fw : reps / warranties 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 : schuler , lance ( legal )
sent : wednesday , december 19 , 2001 1 : 23 pm
to : muller , mark s . ; detmering , tim
cc : golden , jeff ; daniels , eddy ; koehler , anne c . ; cook , mary
subject : reps / warranties
as we have discussed , we are not in a position to commit to convey all properties , assets , rights , etc . that are used in enron ' s current business of trading physical and financial natural gas and electricity and associated risk 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 identified , and then cannot be recovered . the sellers will continue their business , subject to the negotiated noncompete ; however , most everything could be deemed to be " used " in the business . the requested reps / warranties apply 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 every employment and consulting agreement pursuant to which someone is performing 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 , unless relating solely to identified excluded assets . these constructs would pick up literally thousands of other contracts - even confidentiality agreements for example .
we propose the following solution :
1 . we have prepared a schedule of specific assets that should be transferred to netco .
2 . we would give a sufficiency rep to assure the buyer that the listed assets are all the material assets necessary for netco to operate a business similar to the business referenced above . we have communicated to the potential buyer that netco would need to attain certain assets , and these would be identified in writing in the rep . for example , certain third - party licenses , and some hardware items .
3 . the rep would have to be tailored to exclude certain items such as office 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 would not list all of any specified requirement , but only necessary exceptions 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 is later identified as being appropriate for their conducting the business .
6 . we view this as an mbo type transaction involving the sale of assets , whereby 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
fw : reps / warranties
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 : schuler , lance ( legal )
sent : wednesday , december 19 , 2001 1 : 23 pm
to : muller , mark s . ; detmering , tim
cc : golden , jeff ; daniels , eddy ; koehler , anne c . ; cook , mary
subject : reps / warranties
as we have discussed , we are not in a position to commit to convey all properties , assets , rights , etc . that are used in enron ' s current business of trading physical and financial natural gas and electricity and associated risk 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 identified , and then cannot be recovered . the sellers will continue their business , subject to the negotiated noncompete ; however , most everything could be deemed to be " used " in the business . the requested reps / warranties apply 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 every employment and consulting agreement pursuant to which someone is performing 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 , unless relating solely to identified excluded assets . these constructs would pick up literally thousands of other contracts - even confidentiality agreements for example .
we propose the following solution :
1 . we have prepared a schedule of specific assets that should be transferred to netco .
2 . we would give a sufficiency rep to assure the buyer that the listed assets are all the material assets necessary for netco to operate a business similar to the business referenced above . we have communicated to the potential buyer that netco would need to attain certain assets , and these would be identified in writing in the rep . for example , certain third - party licenses , and some hardware items .
3 . the rep would have to be tailored to exclude certain items such as office 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 would not list all of any specified requirement , but only necessary exceptions 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 is later identified as being appropriate for their conducting the business .
6 . we view this as an mbo type transaction involving the sale of assets , whereby 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