TRANSFER AND ASSUMPTION AGREEMENT

Exhibit 10.2

 

TRANSFER AND ASSUMPTION AGREEMENT

 

 

by and among

 

Calpine Corporation,

 

CPN Pipeline Company

 

Rosetta Resources California, LLC,

 

Rosetta Resources Offshore, LLC,

 

Rosetta Resources Rockies, LLC,

 

and

 

Rosetta Resources Texas LP

 

July 7, 2005

TABLE OF CONTENTS

 

 

ii

EXHIBITS AND SCHEDULES

 

Exhibits

 

 

Schedules

 

 

iii

TRANSFER AND ASSUMPTION AGREEMENT

 

This Transfer and Assumption Agreement (this “ Agreement ”) is made and entered into on July 7, 2005 by and among Calpine Corporation, a Delaware corporation and CPN Pipeline Company, a Delaware corporation (collectively referred herein as, the “ Assignor ”), and the subsidiaries of Calpine Gas Holdings LLC (“ CGH ”) that are identified as assignees on the signature pages hereto (collectively, the “ Assignees ”). Assignor and the Assignees are sometimes collectively called “ Parties ” and each individually a “ Party ”.

 

W I T N E S S E T H:

 

WHEREAS, Assignor owns interests in certain oil and gas properties situated in the United States and more fully described herein (the “ Oil and Gas Interests ”); and

 

WHEREAS, Assignor desires to capitalize CGH and Assignees by contributing (i) the Oil and Gas Interests and (ii) all continuing rights, benefits, duties and obligations with respect thereto to Assignees in return for the assumption by Assignees of certain liabilities with respect to the Oil and Gas Interests; and

 

WHEREAS, CGH has requested Assignor, and Assignor has agreed to make such transfers and contributions to Assignees; and

 

NOW, THEREFORE, for valuable consideration and in consideration of the mutual promises and agreements contained herein, the Parties execute this Agreement and covenant and agree as follows:

 

Section 1. Definitions . As used herein the following terms have the meanings given them below, except as otherwise expressly provided:

 

“ Adverse Environmental Condition ” means any contamination or condition exceeding regulatory limits and not otherwise permitted or authorized by permit or law, resulting from any discharge, release, production, storage, treatment, seepage, escape, leakage, emission, emptying, leaching or any other activities on, in or from any Property, or the migration or transportation from other lands to any Property, of any wastes, pollutants, contaminants, hazardous materials or other materials or substances subject to regulation relating to the protection of the environment that require Remediation based upon the condition at the Effective Date pursuant to any current federal, state or local laws or statutes, including the Environmental Laws.

 

“ Affiliate ” means, with respect to any specified Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing, being understood and agreed that with respect to a corporation or other entity, control means direct or indirect ownership of more than fifty percent (50%) of the voting stock or securities of such corporation or other entity.

 

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“ Agreement ” has the meaning given to in the Preamble.

 

“ Applicable Laws ” means any applicable law, order, ordinance, rule, regulation, permit, judgment or decree of any Governmental Body, including the common or civil law of any Governmental Body, including those relating to occupational safety and health, consumer product safety, environmental laws, securities laws, zoning laws or regulations, employee benefits, employment and employee practices.

 

“ Assignees ” has the meaning given to in the Preamble.

 

“ Assignees’ Business ” means the oil and gas exploration and production business of the Assignees that relates to the Properties, but shall not include the business of Assignor that relates to any properties or assets transferred prior to the date of this Agreement or any of the Non-Consent Properties until transferred to an Assignee.

 

“ Assignees’ Liabilities ” means (without duplication): (i) any and all Liabilities that are expressly contemplated in this Agreement to be assumed by Assignees or any Assignee, including the Imbalances; (ii) all agreements and Liabilities of any Assignee under this Agreement, subject to the applicable limitations and restrictions herein; (iii) all Liabilities (other than Taxes), arising out of or resulting from the ownership or operation of the Properties (including any Property that becomes a Cured Non-Consent Property that is transferred to an Assignee), whenever arising, whether before, on, or after the Effective Date, including (a) accidents or injuries associated with the Wells, the casings, and all other leasehold equipment in and on the Wells, gathering lines, pipelines, tanks and all other personal property and fixtures used on or in connection with the Properties (including any Property that becomes a Cured Non-Consent Property that is transferred to an Assignee), (b) any and all Proceedings except for those Proceedings set forth on Schedule 4(b) and Assignor’s Retained Liabilities, (c) the condition of the Properties (including any Property that becomes a Cured Non-Consent Property that is transferred to an Assignee) including all Adverse Environmental Conditions, and also including any such conditions arising out of or relating to any discharge, release, production, storage, treatment or any activities on or in the Properties (including any Property that becomes a Cured Non-Consent Property that is transferred to an Assignee), or the migration or transportation from any other lands to the Properties (including any Property that becomes a Cured Non-Consent Property that is transferred to an Assignee) (specifically excluding transportation and disposal by Sellers from the Properties to offsite locations prior to Closing), whether before, on, or after the Effective Date, of materials or substances that are at present, or become in the future, subject to regulation under Applicable Laws, whether such Applicable Laws now

 

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exist or are hereafter enacted, (d) all Plugging and Abandonment obligations or liabilities. Notwithstanding the foregoing, the Assignees’ Liabilities shall not include the Assignor’s Retained Liabilities, and (e) any duties and the obligations described in Sections 8 and 14 herein

 

“ Assignees’ Suspense Accounts ” has the meaning given to in Section 8 .

 

“ Assignor ” has the meaning given to in the Preamble.

 

“ Assignor’s Business ” means any business of Assignor, other than the Assignee’s Business.

 

“ Assignor’s Actual Knowledge ” means the actual knowledge, without investigation, of B.A. Bill Berilgen (Executive Vice President of Assignor and President of Calpine Fuels Corporation), Charles F. Chambers (Vice President of Calpine Natural Gas L.P.), Art Klavan (Senior Vice President Exploration and Development of Calpine Fuels Corporation), Roxy Blu (Director of Land of Calpine Natural Gas L.P.), Ed Seeman (Director Reservoir Engineering of Calpine Natural Gas L.P.), Denise Bednorz (Controller of Calpine Natural Gas L.P.), or Bert Bates (Director of EH&S of Calpine Natural Gas L.P.).

 

“ Assignor’s Retained Liabilities ” has the meaning given it in Section 4 .

 

“ Burdens ” means royalties (including both lessor royalties and nonparticipating royalty interests), overriding royalties, production payments, and other similar obligations payable out of production.

 

“ Casualty Loss ” has the meaning given to it in Section 15 .

 

“ CGH ” has the meaning given to it in the Preamble.

 

“ Closing ” has the meaning given to it in Section 12 .

 

“ Closing Date ” has the meaning given to it in Section 12 .

 

“ Conveyance ” has the meaning given to in Section 3 .

 

“ Confidential Information ” has the meaning given to in Section 10 .

 

“ CPR ” has the meaning given to it in Section 18 .

 

“ Cured Non-Consent Properties ” has the meaning given to in Section 5 .

 

“ Easements ” means Assignor’s non-exclusive rights to the use and occupancy of the surface, including, without limitation, tenements, appurtenances, surface leases, Easements, permits, licenses, franchises, servitudes and rights-of-way in any way appertaining, belonging, affixed or incidental to or used in connection with the ownership or operation of the Leases, whether recorded or unrecorded.

 

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“ Effective Date ” means 7:00 a.m., CDT on May 1, 2005.

 

“ Employee Matters Agreement ” means the Employee and Employee Benefit Matters Agreement to be entered into by and among Assignor, Calpine Administrative Services Company, Inc. and Rosetta.

 

“ Environmental Condition ” means any condition existing prior to the Effective Date, and only to the extent in existence on the Effective Date with respect to the air, land, soil, surface, subsurface strata, surface water, ground water, or sediments which causes a Property to be subject to remediation under, or not in compliance with an Environmental Law, a Lease or Material Contract, but excluding the conditions associated with, or included in the definition of, Plugging and Abandonment.

 

“ Environmental Law ” means any existing Applicable Law relating to pollution or the protection of the environment, health or safety including laws relating to air, water, land and the generation, storage, treatment, transportation, handling, release or disposal of waste materials including the Clean Air Act, the Federal Water Pollution Control Act, the Safe Drinking Water Act, the Comprehensive Environmental Response, Compensation and Liability Act (“ CERCLA ”), the Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation and Recovery Act, the Hazardous and Solid Waste Amendments Act of 1984, the Toxic Substance Control Act, and the Occupational Safety and Health Act, but shall not include any Applicable Law associated with Plugging and Abandonment.

 

“ Excluded Properties ” has the meaning given to in Section 2 .

 

“ Governmental Body ” means any federal, state, tribal, county, municipal, or other federal, state or local governmental authority or judicial or regulatory agency, board, body, department, bureau, commission, instrumentality, court, tribunal or quasi-governmental authority in any jurisdiction (domestic or foreign) having jurisdiction over Assignor, the Properties or any Person who is a party to any of the transactions contemplated in this Agreement.

 

“ Hydrocarbons ” crude oil, natural gas, casinghead gas, condensate, distillate, sulphur, natural gas liquids, plant products and other liquid or gaseous hydrocarbons (including carbon dioxide), and all other minerals of every kind and character which may be covered by or included in the Properties.

 

“ Imbalance ” means over and under imbalances with respect to gas production or processing attributable to the Properties.

 

“ Indemnified Claims ” has the meaning given to in Section 11 .

 

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“ Indemnitee ” has the meaning given to in Section 11 .

 

“ Indemnitor ” has the meaning given to in Section 11 .

 

“ Law Firm ” has the meaning given to in Section 11 .

 

“ Lawsuit ” has the meaning given to in Section 11 .

 

“ Lease ” has the meaning given it in Section 2 .

 

“ Liability ” means, with respect to any Person, any liability or obligation of such Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, and whether or not the same is require to be accrued on the financial statements of such Person.

 

“ Lien ” means any pledge, lien, mortgage, charge, encumbrance, security interest or other adverse claim.

 

“ Loss ” means all damages, losses, Liabilities, obligations, payments, amounts paid in settlement, fines, penalties, costs (including reasonable fees and expenses of attorneys, accountants and other professional advisors, as well as experts, and other costs of investigation, preparation and litigation in connection with any pleading, claim, demand or other action) of any kind or nature whatsoever, whether known or unknown, contingent or vested, or matured or unmatured.

 

“ Net Revenue Interest ” means the interests of Assignor in and to all production of Hydrocarbons produced, saved, and sold from any Well, described in Exhibit C , after giving effect to all Burdens and Liens, other than Liens to be released in Schedule 1 ; but excluding that percentage of the net revenue interest for those Wells set forth in column entitled “Non-Consent” on Exhibit C-1 .

 

“ Non-Consent Properties ” has the meaning given it in Section 5 .

 

“ NORM ” means naturally occurring radioactive material.

 

“ Oil and Gas Interests ” has the meaning given to in the Recitals.

 

“ Party Representative ” has the meaning given to in Section 11 .

 

“ Permitted Encumbrances ” means:

 

(a)

Burdens if the cumulative effect thereof does not operate to reduce the Net Revenue Interest in a Well described in Exhibit C to less than the amount of the Net Revenue Interest for such Well set forth

 

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in Exhibit C or operate to increase Assignor’s Working Interest in a Well described in Exhibit C to more than the Working Interest for such Well set forth in Exhibit C (unless there is a corresponding increase in the Net Revenue Interest);

 

(b)

Division orders and sales contracts terminable without penalty upon no more than thirty (30) days notice to the purchaser;

 

(c)

Required third-party consents to assignment and similar agreements with respect to which waivers or consents (i) are obtained from the appropriate parties or (ii) are routinely obtained after transfer pursuant to transactions of this nature, including without limitation all preferential rights to purchase;

 

(d)

Materialman’s, mechanic’s, repairman’s, employee’s, contractor’s, operator’s, Tax and other similar Liens or charges arising in the ordinary course of business for obligations (i) that are not delinquent or that will be paid and discharged in the ordinary course of business or (ii) if delinquent, that are being contested in good faith in the ordinary course of business;

 

(e)

All rights to consent by, required notices to, filings with, or other actions by Governmental Body in connection with the sale or conveyance of oil and gas leases or interests therein if they are routinely obtained subsequent to the sale or conveyance;

 

(f)

Easements, rights-of-way, servitudes, permits, surface leases and other rights in respect of surface operations that do not materially interfere with oil and gas operations to be conducted on any Well or Lease;

 

(g)

All (i) operating agreements, unit agreements, unit operating agreements, pooling agreements and pooling designations affecting the Properties that are contained in Assignor’s files or (ii) compulsory or commissioner’s pooling or units; provided that the effect of any such documents will not reduce the Assignor’s interest with respect to oil and gas produced from any Well below the Net Revenue Interest set forth in Exhibit C , or increase Assignor’s Working Interest in such Well to more than the Working Interest set forth in Exhibit C for such Well (unless there is a corresponding increase in the Net Revenue Interest);

 

(h)

Conventional rights of reassignment prior to release or surrender requiring notice to the holders of the rights;

 

(i)

All rights reserved to or vested in any Governmental Body to control or regulate any of the Properties in any manner, and all Applicable Laws;

 

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(j)

The terms and conditions of the Leases, and of all agreements that are contained in Assignor’s files or that are recorded in the public records of the appropriate jurisdiction and which do not reduce the Assignor’s interest with respect to oil and gas produced from any Well to less than the amount of the Net Revenue Interest set forth in Exhibit C for such Well or increase the Assignor’s Working Interest in such Well to more than the Working Interest set forth in Exhibit C for such Well (unless there is a corresponding increase in the Net Revenue Interest);

 

(k)

All other Liens, contracts, agreements, instruments, obligations, defects and irregularities affecting the Properties which individually or in the aggregate are not such as to interfere materially with the operation, value or use of any of the Properties, could not reasonably be expected to prevent or delay Assignees from receiving the proceeds of production from any Well and which do not reduce the Assignor’s interest with respect to Hydrocarbons produced from any Well below the Net Revenue Interest set forth in Exhibit C for such Well or increase the Assignor’s Working Interest in such Well to more than the Working Interest set forth in Exhibit C for such Well (unless there is a corresponding increase in the Net Revenue Interest); and

 

(l)

All Liens as set forth on Schedule 1 which will be released or terminated concurrently with the transfers contemplated herein.

 

“ Person ” means any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, estate, unincorporated organization, other business entity or any Governmental Body.

 

“ Plugging and Abandonment ” means all plugging, replugging, abandonment, removal, disposal or restoration associated with the Properties, including all plugging and abandonment, removal, surface restoration, site clearance and disposal of the wells, structures and personal property located on or associated with the Properties, the removal or capping and burying of all associated flowlines, the restoration of the surface in accordance with Applicable Laws or the terms and conditions of the applicable Leases, site clearance, as required by Applicable Laws, and any disposal of related waste materials, including NORM and asbestos, and shall include such Wells, structures, and personal property associated with any of the Properties, whether drilled or placed on a Lease prior to, at, or after the Effective Date.

 

“ Preferential Right Properties ” has the meaning given it in Section 5 .

 

“ Privilege ” has the meaning given to in Section 11 .

 

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“ Proceeding ” means any action, arbitration, audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, judicial or investigative, whether formal or informal, whether public or private) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Body or arbitrator.

 

“ Properties ” has the meaning given it in Section 2 .

 

“ Purchase and Sale Agreement ” means that certain that certain Purchase and Sale Agreement to be entered into by and among Calpine Gas Holdings LLC, a Delaware limited liability company, Calpine Fuels Corporation, a California corporation, Assignor, and Rosetta.

 

“ Records ” means all of Assignor’s lease files, abstracts and title opinions, division order files, production records, well files, accounting records (but not including general financial accounting or tax accounting records), and other similar files and records which directly relate to the Properties, including geological and geophysical data other than those which Assignor considers to be proprietary or confidential to it or which Assignor cannot provide to Assignee without, in its opinion, breaching, or incurring a material risk of a breach of, agreements with other parties, or waiving, or incurring a material risk of waiving, legal privilege.

 

“ Remediation ” or “ Remediate ” means affirmative actions or remedial work taken to remove or otherwise remedy an Environmental Condition, including any survey, site assessment, audit, investigation, inspection, sampling, analysis, removal, excavation, pump and treat, cleanup, disposal, storage, handling or treatment, excluding those actions associated with Plugging and Abandonment.

 

“ Rosetta ” means Rosetta Resources Inc., a Delaware corporation.

 

“ Rules ” has the meaning given to it in Section 18 .

 

“ Taxes ” means any and all fees (including, without limitation, documentation, license, recording, filing and registration fees), taxes (including without limitation, income, production, gross receipts, ad valorem, value added, windfall profit tax, environmental tax, turnover, sales, use, personal property (tangible and intangible), stamp, leasing, lease, user, leasing use, excise, franchise, transfer, heating value, fuel, excess profits, occupational, interest equalization, lifting, oil, gas, or mineral production or severance, and other taxes), levies, imposts, duties, charges or withholdings of any nature whatsoever, imposed by any Governmental Body or taxing authority thereof, domestic or foreign, together with any and all penalties, fines, additions to tax and interest thereon, whether or not such tax shall be existing or hereafter adopted.

 

“ Third Party ” means a Person other than a Party or an Affiliate of a Party.

 

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“ Transition Services Agreement ” means that certain Transition Services Agreement to be entered into by and among Calpine Corporation, Calpine Fuels Corporation, a California corporation, Rosetta Resources Texas LP, a Delaware limited partnership, Rosetta Resources California, LLC, a Delaware limited liability company, Rosetta Resources Offshore, LLC, a Delaware limited liability company, Rosetta Resources Rockies, LLC, a Delaware limited liability company, Rosetta and Calpine Natural Gas L.P., a Delaware limited partnership.

 

“ Wells ” has the meaning given it in Section 2 .

 

“ Working Interest ” means with respect to the Wells set forth in Exhibit C , the interest of the Assignor therein, without regard to any valid Burdens or Liens which is burdened with the obligation to bear and pay costs of operations; but excluding that percentage of the working interest for those Wells set forth in column entitled “Non-Consent” on Exhibit C-1 .

 

Section 2. Assignment of Properties .

 

(a) Properties . Subject to the exceptions, reservations, terms and conditions herein contained (including, without limitation, the retention and reservation by Assignor of the Excluded Properties), at the Closing Assignor shall transfer, assign, and deliver unto each Assignee, its successors and assignees, effective as of the Effective Date, all of Assignor’s rights, titles, interests in the real and personal property, rights, titles, interests and estates described in this Section 2 (collectively called the “ Properties ”) that are specifically listed next to such Assignee’s name in Exhibit A :

 

(i) the oil, gas and other mineral leases and mineral fee, wellbore interests and other interests and estates and the lands and premises covered or affected thereby which are described on Exhibit B (collectively, called the “ Leases ” and individually called a “ Lease ”) or which Leases are otherwise referred to herein, and specifically, including without limitation, the Net Revenue Interests and Working Interests which are set forth in Exhibit C ;

 

(ii) (a) the properties pooled or unitized with any of the Leases; (b) all unitization, communitization, pooling agreements and declarations of pooled units and the units created thereby (including, without limitation, all units created under orders, regulations, rules or other official acts of any Governmental Body having jurisdiction and any units created solely among working interest owners pursuant to operating agreements or otherwise) which may affect all or any portion of the Leases including, without limitation, those units which may be described or referred to on attached Exhibit B ; (c) all operating agreements, production sales or other contracts, farmout agreements, farm-in agreements, area of mutual interest agreements, equipment leases and other agreements which relate to the Leases or interests in the Leases described or referred to herein or on

 

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attached Exhibit B or to the production, sale, purchase, exchange, processing, handling, storage, transporting or marketing of the Hydrocarbons from or attributable to such Leases or interests, including without limitation the contracts described on Exhibit I ; and (d) the Leases described on Exhibit B and covered by each Conveyance although Assignor’s interests therein be incorrectly described or a description of a part or all of such Leases or Assignor’s interest therein be omitted; it being intended by Assignor to cover and affect hereby all interests which Assignor owns in and to the Leases notwithstanding that the interests as set forth on Exhibit B may be limited to particular lands, specified depths or particular types of property interests;

 

(iii) all Hydrocarbons which may be produced and saved from or attributable to the Leases and/or the lands pooled or unitized therewith, including all saleable oil in tanks and all rents, issues, profits, proceeds, products, revenues and other income from or attributable to the Leases and the lands pooled or unitized therewith;

 

(iv) all tenements, hereditaments, appurtenances and properties in anywise appertaining, belonging, affixed or incidental to the Leases, rights, titles, interests and estates described or referred to in paragraphs (a) and (b) above, including without limitation any and all property, real or personal, situated upon, used or held for use in connection with the operating, working or development of any of such Leases and/or the lands pooled or unitized therewith including any and all oil wells, gas wells, injection wells or other wells (collectively, such Wells are referred to herein as “ Wells ” and are more fully described on Exhibit C , but excluding percentage of the net revenue and working interest for those Wells in the column entitled “Non-Consent”), facilities, buildings, structures, field separators, liquid extraction plants, plant compressors, pumps, pumping units, pipelines, sales and flow lines, gathering systems (including the gathering system described on Exhibit C-2 for California purposes only), field gathering systems, salt water disposal facilities, tanks and tank batteries, fixtures, valves, fittings, machinery and parts, engines, boilers, meters, apparatus, equipment, appliances, tools, implements, cables, wires, towers, casing tubing and rods, surface leases, rights-of-way, Easements, servitudes, licenses and other surface and subsurface rights, together with all additions, substitutions, replacements, accessions and attachments to any and all of the foregoing properties;

 

(v) interests of every nature in and to (i) the Leases and other rights, titles, interests and estates described above and every part and parcel thereof, including such rights, titles, interests and estates as the same may be enlarged by the discharge of any payments out of production or by the removal of any charges or Permitted Encumbrances to which any of the Leases and/or other rights, titles, interests and estates are subject, or otherwise; (ii) any and all renewals and extensions of any of the Leases

 

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and/or other rights, titles, interests or estates; and (iii) all contracts and agreements supplemental to or amendatory of or in substitution for the contracts and agreements described or mentioned above;

 

(vi) all improvements, tools, parts and equipment used in connection with all or any part of the Property described in this or any other clause of this Section;

 

(vii) to the extent transferable without material restriction or payment of transfer or license fee, all Records, except for those expressly excluded by Assignor; and

 

(viii) Imbalances.

 

(b) Excluded Properties . The Properties do not include, and Assignor does hereby EXCEPT and EXCLUDE therefrom and does hereby RETAIN and RESERVE unto Assignor, its successors and assigns:

 

(i) all (i) trade credits, accounts receivable, notes receivables and other receivables attributable to the interests of Assignor or its Affiliates in the Properties with respect to any period of time prior to the Effective Date and (ii) deposits, cash, checks in process of collection, cash equivalents and funds attributable to the interests of Assignor or its Affiliates in the Properties with respect to any period of time prior to the Effective Date;

 

(ii) all claims and causes of action of Assignor or its Affiliates (i) arising from acts, omissions or events, or damage to or destruction of property occurring prior to the Effective Date to the extent related to any of Assignor’s Retained Liabilities or any of indemnification obligations of Assignor under this Agreement or (ii) affecting any of the Excluded Properties;

 

(iii) subject to the provisions of Section 28 , all Hydrocarbons produced from or attributable to the Properties with respect to all periods prior to the Effective Date;

 

(iv) all claims of Assignor or any of its Affiliates for refunds of or loss carry forwards with respect to (i) Taxes attributable to any period prior to the Closing Date; (ii) Taxes attributable to any of the Excluded Properties; or (iii) any Tax credits accruing to the Properties prior to the Closing Date;

 

(v) all amounts due or payable to Assignor or its Affiliates as adjustments or refunds under any contracts affecting the Properties, with respect to any period prior to the Effective Date including, without limitation, amounts recoverable from audits under operating agreements;

 

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(vi) all amounts due or payable to Assignor or its Affiliates as adjustments to insurance premiums related to the Properties with respect to any period prior to the Effective Date;

 

(vii) all proceeds, benefits, income or revenues accruing (and any security or other deposits made) with respect to (i) the Properties prior to the Effective Date; or (ii) any of the Excluded Properties;

 

(viii) all geological or geophysical information and data of Assignor or its Affiliates, whether proprietary to such Persons or licensed from Third Parties, but only to the extent that the transfer thereof is prohibited by law or third-party agreement and the necessary consents to transfer are not obtained before Closing;

 

(ix) the non-exclusive right reserved unto the Assignor and its Affiliates to use the Easements;

 

(x) all the intellectual property of Assignor or its Affiliates, including but not limited to computer software, patents, trade secrets, copyrights, names, marks, and logos related to the Assignor’s Business;

 

(xi) all rights of ingress, egress and surface use retained by Assignor or its Affiliates in connection with its ownership and operation of CPN Pipeline Company and its assets;

 

(xii) originals of all files relating to Assignor’s Retained Liabilities, Proceedings set forth on Schedule 4(b) and copies (but not the originals) of all files described in Section 13 );

 

(xiii) all of Assignor’s rights, titles, interests and estates in and to (x) the percentage of Non-Consent Properties and related Wells described in Exhibit B-1 and C-1 and (y) to the extent the same are situated upon, used or held for use in connection with the Non-Consent Properties and related Wells, the properties, rights, titles, interests and estates of Assignor’s described or referred to in Section 2(a)(i) through (viii) above, but only until such time as such Non-Consent Properties are transferred to Assignees.

 

These excluded properties are collectively referred to as the “ Excluded Properties ”.

 

Section 3. Acceptance of Properties and Assumption of Continuing Rights and Obligations . At Closing, upon Assignees’ execution and delivery of the Conveyances from Assignor to the respective Assignees in the form of Exhibit G and the Assignment of Contracts from Assignor to the respective Assignees in the form of Exhibit J (the Conveyance and the Assignment are collectively called the

 

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“ Conveyances ” and individually a “ Conveyance ”), Assignees shall accept assignment of the Properties pursuant to Section 2 above and shall severally assume all of the rights, benefits, duties, and obligations, as described in Section 4 hereof, with respect to the applicable Properties conveyed to each of them respectively; provided, however, that the Assignor’s Retained Liabilities (as defined below) shall remain the sole responsibility of Assignor.

 

Section 4. Liabilities Relating to the Properties . Assignor and each Assignee hereby agree that upon Assignor’s execution of a Conveyance such Assignee shall be deemed to have, and shall, severally assume all of the Liabilities associated with the Properties assigned to such Assignee as follows:

 

(a) Assumed Liabilities . Except to the extent of Assignor’s Retained Liabilities, effective on the Closing Date, all of the Assignees shall jointly and severally assume and agree to fully and timely pay, perform, and discharge in accordance with their terms, all the Assignees’ Liabilities.

 

(b) Assignor’s Retained Liabilities . Assignor shall retain all the following Liabilities relating to the Properties (the “ Assignor’s Retained Liabilities ”) and the Assignor’s Retained Liabilities shall remain the sole responsibility of and shall be retained, paid, performed and discharged solely by Assignor:

 

(i) any Liability for additional payments of severance taxes, royalties, overriding royalties or other similar Burdens relating to the sales to Assignor or any of its Affiliates of Hydrocarbons produced from the Properties prior to the Closing Date;

 

(ii) any Liabilities expressly retained by Assignor or any of its Affiliates pursuant to the Employee Matters Agreement;

 

(iii) any Liability for Taxes of Assignor, or any of its Affiliates (i) attributable to all taxable periods ending on or before the Closing Date, (ii) for the portion of any taxable period that includes but does not end on the Closing Date, or (iii) that may be imposed on any Assignee under section 1.1502-6 of the Treasury regulations promulgated under the Internal Revenue Code of 1986, as amended or any analogous provision of state or local law or regulation as a result of the affiliation of such Assignee or its Affiliates with Assignor; and

 

(iv) any Liability arising out of any Proceeding set forth on Schedule 4(b) .

 

(c) Release and Indemnification .

 

(i) Each Assignee hereby covenants not to sue and further releases the Assignor and the Assignor’s Affiliates, directors, officers, employees, stockholders, partners, and agents from and waives on behalf

 

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of such Assignee, and on behalf of its successors and assigns, all rights under this Agreement or any Exhibits related thereto to pursue and to recover any and all Losses, except for any Losses arising from or relating to the special warranty of title contained in the Conveyance as set forth in Exhibit C , from Assignor and Assignor’s Affiliates, directors, officers, employees, stockholders, partners