deemed a waiver of any

                                      -38-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
              OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
          CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

         other right hereunder or of any other breach or failure by said other
         party whether of a similar nature or otherwise.

18.8.    Counterparts. This Agreement may be executed in two or more
         ------------
         counterparts, each of which shall be deemed an original, but all of
         which together shall constitute one and the same instrument.

                                      -39-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
              OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
          CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as of the date
first set forth above.

AGREED FOR AND ON BEHALF               AGREED FOR AND  ON BEHALF OF
OF GENERAL ELECTRIC COMPANY            CATALYTICA COMBUSTION SYSTEMS,
                                       INC.

By:    /s/ Mark M. Little              By:    /s/ Dennis A. Orwig
       ------------------------               --------------------------

Name:  Mark M. Little                  Name:  Dennis A. Orwig
       ------------------------               --------------------------

Title: VP Power Plants                 Title: Chief Executive Officer
       ------------------------               --------------------------

AGREED FOR AND ON BEHALF OF
GENXON

By:    /s/ Patrick T. Conroy
       ------------------------

Name:  Patrick T. Conroy
       ------------------------

Title: President
       ------------------------

Witness: /s/ Stanley S. Smith
         -----------------------

Name:  Stanley S. Smith
       -------------------------

Title: GM-GT Product Management
       -------------------------

Witness: /s/ Joseph Cusson
         -----------------------

Name:  Joseph Cusson
       -------------------------

                                      -40-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
              OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
          CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

Title: Director, Marketing CCSI
       -------------------------

                                      -41-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
              OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
          CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

                                   EXHIBIT A
                                   ----------

                        PROGRAM SCHEDULE AND MILESTONES
                        -------------------------------

         [*]

                                      -42-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
              OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
          CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

                                   EXHIBIT B
                                   ---------

                            COMMERCIALIZATION PLAN
                            ----------------------

                Time to Market Focus of Commercialization Program
                -------------------------------------------------

Basic Principles
----------------

         Customer requirements drives market timing Development  compatible with
         GE's NPI Tollgate process

Program Targets
---------------

Initial Customer     Market                 First            Estimated
Funding              Segments/  Incentive   Turbine Firing   Program Budgets (3)
Targets              Turbines   Term        Tollgate 6       ($ million)
-------              --------   ----        ----------       -----------

Syntroleum and       PGT10 or   Through     [*]              GE          [*]
licensees            Other      2001                         CCSI        [*]
                                                                          --
                                                             Total       [*]

Enron, Arco, US      7E         Through     [*] (2)          GE          [*]
Utilities, Other                2003                         CCSI        [*]
7E/SCR Users,                                                             --
GE Selkirk                                                   Total       [*]

Enron, US            7F         Through     [*] (2)          GE          [*]
Utilities                       2003                         CCSI        [*]
                                                                          --
                                                             Total       [*]

----------------------

[*]

(2)      To first engine firing which includes 2 full size test combustors and 1
         full combustor set (10 combustors for a 7E and 14 combustors for a 7F),
         but excludes costs for installation and appropriate field testing. The
         cost will be site specific - very preliminary estimate of [*]. Field
         testing is estimated at 2 months.

                                      -43-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
              OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
          CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

(3)      Assumes that both GE and CCSI will pursue parallel "Component" paths
         through the Preliminary Design Phase (includes prototype test
         hardware), and GE will select a "Component" path to go forward to Final
         Design Phase.

                                      -44-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
               OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
           CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

                                   EXHIBIT C
                                   ---------

                        TERMS & CONDITIONS OF PURCHASE
                        ------------------------------

1.  APPLICABLE TERMS AND CONDITIONS. Purchaser and Seller agree that the
following statement shall be printed on the front of any Purchase Order or
Contract for the sale of XONON Modules or XONON Components (herein referred to
individually or collectively as the "Product" or "Products" or "Goods"): "The
purchase and sale of the Products set forth in this Purchase Order shall be
subject to the Terms and Conditions of Purchase attached as Exhibit C to the
Collaborative Commercialization and License Agreement (the "CCLA"), dated
November 19, 1998, between Catalytica Combustion Systems, Inc., (the "Seller")
and General Electric Company (the "Purchaser"). Any other terms and conditions
included in this Purchase Order or in any acknowledgment of this Purchase Order
shall not be applicable to this purchase and sale of Products.

2. PRICES AND PAYMENTS. Unless otherwise stated on the face of this Purchase
Order, Seller shall invoice Purchaser for one hundred percent (100%) of the
purchase price within thirty (30) days after delivery. Purchaser shall remit
full payment of the purchase price to Seller by wire transfer within forty five
(45) days of receipt of Seller's invoice. All prices specified here in are firm
and shall not be subject to change, and includes all federal and state income
taxes and payroll taxes. Seller's invoice shall separately state any local
sales, use, VAT or other types of local taxes and duties applicable to the goods
furnished to the Purchaser. No extra charges of any kind will be allowed unless
specifically agreed to in writing by the Purchaser. Purchaser shall be entitled
at all time to set-off any amount owing, excluding disputed claims, at any time
from Seller to Purchaser against any amount payable at any time by Purchaser in
connections with this between Purchaser and Seller.

3. DELIVERY, RISK OF LOSS, TITLE TRANSFER, DELAY. Products manufactured in the
United States shall be delivered to Purchaser FOB Seller's factory. Unless
otherwise stated on the face of this Purchase Order, Purchaser shall be
responsible for risk of loss and all transportation and insurance costs after
delivery. Unless otherwise stated on the face of this Purchase Order title shall
pass to Purchaser upon placement of the goods on the trucks or other transit of
Purchaser's designated carriers. Goods delivered to Purchaser in advance of the
delivery schedule may be returned to Seller at Seller's expense.

Seller shall use all reasonable efforts to meet any delivery schedule specified
by Purchaser, provided Purchase Orders are placed in a timely fashion and
contain all

                                      -45-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
               OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
           CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

necessary information including but not limited to a full description of the
goods ordered, the quantity ordered and requested delivery dates. All Purchase
Orders shall be placed as firm orders for goods setting forth the quantities of
goods required and the requested delivery date(s). Purchaser shall endeavor to
place purchase orders not later than one hundred and twenty (120) days prior to
the requested delivery date. Provided Purchaser has complied with the foregoing
one hundred and twenty (120) day prior notification, and except to the extent
caused by an Excusable Delay as defined in Article 15 of the CCLA, Seller shall
be liable for liquidated damages for failure to achieve delivery on or prior to
Purchaser's designated delivery date at the rate of 0.5% of the purchase price
allocable to the delayed goods per day (beginning with the fifteenth (15) day
after the delivery date). Seller's liquidated damages shall not exceed ten
percent 10% of Purchase Order purchase price. Purchaser shall waive such
liquidated damages if Purchaser's contract with its customer does not include a
provision for delay liquidated damages between Purchaser and its customer or if
Seller is able to remedy its delay at its sole cost such that Purchaser does not
incur any delay liquidated damages to its customer arising out of the delay of
the Products. If Seller is more than sixty (60) days late, Purchaser shall have
the right to terminate this Purchase Order.

4.  PURCHASER'S PROPERTY. Unless otherwise agreed in writing, all tools,
equipment or material of every description furnished to Seller by Purchaser or
specially paid for by Purchase, and any replacement thereof, or any materials
affixed or attached thereto, shall be and remain the personal property of
Purchaser. Such property and, whenever practical, each individual item thereof,
shall be plainly marked or otherwise adequately identified by Seller as the
property of the Purchaser and shall be safely stored separate and apart from
Seller's property. Seller shall not substitute any property for Purchaser's
orders. Such property, while in Seller's custody or control, shall be held at
Seller's risk, shall be kept insured by Seller at Seller's expense in an amount
equal to the replacement cost with loss payment to Purchaser and shall be
subject to removal at Purchaser's written request, in which event Seller shall
prepare such property for shipment and shall redeliver to Purchaser in the same
condition as originally received by Seller, reasonable wear and tear excepted,
all at Seller's expense.

5. DRAWINGS. Unless otherwise specifically agreed in writing by Purchaser, any
check or approval of drawings by Purchaser will be for Seller's convenience and
will not relieve Seller of its responsibility to meet all requirements of this
order.

6. CHANGES. Subject to the order scheduling requirements in Article 7.2.3 of the
CCLA and Article 3 above, the Purchaser may at any time, in writing, make
changes within the general scope of this Purchase Order in any one or more of
the following: (a) drawings, designs or specification where the goods to be
furnished are to be specially

                                      -46-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
               OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
           CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

manufactured for the Purchaser in accordance therewith, but not Seller's
specifications which the parties have mutually agreed upon under the CCLA as
being applicable to this Purchase Order, or other mutually agreed upon
specifications; (b) method of packing; (c) time of delivery; (d) the amount of
Purchaser's furnished property; or (e) quality. If any such changes causes an
increase or decrease in the cost of, or the time required for the performance of
any work under this Contract, whether changed or not changed, an equitable
adjustment shall be made in the Contract Price or delivery schedule, or both,
and the Purchase Order shall be modified in writing accordingly. Notification to
Purchaser of any Claim by the Seller for adjustment under this clause must be
asserted within thirty (30) days from the date of receipt by the Seller of the
notification of change. Any change to this order shall be authorized only by a
duly executed Purchase Order amendment.

7. INSPECTION. (a) All goods (which term throughout this order includes without
limitation raw materials, components, intermediate assemblies, tools and end
products) shall be subject to inspection and test by the Purchaser and its
Customer, (where GE is required under its contracts with its Customers to
provide inspection rights at Seller's facility, then Seller's agreement will not
be required) at all reasonable times and places, including the place of
manufacture; (b) If any inspection or test is made on the premises of Seller or
its supplier, Seller, without additional charge, shall provide all reasonable
facilities and assistance for the safety and convenience of the inspectors in
the performance of their duties and Purchaser shall comply with Seller's
premises, security and safety rules; (c) acceptance or rejections of the goods
shall be made as promptly as practical after delivery, except as otherwise
provided in this order, but failure to inspect and accept or reject goods or
failure to detect defects by inspection, shall neither relieve Seller from
responsibility for such goods as are not in accordance with the order
requirements nor impose liabilities on Purchaser thereof; (d) Seller shall
provide and maintain an inspection and process control system mutually
acceptable to Purchaser and Seller covering the goods hereunder. Records of all
inspection work by Seller shall be kept complete and available to Purchaser
during the performance of this order and for such longer periods as may be
specified in this order, not to exceed five (5) years after order date. Seller
will allow representative of Purchaser and Purchaser's customers reasonable
access to the facilities involved in performing this order for purposes of
reviewing the status and progress of production, subject to compliance with
Seller's facility security and safety rules. If during the course of any
inspection in Seller's factory, Purchaser finds that any of the goods are
defective or otherwise not in conformity with the requirements of this Purchase
Order or the CCLA, including any drawings or specifications, Seller shall remedy
such non conformity at its own expense by reperforming any nonconforming service
or replacing any non conforming goods.

                                      -47-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
               OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
           CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

8. WARRANTIES. Seller warrants that all goods sold will be free of any claims of
any nature and by any third person and that Seller shall convey clear title to
Purchaser. Seller further warrants that the Products supplied by Seller to
Purchaser shall perform in accordance with agreed upon specifications and shall
be free from defects (a) in materials and workmanship, whatever the origin, (b)
in design having regard to the state of the art at the time of the order and
including defects arising from the choice of materials and / or parts; (c) in
manufacturing process; and (d) arising from non-suitability for the use for
which it was intended. This warranty shall take effect from the date of
acceptance of the Products by Purchaser and shall remain in force until the
earliest of the following to occur: (i) the gas turbine in which the Products
have been installed achieve 8000 operating hours; (ii) forty eight months from
Start-Up; or (iii) sixty (60) months after the delivery of the Products to
Purchaser. Start-Up means the time when the equipment installation is complete
and the gas turbine in which the Product has been installed is first
synchronized to the grid. Purchaser's sole remedy in the event of any breach of
this warranty shall, at Seller's option, be the replacement or repair in a
timely fashion of the defective Product. Seller shall make replacement Products
available and pay transportation, taxes, custom duties and insurance to the site
where the gas turbine is located. Any repaired or replaced Product shall be
warranted for 8000 operating hours, provided that in no event shall Seller's
warranty obligation extend beyond seventy two (72) months from the delivery of
the initial Product.

Purchaser shall notify Seller of obvious defects within sixty (60) days of
delivery and of latent defects within thirty (30) days of discovery.

The warranties set forth in this section shall not apply to any claims, problems
or defects which are the result of normal wear and tear, mishandling, misuse,
neglect or improper testing and repair by other than CCSI or its authorized
representatives.

THE EXPRESS WARRANTIES PROVIDED HEREIN ARE IN LIEU OF ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ALL OTHER WARRANTIES
ARE HEREBY DISCLAIMED AND EXCLUDED BY SELLER.

9. SUSPENSION; TERMINATION FOR CONVENIENCE. Purchaser may, at any time, by
written notice to Seller and termination for convenience, suspend performance of
the work. Said notice of suspension shall specify the date of suspension and the
estimated duration of the suspension. Upon receiving any such notice of
suspension, Seller shall promptly suspend further performance of the work to the
extent specified, and during the period of such suspension shall properly care
for and protect all

                                      -48-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
               OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
           CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

work in progress and materials, supplies, and equipment Seller has on hand for
performance of the work. Purchaser may at any time withdraw the suspension of
performance of the work as to all or part of the suspended work by written
notice to Seller specifying the effective date and scope of withdrawal, and
Seller shall resume diligent performance of the work for which the suspension is
withdrawn on the specified effective date of withdrawal, subject to then
existing contracts and commitments .

Purchaser may terminate all or any part of this Purchase Order at any time by
providing written notice to Seller.

If this Purchase Order is canceled or terminated for the convenience of
Purchaser or suspended upon the direction of Purchaser for other than Seller
fault, in either case when there is less than 120 days until the scheduled
delivery date, Purchaser shall be responsible for, and shall pay Seller for
Product-in-process on a percent of completion basis, established on a
proportional basis, where fifty (50%) completion is assumed on day one hundred
and twenty (120) and one hundred (100%) completion is assumed on day thirty (30)
in each case prior to the scheduled delivery date as a result of such
cancellation, termination or suspension, plus any uncancelable commitments made
by Seller, but not to exceed the amount of the Purchase Price allocable to the
terminated portion of this Purchase Order. Purchaser shall pay undisputed
amounts to Seller within thirty (30) days after Seller provides Purchaser with
an invoice.

10. DEFAULT. Except in instances of Excusable Delay as defined in Article 15 of
the CCLA, Purchaser may by written notice of default to Seller, terminate this
Purchase Order, in whole or in part' (a) if Seller is greater than sixty (60)
days late in delivering the Products, at least twice in any given twelve (12)
month period, or (b) if Seller fails to comply with any of the material terms
and conditions of this Purchase Order and upon receipt of written notice from
Purchaser does not commence corrective action within ten (10) days and cure such
default within sixty (60) days. Upon termination, Purchaser may procure goods
similar in function to the Products, such as SCR or DLN components, and, subject
to the Limitation of Liability set forth below, Seller shall reimburse Purchaser
such costs Purchaser incurs in excess of the Purchase Price.

As an alternative remedy, and in lieu of termination for default, Purchaser may
in its sole discretion, elect to extend the time for delivery and/or waive other
deficiencies in Seller's performance in which case an equitable adjustment in
the Purchase Price shall be negotiated.

11. INDEMNITY AND INSURANCE - WORK ON SELLER'S PREMISES. Each Party (the
"Indemnifying Party") shall indemnify and hold harmless the other party,

                                      -49-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
               OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
           CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

its affiliates, officers, directors, agents and employees (the "Indemnified
Parties") against any losses resulting from any third party claim for death or
personal injury or damage to third party tangible real or personal property to
the extent such claim arises from the Indemnifying Party's negligence, gross
negligence or willful misconduct."

Seller shall take all reasonable precautions to prevent the occurrence of any
injury to persons or to property during the progress of work, and, except to the
extent that any such injury or damage is due solely and directly to Purchaser,
shall defend and indemnify Purchaser against any claim which may result in any
way from any act or omission of the Seller, its agents, employees, or
subcontractors. Seller shall maintain comprehensive general liability (including
contractual liability coverage insuring the liabilities assumed above).
Automobile Liability and Employers and Employers Liability insurance with limits
as reasonably required by Purchaser, as well as appropriate Workers Compensation
Insurance as well protect Seller from all claims under any applicable Workers
Compensation and Occupational Disease Act. Seller shall furnish to Purchaser,
upon written request, a Certificate of Insurance completed by its insurance
carrier(s) certifying that insurance coverages are in effect and will not be
canceled or materially changed until ten days after prior written notice has
been delivered to the purchaser as required by Purchaser.

12. LIMITATION OF LIABILITY. The total liability of Seller, on all claims of any
kind, whether in contract, warranty, indemnity, tort (including negligence),
strict liability, or otherwise, arising out of the performance or breach of this
Purchase Order shall not exceed two (2) times the Purchase Price.

In no event, whether as a result of breach of contract, warranty, indemnity,
tort (including negligence), strict liability, or otherwise, shall either party
or their respective subcontractors or suppliers be liable for loss of profit or
revenues or for any special, consequential, incidental, indirect or exemplary
damages.

13. PROPER BUSINESS PRACTICES. Seller shall comply with all laws dealing with
improper or illegal payments, gifts or gratuities, and Seller agrees not to pay,
promise to pay or authorize the payment of any money or anything of value,
directly or indirectly to any person for the purpose of illegally or improperly
inducing a decision or obtaining or retaining business in connection with this
Order.

14. COMPLIANCE WITH LAWS General. Seller agrees to comply with the applicable
provisions of any federal, state, provincial or local law or ordinance and all
lawful orders, rules, and regulations issued thereunder. In addition, Seller
shall comply with Good Industry Practices, including the exercise of that degree
of skill, diligence,

                                      -50-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
               OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
           CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

prudence and foresight which can reasonably be expected from a competent Seller
who is engaged in the same type of manufacture under similar circumstances in a
manner consistent with all applicable requirements and with all applicable
general recognized international standards. No forced or prison labor may be
used in manufacturing the products to be supplied under this contract. If forced
or prison labor is determined to have been used in the manufacture of the
products supplied hereunder the Purchaser shall have the right to immediately
terminate the contract without further compensation to the Seller.

Provisions applicable to orders for work to be performed, goods to be produced,
or services to be rendered within the United Stated. (a) Seller shall comply
with any provisions, representations or agreements or contractual clauses
required thereby to be included or incorporated by reference or operation of law
in the contract resulting from acceptance of this order and dealing with: (I)
Equal Opportunity (Executive Order 11246 as amended by Executive Orders 113575
and 10286 and applicable regulations promulgated pursuant thereto); (ii)
Employment of Veterans (Executive Order 11701 and applicable regulations
promulgated pursuant thereto); (iii) Employment of the Handicapped (Executive
Order 11758 as amended by Executive Order 11867 and applicable regulations
promulgated pursuant thereto); (iv) Employment Discrimination Because of Age
(Executive Order 11141 and applicable regulations promulgated pursuant thereto);
and (v) Utilization of Disadvantaged and Business Enterprises (Executive Order
11625. Public Law 95-507 and applicable regulations promulgated pursuant
thereto). (b) Seller certifies that with respect to orders which exceed $10,000
it is in compliance with the requirements for nonsegregated facilities set forth
in 41 CFR Chapter 60-1.8. (c) Seller warrants that each chemical substance
constituting or contained in goods sold or otherwise transferred to Purchaser
hereunder is on the list of chemical substances compiled and published by the
Administrator of the Environmental Protection Administration pursuant to the
Toxic Substances Control Act (P.L. 92-573 as amended, and the Federal Hazardous
Substances Act (P.L. 92-5 16) as amended and lawful standards and regulations
thereunder. (d) In accepting this order Seller represents that the goods to be
furnished hereunder were or will be produced in compliance with the requirements
of the Fair Labor Standards Act of 1938, as amended, including Section 12(a) and
Seller shall insert a certificate to that effect on all invoices submitted in
connection with this order.

Provisions applicable to orders for goods or materials, the destination of
which, final or intermediate, is in the United States. Seller warrants that each
chemical substance constituting or contained in goods sold or otherwise
transferred to Purchaser hereunder is on the list of chemical substances
compiled and published by the United States Administrator of the Environmental
Protection Administration pursuant to the Toxic

                                      -51-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
               OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
           CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

Substances Control Act (P.L. 92-573) as amended, and the Federal Hazardous
Substances Act (P.L. 92-516) as amended and lawful standards and regulations
thereunder.

Provisions applicable to orders for goods from outside the United States, to be
delivered DEQ, FAC or DAF (INCO TERMS 1990) at point of entry to the United
States. Seller warrants that all sales made hereunder are or will be made at not
less than fair value under the United States Anti-dumping Law (19 U.S.C. SEC.
160o ct set.), and Seller will indemnify, defend and hold Purchaser harmless
from and against any costs or expenses (including, but not limited to, any anti-
dumping duties which may be imposed) arising out of or in connection with breach
of this warranty.

Provisions applicable to orders for goods from outside the United States, to be
delivered within the United States. Seller agreed that Purchaser will not be a
party to the importation of the goods, that the transaction(s) represented by
this order will be consummated subsequent to importation and that Seller will
neither cause nor permit Purchaser's name to be shown as "importer of record" on
any customs declaration. If Seller will be the importer of record to the United
States, Seller shall provide Purchaser with Customs Form 331 entitled
"Certificate of Delivery" properly executed as well as Customs Form 7501 "Entry
Summary" and a copy of Seller Invoice.

Provisions applicable to technical data provided to Seller from within the
United States. Seller hereby assures the Purchaser that all technical data
received from Purchaser will not be exported from the United States or re-
exported from Seller's country without the express written concurrence to such
export by Purchaser.

15. PACKING, PRESERVATION AND MARKING. Packing, preservation and marking
requirements will be in accordance with the specification drawing or as
specified on the Purchaser Order. If none specified, use the best commercially
accepted practice.

16. GOVERNING LAW. This order shall in all respects be governed by and
interpreted in accordance with the substantive law of the State of New York,
U.S.A. excluding its conflicts of law provisions. The Parties hereby exclude the
application of the United Nations Convention on Contracts for the International
Sale of Goods.

17. DISPUTE RESOLUTION. Purchaser and Seller shall attempt amicably to resolve
any controversy, dispute or difference arising out of this Order, failing which
either party may initiate litigation. Litigation arising from this Order may be
brought only in the United States District Court for the Southern District of
New York or, if such court lacks subject matter jurisdiction, in the Supreme
Court of the State of New York in

                                      -52-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
               OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
           CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

and for New York County. The Parties hereby submit to the jurisdiction of said
courts, and waive any defense of forum non conveniens.

18. YEAR 2000 COMPLIANCE WITH DATE PROCESSING REQUIREMENTS. In addition to any
other warranties and representations provided by Supplier to Purchaser, whether
pursuant to this purchase order, by law, equity, or otherwise, Seller
represents, warrants and covenants that Seller shall use all reasonable efforts
to insure that (a) any product(s) and/or service(s) provided by Seller hereunder
including, without limitation, each item of hardware, software, or firmware; any
system, equipment, or products consisting of or containing one or more thereof;
and any and all enhancements, upgrades, customizations, modifications,
maintenance and the like ("Products/Services") shall be Year 2000 Compliant at
the time of delivery and at all times thereafter and in all subsequent updates
or revisions of any kind, and (b) Seller's supply of the Products/Services to
Purchaser shall not be interrupted, delayed, decreased, or otherwise affected by
dates prior to, on, after or spanning January 1, 2000. For purposes of this
purchase order, the term "Year 2000 Compliant" means that (1) the
Products/Services accurately process, provide and/or receive date data
(including without limitation calculating, comparing, and sequencing), within,
from, into, and between centuries (including without limitation, the twentieth
and twenty-first centuries, the last year of a century (e.g. 1999) and the first
year of the next century (e.g. 2000), and leap year calculations, and (2)
neither the performance nor the functionality nor Seller's supply to Purchaser
of the Products/Services will be affected by dates prior to, on, after, or
spanning January 1, 2000. Moreover, Seller convenants and agrees all reasonable
steps shall be taken to insure that the design of said Product/Services to
ensure compliance with the foregoing warranties, representations and covenants
shall include, without limitation, date data century recognition, calculations
that accommodate same century and multi-century formulae and date values, and
date data interface values that reflect the century. In particular, but without
limitation, (I) no value for current date will cause any error, interruption, or
decreased performance in the operation of such Products/Services, (ii) all
manipulations of date-related data including, but not limited to, calculating,
comparing, sequencing, processing and outputting) will produce correct results
for all valid dates, including when used in combination with other products,
(iii) date elements in interfaces and data storage will specify the correct
century to eliminate date ambiguity without human intervention, including leap
year calculations, (iv) where any date element is represented without a century,
the correct century will be unambiguous for all manipulations involving that
element, (v) authorization codes, passwords, and zaps (purge functions) should
function normally and in the same manner prior to, on, after and spanning
January 12, 2000, including, without limitation, the manner in which they
function with respect to expiration dates and CPU serial numbers.

                                      -53-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
               OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
           CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

No obligation of Seller under this purchase order shall be excused by reason of
the failure of Seller's or any other person's Products/Services to be Year 2000
Compliant, nor shall such occurrence(s) be deemed a force majeure event. As used
in this purchase order, the words "date" and "dates" shall be deemed to include
"time".

In the event of breach of this warranty, in addition to any other remedies
Purchaser may have, whether pursuant to this purchase order, by law, equity or
otherwise, Purchaser shall, at its option, be entitled to repair or replacement
of any non-compliant Products/Services, at no cost to Purchase, within sixty
(60) days after notice of breach from Purchaser to Seller.

Notwithstanding anything in this purchase order to the contrary, the period of
the representations, warranties and covenants set forth in this section shall
extend at least until January 31, 2001. Any statute of limitations that might be
applicable to Seller's Year 2000 Compliant warranty and representation shall not
accrue or begin to run until the later of January 31, 2001 or the time when such
statute of limitations would otherwise accrue or begin to run, and, with respect
to any claim based on any failure of the Products/Services to be Year 2000
Compliant, Seller shall not assert any defense based on or alleging the passage
of time from the effective date of this purchase order to January 31, 2001.

19. WAIVER. No claim or right arising out of a breach of this Contract can be
discharged in whole or in part by a waiver or renunciation of the claim or right
unless the waiver or renunciation is supported by consideration and is in
writing signed by the aggrieved party. The failure of Purchaser to enforce at
any time or for any period of time any of the provisions hereof shall not be
construed to be a waiver of such provisions or of the right to Purchaser
thereafter to enforce each and every such provision.

20. ENTIRE AGREEMENT. This Purchase Order and the CCLA with such documents as
are expressly incorporated herein by reference, is intended by the parties as a
final expression of their Agreement with respect to such terms as are included
herein, and is intended also as complete and exclusive statement of the terms of
their Agreement. No course of prior dealings between parties and no usage of the
trade shall be relevant to determine the meaning of this Agreement even though
the accepting or acquiescing party has knowledge of the performance and
opportunity for objection. The invalidity, in whole or in part, of any of the
foregoing articles or paragraphs of this Purchase Order shall not affect the
remainder of such article or paragraphs or any other article or paragraphs of
this Purchase Order.

                                      -54-
<PAGE>

                       CONFIDENTIAL TREATMENT REQUESTED
        [*] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
               OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
           CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
                             THE OMITTED PORTIONS.

                                      -55-

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