|
|
Enron Mail |
as we discussed this is the proposed solution...i may need you to speak to=
someone at umbrella..call lance if you have a question -----Original Message----- From: =09Schuler, Lance (Legal) =20 Sent:=09Wednesday, December 19, 2001 1:23 PM To:=09Muller, Mark S.; Detmering, Tim Cc:=09Golden, Jeff; Daniels, Eddy; Koehler, Anne C.; Cook, Mary Subject:=09Reps/Warranties As we have discussed, we are not in a position to commit to convey all prop= erties, assets, rights, etc. that are used in Enron's current business of t= rading physical and financial natural gas and electricity and associated ri= sk management products. As the document is currently drafted, all items go= , unless specifically excluded. The danger to the estate is that, because = the catch-all phrase is so broad, we know now that many items will not be i= dentified, and then cannot be recovered. The sellers will continue their b= usiness, subject to the negotiated noncompete; however, most everything cou= ld be deemed to be "used" in the business. The requested reps/warranties a= pply not just to the assets they are to receive, but to the business stated= above. So they are, for example, demanding that we identify and list ever= y employment and consulting agreement pursuant to which someone is performi= ng services in the operation of the Business, and each contract with a term= of one year or more that has been made in connection with the Business, un= less relating solely to identified excluded assets. These constructs would= pick up literally thousands of other contracts - even confidentiality agre= ements for example. We propose the following solution: 1. We have prepared a schedule of specific assets that should be transferr= ed to Netco. 2. We would give a sufficiency rep to assure the Buyer that the listed ass= ets are all the material assets necessary for Netco to operate a business s= imilar to the Business referenced above. We have communicated to the potent= ial buyer that Netco would need to attain certain assets, and these would b= e identified in writing in the rep. For example, certain third-party licen= ses, and some hardware items. 3. The rep would have to be tailored to exclude certain items such as offi= ce space. 4. We would give negotiated reps on the specified Assets, and in limited, = appropriate circumstances on the Business. Other than the asset list, we w= ould not list all of any specified requirement, but only necessary exceptio= ns to the reps, as negotiated. 5. We would give a broad "further assurance" covenant to provide, without = further cost to Netco but subject to any required consents, anything that i= s later identified as being appropriate for their conducting the business. 6. We view this as an MBO type transaction involving the sale of assets, w= hereby the people going to Netco know the underlying business best, and can= identify specifically the assets that should go, both for the contract to = begin with, but also in a very short period of time post-closing (by using = the further assurance clause). W. Lance Schuler Enron North America Corp. 1400 Smith Street Houston, Texas 77002 Phone: 713/853-5419 Fax: 281/664-4890 Email: lance.schuler-legal@enron.com
|