Contract
Exhibit
10.4
This
Partial Transfer and Release Agreement (this “Agreement”)
entered into this 3rd day of August, 2007, is made by and among those parties
to
a certain purchase and sale agreement, transfer and assumption agreement,
and
all other interrelated agreements thereto, executed July 7,
2005 (collectively, the “PSA”), namely, Calpine Gas
Holdings LLC, CPN Pipeline Company, Calpine Corporation, Calpine Producer
Services, L.P., Calpine Fuels Corporation and their subsidiaries and affiliates,
as applicable (collectively, “Calpine”), on the one hand, and
Rosetta Resources Inc., Rosetta Resources Operating LP (individually and
as
successor by merger with Rosetta Resources California, LLC; Rosetta Resources
Rockies, LLC; Rosetta Resources Texas GP, LLC; Rosetta Resources Texas LP,
LLC;
and Rosetta Resources Texas LP) and Rosetta Resources Offshore, LLC and their
subsidiaries and affiliates, as applicable (collectively,
“Rosetta”), on the other
hand. Calpine and Rosetta are
sometimes referred to collectively as the “Parties” and
individually as a “Party.”
RECITALS
A. The
PSA provided for the sale to Rosetta of
ultimate ownership and control of all or substantially all of the assets
comprising Calpine’s oil and gas business (the “Sale
Transaction”).
B. Among
the properties to be transferred pursuant to the PSA were the
properties listed on Exhibit A attached hereto (collectively,
the “Properties”).
C. On
or about December 20, 2005 (the “Commencement Date”),
Calpine filed petitions for relief under chapter
11 of the
title 11 of the United States Code (the “Bankruptcy Code”) in
the United States Bankruptcy Court for the Southern District of
New York (the “Bankruptcy
Court”). Calpine’s chapter 11 cases are
being jointly administered under Case No. 05-60200-brl (the “Chapter 11
Cases”).
D. Because
of the Chapter 11 Cases, certain issues remain open with respect to the
PSA, and a number of disputes have arisen between the
Parties. Among other things, there are open issues
with respect to the status of legal title to the Properties as
of the Commencement Date.
E. The
Parties have reached an interim business solution in connection
with the Properties for certain, but not all, of the
outstanding disputes on the basis set forth in detail in this
Agreement.
1
AGREEMENT
NOW
THEREFORE, for valuable consideration as exchanged between
Calpine and Rosetta in this Agreement, the
Parties agree:
1.
New Marketing Agreement. Contemporaneously with
the execution of this Agreement, each Party agrees to execute,
and deliver its respective counterparts of, the New Marketing Agreement attached
hereto as Exhibit B (the “New Marketing
Agreement”), which, among other provisions, extends the primary term
for Calpine’s provision of marketing services for
Rosetta until the earlier of: (i) June 30, 2009;
or (ii) the
date Calpine receives written notice from
Rosetta of immediate expiration of the New Marketing
Agreement
on account of the first to occur of the following: (a) the entry by a court
of
competent jurisdiction of a final, nonappealable order avoiding the Sale
Transaction as a fraudulent or similar transfer; or (b) the Bankruptcy
Court’s authorizing Calpine to reject the
PSA in whole or in part, unless
Rosetta
obtains a stay of the effect of such rejection order from a court of competent
jurisdiction, in which case, upon the entry of a final nonappealable order
authorizing Calpine to reject the PSA in whole
or in part (and, in either case,Calpine exercising its
authority pursuant to any
such rejection order).
2.
Resolution of Outstanding Property
Issues.
(a) Contemporaneously
with the execution of this Agreement, each Party agrees to
execute, and deliver its respective counterparts of, all documents attached
as
Exhibit C and also to complete, promptly following
Rosetta’s request, all necessary steps and actions
and execute
all other documents required to convey to Rosetta (or, as
applicable, to irrevocably establish in Rosetta’s name) full
legal title in and to (i) the Properties and (ii) all operating
rights possessed by Calpine related to the
Properties, which conveyances shall be effective,
except as
provided in Sections 5 and 6 hereof, on and from the “Effective
Date” (as defined by the PSA), free and clear of any
and all liens, claims and encumbrances arising on or after July 7, 2005 by,
through or under Calpine or its actions. The
Parties acknowledge and agree that the Parties
may be required to provide or execute additional documents with respect to,
and
to complete, conveyance of the Properties to
Rosetta as may be reasonably requested by California
State
Lands Commission (“CSLC”), U.S. Department of Interior,
Minerals Management Service (“MMS”) or Bureau of Land
Management (“BLM”) (collectively, “Regulatory
Authorities”) or Rosetta from time to time which the
Parties shall promptly execute (not
later than ten (10) days
following their receipt). A nonexclusive list of the documents
required is set forth in Exhibit C attached
hereto.
2
(b) The
Parties agree to take all reasonable steps necessary to obtain
acknowledgments from applicable Regulatory Authorities that such authorities
will recognize the applicable Rosetta entity as the record
title owner and operator of each of the Properties as of the
Effective Date.
(c) Following
receipt of all required governmental approvals of the transfer to
Rosetta of legal title to the Properties,
Rosetta agrees to aid and
assist Calpine to
secure the release of any collateral security Calpine has
posted with respect to the
Properties. Rosetta agrees to
execute and deliver to Calpine all documents required with
respect to such release for the items as set forth in Exhibit
D, copies of which have been provided to Rosetta, and
also to complete all necessary steps and actions and execute all other documents
required to secure the release of any collateral security
Calpine has posted with respect to the
Properties. The Parties acknowledge
and agree that Rosetta may be required to provide or execute
additional documents to secure such releases as may be reasonably requested
by
Calpine from time to time which the Parties
shall promptly execute (not later than ten (10) days following their
receipt). A nonexclusive list of the documents required is set forth
in Exhibit D attached hereto.
3.
Assumption and Assignment of Contracts and
Leases and Related Liabilities. Subject to Section 5(b),
Calpine agrees to seek Bankruptcy Court
approval, as necessary, to assume pursuant to Section 365(b) of the
Bankruptcy Code and assign or otherwise convey to
Rosetta in accordance with Section 2 hereof,
any and all
interest, title or rights Calpine has in or to the
Properties and any related operating rights, rights-of-ways,
compensatory royalty agreements, easements and leases pertaining to the
Properties. Rosetta agrees to
assume, effective as of the Assumption Date (as hereinafter defined), all
cure
obligations (as provided in section 365(b)(1)(A) of the Bankruptcy
Code) in connection with any such assumption related to the
Properties and to pay, and indemnify Calpine
for, such obligations which shall be set forth or, by agreement of the
Parties, otherwise provided for in the Bankruptcy
Court order approving such assumption. To the extent
Rosetta disputes any cure claims
asserted by any counterparties, Calpine
agrees to reasonably cooperate in defending against and opposing such asserted
cure claims. “Assumption Date” shall mean: (i) for
liabilities Rosetta assumed pursuant to the
PSA, the effective date of such assumption
as provided in the
PSA; and (ii) for additional liabilities that
Rosetta did not assume pursuant to the PSA but
will assume pursuant to this Agreement, the effective date of such assumption
agreed to by the applicable Regulatory Authority. The
Parties agree to use all reasonable efforts to include in such
Bankruptcy Court order any wording as may be reasonably
requested by the Regulatory Authorities or either Party, as
applicable, in order to effectuate the terms of this Agreement.
3
4.
Assumption of Rights and Liabilities.
(a) Effective
as of the Assumption Date, Calpine agrees to assign, and
Rosetta agrees to assume, all rights, obligations,
duties,
benefits, burdens, and claims of Calpine related to any
underpayment or overpayment of monies, revenue interests, royalties or other
payment obligations to the State of California, acting through the
CSLC with respect to that portion of the
Properties for which CSLC approvals are outstanding
(collectively, the “CSLC Properties”), including without
limitation: (i) the CSLC’s June 14, 2006 Audit for PRC 415.1 alleging
underpayment in the amount of $643,379.92, together with any and all penalties
and interest that have continued to accrue thereon; and (ii) the right to
pursue, negotiate, resolve, pay any underpayments, and retain any overpayments
for its own account with respect to all such CSLC Properties
from and after May 1, 2000.
(b) Effective
as of the Assumption Date, Rosetta agrees to: (i) assume all of
Calpine’s liabilities associated or arising in
connection with
the operation or Calpine’s status as lessee of the
Properties (including without limitation plugging
and
abandonment costs and all of the liabilities for the items listed on
Exhibit D attached hereto); and (ii) comply with all applicable
governmental regulations associated with the Properties,
including without limitation maintaining a clean-up/spill response plan for
operated MMS leases as may be required by applicable law.
5.
Reservation of Rights.
(a) Excepting
the conveyance of title to the Properties and attendant rights
thereto, including without limitation operating rights, as specifically provided
herein, this Agreement is without prejudice to the Parties’
respective rights, defenses, arguments, remedies, claims
and obligations under
the PSA and applicable law.
(b) The
Parties reserve all rights to argue that any contracts or
leases associated with the Properties are real property
interests. Notwithstanding the Agreement, nothing herein shall
constitute an admission by either Party (or impair its right to
argue otherwise) that the Bankruptcy Code mandates assumption
and assignment of such leases.
6.
No Prejudice. Notwithstanding any
language herein to the contrary, nothing in this Agreement including the
effectiveness of the conveyances of the Properties on the
Effective Date set forth in Section 2 hereof shall prejudice, release or
otherwise impair the respective rights, defenses, arguments, remedies, claims,
or offsets of either the Calpine chapter 11 debtors (or their
estates) or Rosetta with respect to (a) any fraudulent transfer
action in connection with the Sale Transaction and defense thereto, (b) any
actions to assume or reject the PSA, whether in whole or in
part, and any defense or response thereto, including any claims for damages
or
rights of cure, whichever the case may be, relating thereto; provided,
however,Calpine acknowledges and agrees that in the event
it is authorized and exercises any right to hereafter reject the
PSA, such rejection shall not affect in any manner
Rosetta’s right, title and interest in and to
the
Properties, whether conveyed pursuant to this Agreement or
otherwise, or (c) in connection with those remaining properties identified
by
Calpine as Section 365(d) leases in its Motion to Assume filed
in or about June 2006 with the Bankruptcy Court and not listed
on Exhibit A hereto. Nothing herein shall impair or
otherwise preclude Rosetta from asserting its rights, defenses,
arguments or remedies in seeking to compel Calpine to assume or
reject the PSA or Calpine from asserting any
legal rights, defenses, arguments, or remedies in response
thereto.
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7.
Releases.
(a) Except
as otherwise provided in Section 6 and elsewhere herein (including to the
extent
that Calpine is subject to any claim, or liability for any
claim, associated or arising in connection with the operation or
Calpine’s status as lessee of the Properties),
Calpine hereby releases any
claims, causes of action, suits or
demands that Calpine or its estate may have against
Rosetta and the Rosetta signatories hereto,
together with their affiliates, officers, directors, employees, agents,
attorneys, and representatives, solely in connection with
Rosetta’s operation, management, or control of the
Properties. For the avoidance of doubt and as set
forth in Section 6 above, the release in this Section 7(a) is not a release
of
any assumption or rejection related rights under the PSA or any
rights to prosecute any avoidance actions under sections 544, 548, and 550
of
the Bankruptcy Code with respect to the entirety of the Sale
Transaction under the PSA.
(b) Except
as otherwise provided in Section 6 and elsewhere herein (including without
limitation to the extent Calpine has liability with respect to
operating expenses, costs or other burdens of any ownership interest it
maintains in respect of any unitization involving any of the
Properties), Rosetta hereby releases any
claims, causes of action, suits or demands that Rosetta or its
assignees or successors-in-interest may have against Calpine or
its affiliated chapter 11 debtors, together with their affiliates, officers,
directors, employees, agents, attorneys, and representatives, solely in
connection with Rosetta’s operation, management, or control of
the Properties. For the avoidance of doubt and as
set forth in Section 6 above, the release in this Section 7(b) is not a release
of any defenses, offsets, claims, counterclaims, arguments, cure amounts
or
damages arising out of or in defense to any assumption or rejection of the
PSA or any avoidance actions under sections 544, 548, and
550
of the Bankruptcy Code by Calpine, its
affiliated chapter 11 debtors, or their estates with respect to the entirety
of
the Sale Transaction under the PSA.
5
(c) The
Parties each acknowledge that they have been advised by their
respective legal counsel and are familiar with the provisions of California
Civil Code Section 1542, which provides as follows:
“A
general release does not extend to claims which the creditor does not know
or
suspect to exist in his favor at the time of executing the release, which
if
known by him must have materially affected his settlement with the
debtor.”
Each
of
the Parties, being aware of Section 1542, hereby expressly
waives any and all rights it may have thereunder, as well as under any other
statutes or common law principles of similar effect, with respect to the
releases in this Section 7.
8.
Subsequent Transfers. During the pendency of the
any avoidance action, Rosetta agrees to provide
Calpine five (5) business days’ advance written notice of any
transfer or sale of any of the Properties.
9.
Entire Agreement. Except for the
PSA, this Agreement is the entire agreement between
the
Parties in respect of the subject matter hereof and shall not
be modified, altered, amended or vacated without the prior written consent
of
all Parties hereto. No statement made or action
taken in the negotiation of this Agreement may be used by any
Party for any purpose whatsoever.
10. No
Admissions; No Presumption Against Drafter. This Agreement and
its contents are the result of negotiations by the Parties in
an effort to compromise on certain unresolved disputes. Nothing
herein shall be held to be an admission against the interests of either
Party or form the basis for waiver or estoppel in connection
with either Party’s legal rights, claims or defenses associated
with the properties not addressed by this Agreement. Each
Party has cooperated in the drafting and preparation of this
Agreement. Hence, in any construction to be made of this Agreement,
the same shall not be construed against any Party.
11. Further
Assurances. Following the execution of this Agreement, each
Party is and shall be obligated to execute and deliver such
other certificates, agreements and other documents and take such other actions
as may be reasonably be requested, from time to time, by any of the other
Parties in order to consummate or implement to the fullest degree possible
the
transactions and agreements contemplated by this
Agreement. Additionally, to the extent that same relate to the
Sales Transaction and are not included in the
Bankruptcy Court’s order, pursuant to Section 365(d) of
the
Bankruptcy Code, dated July 12, 2006 (the “365
Order”), Rosetta agrees to assist
Calpine, following the Closing Date (as
defined in Section 23, supra), in Calpine’s
efforts to secure release of
the collateral security as described in
Exhibit E attached hereto by providing records or copies of
records and the use of the reasonable time of its employees in support of
this
objective.
6
12. Recording
Instruments. Calpine authorizes
Rosetta to file any and all recording instruments,
conveyances
and documents required to confirm and memorialize under applicable laws
Rosetta’s legal interest and title in and to: (i) the
Properties; and (ii) any other properties transferred from
Calpine to Rosetta that were not listed in the
365 Order; as well as related agreements and contracts
that have been or are being conveyed to Rosetta; provided,
however, that Rosetta shall provide copies of such
instruments, conveyances and documents to Calpine, and the
opportunity to comment on any instruments, conveyances, or documents not
attached as Exhibits hereto, at least five (5) business days before filing
;
provided, further, that Rosetta shall: (a) provide at
least one (1) business day’s advance written notice to Calpine
regarding the nature and substance of any anticipated transactions (including
without limitation communications) pursuant to that certain Limited Power
of
Attorney by and between Calpine Corporation and Rosetta Resources Operating,
L.P., dated as of August 3, 2007; and (b) notify Calpine in writing regarding
the substance of any such transactions promptly after the occurrence
thereof.
13. Notices. Notices
to the Parties under this Agreement shall be sent
to:
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Calpine
Corporation
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Attn.:
Xxxxx Xxxxxxxx
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Attn.: Xxxxxxx
X. Xxxxxxxx
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717
Texas, Suite 1000
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000
Xxxxx, Xxxxx 0000
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Xxxxxxx,
Xxxxx 00000
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Xxxxxxx,
Xxxxx 00000
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14. Successors
and Assigns. This Agreement and all of the provisions hereof are
binding upon and shall inure to the benefit of the Parties and
their respective successors, assigns, agents, employees, representatives,
officers, directors, partners, parent companies, subsidiaries, affiliates,
assigns, predecessors-in-interest, successors-in interest, and
shareholders. Nothing in this Agreement, express or implied, is
intended to confer upon any person other than the Parties, and their successors
and assigns, any rights, remedies or obligations under or by reason of this
Agreement.
15. Governing
Law. The terms of this Agreement will be governed by, and
interpreted in accordance with the internal laws of, the State of Texas,
without
regard to the rules regarding choice of laws or conflicts of laws.
16. Counterparts. This
Agreement may be executed in any number of counterparts, each of which so
executed shall be deemed an original, but all of which together shall constitute
one and the same instrument.
17. No
Waivers. The failure of any Party to insist on
performance of any of the terms and conditions of this Agreement shall not
be
construed as a waiver or relinquishment of any rights granted hereunder or
of
the future performance of any such term, covenant or condition, but the
obligations of the Parties with respect thereto shall continue in full force
and
effect.
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18. Severability. Subsequent
to the Closing Date, if any part of this Agreement is found to
be prohibited, unlawful, void or for any reason unenforceable, then it shall
be
deemed severable and separable from the remaining parts and it shall not
invalidate or render unenforceable the remaining parts of this
Agreement.
19. Representations. Each
Party represents and warrants to, and agrees with, the other
Party as follows:
(a) Each
Party has received or has been given full opportunity to
receive independent legal advice from its attorneys with respect to the
advisability of making the settlement provided for herein, and with respect
to
the advisability of executing this Agreement.
(b) Neither
Party (nor, without limitation, any officer, agent, employee,
representative, or attorney of or for either Party) has made
any statement or representation to the other Party regarding
any fact relied upon in entering into this Agreement, and each
Party warrants that it does not rely upon any statement,
representation or promise of the other Party (or, without
limitation, of any officer, agent, employee, representative, or attorney
for the
other Party) in executing this Agreement, or in making the
settlement or granting the releases provided for herein, except as expressly
stated in this Agreement.
(c) Each
Party has made such investigation of the facts pertaining to
the settlement outlined above and to this Agreement, and of all the matters
pertaining thereto, as it deems necessary.
(d) In
entering into this Agreement, and the settlement provided for herein, each
Party assumes the risk of any misrepresentation, concealment
or
mistake. If either Party should subsequently
discover that any fact relied upon by it in entering into this Agreement
was
untrue, or that any fact was concealed from it, or that its understanding
of the
facts or of the law was incorrect, such Party shall not be
entitled to any relief in connection therewith, including, without limitation
on
the generality of the foregoing, any alleged right or claim to set aside
or
rescind this Agreement. This Agreement is intended to be and is final
and binding between the Parties with respect to the matters set forth in
this
Agreement, regardless of any claims of misrepresentation, promise made without
the intention to perform, concealment of fact, mistake of fact or law, or
of any
other circumstances whatsoever.
(e) No
Party has heretofore assigned, transferred, or granted, or
purported to assign, transfer, or grant, any of the claims, demands, causes
of
action or rights of appeal disposed of by this Agreement.
(f) Each
term of this Agreement is contractual and not merely a recital.
8
20. Fees
and Expenses. Each Party shall pay its own
costs, fees and expenses (including attorneys’ fees) incurred in connection with
the preparation, negotiation, and execution of this Agreement, and the documents
and agreements contemplated by this Agreement, and shall not seek reimbursement
thereof from the other Party.
21. Headings. The
headings in this Agreement are for convenience only and shall not be considered
a part of or affect the construction or interpretation of any provision of
this
Agreement.
22. Exhibits. The
exhibits attached to this Agreement are fully incorporated into and are made
a
part of this Agreement for all purposes.
23. Court
Approval. This Agreement in its entirety, including the various
documents delivered executed by the Parties pursuant to this Agreement are
expressly subject to and contingent upon approval, by entry of a signed order,
of the Bankruptcy Court (the “Approval Order”); provided,
however, that approval of this Agreement shall not be construed to have any
bearing on any claims or causes of action not expressly waived
herein. The date on which the Parties exchange executed copies of
this Agreement and all documents listed on Exhibit C shall be
the “Execution Date” for this Agreement. The date of
the entry of the Approval Order shall be the “Closing Date” for
this Agreement. Calpine agrees to take such action
as reasonably may be required to promptly obtain such Bankruptcy
Court approval of the Agreement and conveyance of the
Properties to Rosetta free and clear of all liens,
claims and encumbrances as set forth herein. Rosetta
agrees to assist Calpine in this regard. If this
Agreement is not approved by the Bankruptcy Court, or if the
Approval Order is overturned or modified on appeal, then this Agreement shall
be
of no further force and effect and, in such event, (a) neither this Agreement
nor any negotiations and writings in connection with this Agreement shall
in any
way be construed as or deemed to be evidence of or an admission on behalf
of any
Party regarding any claim or right that such
Party may have against the other Party, and
(b) the Parties shall otherwise be restored to the position in effect prior
to
the date of this Agreement. The Parties agree to
work cooperatively with the Regulatory Authorities toward the objective that,
on
or before the Closing Date, all Regulatory Authorities will
have confirmed to the Parties that their respective ministerial
approvals will be granted upon receipt of the Bankruptcy Court
order approving this Agreement and their receipt, respectively, of required
documents.
24. Exchange
of Executed Originals. On the Execution Date,
each of the Parties shall execute and deliver one complete set of original
signature pages of this Agreement and all other documents and agreements
listed
on Exhibit C to the law firm representing the other Party
pending the occurrence of the Closing Date.
25. Retention
of Jurisdiction. The Bankruptcy Court shall
retain jurisdiction to interpret and enforce this Agreement.
9
IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the date
and
year first above written.
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By:
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/s/ Xxxxxxx X. Xxxxxxxx | |
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Name:
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Xxxxxxx X. Xxxxxxxx | |
|
Date:
|
8/3/07 |
ROSETTA
RESOURCES OPERATING LP,
formerly
known as Calpine Natural Gas L.P., and
successor
by merger to Rosetta Resources California, LLC,
Rosetta
Resources Rockies, LLC, Rosetta Resources Texas, GP, LLC,
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By:
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/s/ Xxxxxxx X. Xxxxxxxx | |
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Name:
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Xxxxxxx X. Xxxxxxxx | |
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Date:
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8/3/07 |
ROSETTA
RESOURCES OFFSHORE, LLC
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By:
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/s/ Xxxxxxx X. Xxxxxxxx | |
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Name:
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Xxxxxxx X. Xxxxxxxx | |
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Date:
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8/3/07 |
10
CALPINE
CORPORATION
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By:
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/s/ Xxxxxxx Xxxxx | |
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Name:
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Xxxxxxx Xxxxx | |
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Date:
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8/3/07 |
CALPINE
PRODUCER SERVICES, L.P.
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By:
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/s/ Xxxxxxx Xxxxx | |
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Name:
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Xxxxxxx Xxxxx | |
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Date:
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8/3/07 |
CALPINE
FUELS CORPORATION
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By:
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/s/ Xxxxxxx Xxxxx | |
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Name:
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Xxxxxxx Xxxxx | |
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Date:
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8/3/07 |
CALPINE
GAS HOLDINGS, L.L.C.
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By:
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/s/ Xxxxxxx Xxxxx | |
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Name:
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Xxxxxxx Xxxxx | |
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Date:
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8/3/07 |
CALPINE
PIPELINE COMPANY
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By:
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/s/ Xxxxxxx Xxxxx | |
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Name:
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Xxxxxxx Xxxxx | |
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Date:
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8/3/07 |
11
