Case No. 01-16034 (AJG), Jointly Administered.United States Bankruptcy Court, S.D. New York.
June 26, 2003.
Melanie Gray, Martin J. Bienenstock, Brian S. Rosen, Weil, Gotshal Manges LLP, New York, New York, Attorneys for the Debtors.
Henry Flores, Haynes Boone, LLP, Houston, Texas, Attorneys for EnerVest Acquisitions LLC.
STIPULATION AND ORDER WITHDRAWING WITH PREJUDICE THE MOTION OF ENERVEST ACQUISITIONS, L.L.C. FOR ENTRY OF AN ORDER COMPELLING ALTERNATIVE DISPUTE RESOLUTION PURSUANT TO PURCHASE AND SALE AGREEMENT
ARTHUR J. GONZALEZ, United States Bankruptcy Judge
Enron Corp., as debtor and debtor in possession (“Enron”) and EnerVest Acquisitions, L.L.C. (“EnerVest”), by and through their respective counsel, do hereby stipulate (the “Stipulation and Order”) as follows:
RECITALS:
A. Commencing on December 2, 2001 (the “Petition Date”), Enron and certain of its affiliates (collectively, the “Debtors”), filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. The Debtors continue to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code
B. On March 13, 2003, McGarret XI, L.L.C. (“McGarret”), a non-debtor affiliate of Enron, and EnerVest entered into that certain Purchase and Sale Agreement (the “Purchase Agreement”) pursuant to which McGarret agreed to sell all of the outstanding shares of common stock of CGAS, Inc. (“CGAS”), a non-debtor privately held Ohio corporation.
C. On March 26, 2003, Enron filed its Motion for an Order, Pursuant to Sections 105 And 363 of the Bankruptcy Code, Authorizing and Approving (A) Enron Corp.’s Consent, by and Through its Subsidiaries and Affiliates, to the Sale of the Stock of CGAS, Inc. to EnerVest Acquisitions, L.L.C. in Accordance with the Terms and Conditions of the Purchase and Sale Agreement, and (B) the Consummation of the Transactions Contemplated Therein (the “Sale Motion”).
D. On May 8, 2003, the Court entered an order approving the Sale Motion (the “Approval Order”).
E. Pursuant to Section 2.5(a) of the Purchase Agreement, EnerVest had thirty (30) days from the date of the Purchase Agreement to inform McGarret in writing of EnerVest’s disagreement with McGarret’s calculation of Scheduled Working Capital (as defined in the Purchase Agreement) and the positive Scheduled Working Capital Adjustment (as defined in the Purchase Agreement) of $150,000, specifying each of the disputed items and setting forth in reasonable detail the basis for each such dispute.
F. On April 11, 2003, EnerVest delivered to McGarret its Notice of Objection (the “Objection”) in which it purported to set forth certain errors in McGarret’s calculation of Scheduled Working Capital (the “Disputed Items”).
G. On April 22, 2003, McGarret responded to the Objection in which it set forth its disagreement with respect to a large portion of the Disputed Items.
H. By motion, dated May 20, 2003 (the “Motion”), EnerVest seeks entry of an order compelling alternative dispute resolution with respect to the unresolved Disputed Items pursuant to Section 2.5 of the Purchase Agreement.
I. The Motion is currently set for hearing on June 26, 2003.
J. Enron and EnerVest now desire to resolve the Motion on the terms and conditions set forth in this Stipulation and Order.
NOW THEREFORE, IT IS HEREBY STIPULATED AND AGREED by Enron and EnerVestas follows:
1. The Motion is hereby withdrawn with prejudice.
2. Within ten (10) business days of entry of this Stipulation and Order, Enron shall cause McGarret to select the Accounting Referee (as that term is defined in the Purchase Agreement), and EnerVest and McGarret shall proceed to have the Disputed Items resolved by the Accounting Referee in accordance with Sections 2.5(b), (c) and (d) of the Purchase Agreement and the terms of this Stipulation and Order.
3. All of the Disputed Items are set forth in the Objection. Any disagreement with respect to McGarret’s calculation of Scheduled Working Capital which has not been expressly asserted in the Objection has been waived by EnerVest pursuant to Section 2.5(a) of the Purchase Agreement.
4. EnerVest and McGarret agree that the only adjustments permitted under Section 2.5 of the Agreement are Scheduled Working Capital Adjustments (as defined in the Purchase Agreement).
5. Scheduled Working Capital is defined in Section 1.1 of the Purchase Agreement. The parties shall not attempt to alter this definition in any dispute resolution proceeding involving the Accounting Referee.
6. Schedule 2.5(a) of the Purchase Agreement sets forth all the line items (individually a “Line Item” and collectively, the “Line Items”) which comprise Scheduled Working Capital, and includes “Cash”, “Receivables”, “Prepaid Expenses and Other”, “Cost in Excess of Receipts”, “Accounts Payable”, and “Accrued Liabilites and Expenses”.
7. References to “GAAP” and “consistent” appearing in the definition of “Scheduled Working Capital” and in Section 2.5 of the Purchase Agreement, refer solely to the individual accounts comprising the Line Items.
8. Except as expressly provided herein, EnerVest and McGarret reserve all of their respective rights, claims and defenses with respect to the Disputed Items.
9. The parties hereto shall be responsible for their respective costs and expenses (including, without limitation, attorneys’ fees) incurred by it in negotiating, drafting and obtaining approval of the terms of this Stipulation and Order and in connection with the Motion and shall not be responsible for the payment of any such fees or costs incurred by any other party hereto.
10. The parties shall not attempt to introduce or otherwise utilize prior drafts of this Stipulation and Order in any dispute resolution proceeding involving the Accounting Referee.
11. To facilitate execution, this Stipulation and Order may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature and acknowledgement of, or on behalf of, each party appear on each counterpart. All counterparts shall collectively constitute a single instrument. It shall not be necessary in making proof of this Stipulation and Order to produce or account for more than a single counterpart containing the respective signatures and acknowledgement of, or on behalf of, each of the parties hereto. Facsimile signatures shall be binding to the same effect as originals.
12. The Court shall retain exclusive jurisdiction to determine any disputes arising from or relating to this Stipulation and Order.
IT IS SO ORDERED.