Calculation of Title Defect Amounts, Title Benefit Amounts, and Environmental Defect Amounts. (a) The Title Defect Amount resulting from a Title Defect shall be determined as follows: (i) if Purchaser and Seller agree in writing upon the Title Defect Amount, that amount shall be the Title Defect Amount; (ii) if the Title Defect is a lien, encumbrance, or other charge which is liquidated in amount, then the Title Defect Amount shall be the amount necessary to be paid to remove the Title Defect from Seller’s interest in the affected Property; (iii) with respect to the Target Interval (except as expressly depth limited within the Target Interval as set forth on Exhibit A-1), if the Title Defect represents a discrepancy between (A) Seller’s aggregate ownership of Net Acres for any Lease and (B) the amount of Net Acres set forth for such Lease in Exhibit A-1, and there is no discrepancy between the aggregate Net Revenue Interest of Seller in such Lease and the Net Revenue Interest set forth for such Lease in Exhibit A-1, then the Title Defect Amount shall be the product of the Allocated Value of such Lease multiplied by a fraction, the numerator of which is the difference between the number of Net Acres owned by Seller in such Lease and the number of Net Acres set forth for such Lease in Exhibit A-1, and the denominator of which is the Net Acres set forth for such Lease in Exhibit A-1; (iv) with respect to the Target Interval (except as expressly depth limited within the Target Interval as set forth on Exhibit A-1), if the Title Defect represents a discrepancy between (A) the Seller’s aggregate Net Revenue Interest for any Property and (B) the Net Revenue Interest stated in Exhibit A-1 or Exhibit A-2, as applicable, for such Property, and (1) with respect to Properties that are Xxxxx, the Seller’s (and Purchaser’s, as successor in interest to Seller) Working Interest in such Property is decreased below the Working Interest amount set forth for such Property on Exhibit A-2 in the same proportion as the decrease in Net Revenue Interest in such Property, or (2) with respect to Properties that are Leases, there is no discrepancy with respect to Seller’s (and Purchaser’s, as successor in interest to Seller) Net Acre ownership in such Property and the amount of Net Acres set forth for such Property on Exhibit A-1, then the Title Defect Amount shall be the product of the Allocated Value of such Property multiplied by a fraction, the numerator of which is the decrease in Seller’s aggregate Net Revenue Interest in such Property and the denominator of which is Seller’s Net Revenue Interest stated in Exhibit A-1 or Exhibit A-2, as applicable, for such Property; provided, however, that if the Title Defect does not affect the Property throughout its entire productive life, the Title Defect Amount determined under this Section 3.9(a)(iv) shall be reduced to take into account the applicable time period only; (v) if the Title Defect represents an obligation, encumbrance, burden, or charge upon, or other defect in title to, the affected Property of a type not described in subsections (i), (ii), (iii), or (iv) of this Section 3.9(a), the Title Defect Amount shall be determined by taking into account the Allocated Value of the Property so affected, the portion of Seller’s interest in the Property affected by the Title Defect, the legal effect of the Title Defect, the potential discounted economic effect of the Title Defect over the productive life of the affected Property, the values placed upon the Title Defect by Purchaser and Seller, the age of the factual matters causing or constituting the alleged Title Defect, the probability that title failure will occur with respect to any Title Defect that represents only a possibility of title failure, and such other factors as are necessary to make a proper evaluation; (vi) if a Title Defect is reasonably susceptible of being cured, the Title Defect Amount shall not be greater than the reasonable cost and expense of curing such Title Defect; (vii) the Title Defect Amount with respect to a Title Defect shall be determined without duplication of any costs or losses included in another Title Defect Amount hereunder or for which Purchaser otherwise receives credit in the calculation of the Purchase Price; and (viii) notwithstanding anything to the contrary in this Article 3: (A) except with respect to any matter that constitutes a breach Seller’s special warranty of title of Defensible Title in the Assignment, Deed and Xxxx of Sale (or would constitute a breach of such special warranty of title upon Closing and without giving effect to the limitation in this clause (A)), an individual claim for a Title Defect for which a valid claim notice is given prior to the Defect Claim Date shall only generate an adjustment to the Base Purchase Price under this Article 3 if the Title Defect Amount with respect thereto exceeds One Hundred Thousand Dollars ($100,000); (B) the aggregate Title Defect Amounts attributable to the effects of all Title Defects upon any given Property shall not exceed the Allocated Value of such Property; and (C) except with respect to any matter that constitutes a breach Seller’s special warranty of title of Defensible Title in the Assignment, Deed and Xxxx of Sale (or would constitute a breach of such special warranty of title upon Closing and without giving effect to the limitation in this clause (C)), there shall be no adjustment to the Base Purchase Price for Title Defects unless and until the sum of (i) all Title Defect Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(a)(viii)(A) and (ii) all Environmental Defects Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(c)(iv)(A) exceed the Aggregate Deductible Amount, and then only to the extent that such aggregate amount exceeds the Aggregate Deductible Amount. (b) The Title Benefit Amount resulting from a Title Benefit shall be determined as follows: (i) if Purchaser and Seller agree in writing upon the Title Benefit Amount, that amount shall be the Title Benefit Amount; (ii) if the Title Benefit represents a discrepancy between (A) Seller’s aggregate Net Acre ownership in any Lease and (B) amount of Net Acres shown for such Lease in Exhibit A-1, and there is no discrepancy between the aggregate Net Revenue Interest of Seller in such Lease and the Net Revenue Interest set forth for such Lease in Exhibit A-1, then the Title Benefit Amount shall be the product of the Allocated Value of such Lease multiplied by a fraction, the numerator of which is difference between the number of Net Acres owned by Seller in such Lease and the number of Net Acres set forth for such Lease in Exhibit A-1, and the denominator of which is the Net Acres set forth for such Lease in Exhibit A-1; (iii) if the Title Benefit represents a discrepancy between (A) the Net Revenue Interest for any Property and (B) the Net Revenue Interest stated with respect to such Property in Exhibit A-1 or Exhibit A-2, then the Title Benefit Amount shall be the product of the Allocated Value of the affected Property multiplied by a fraction, the numerator of which is the increase in Seller’s aggregate Net Revenue Interest in such Property and the denominator of which is the Net Revenue Interest stated in Exhibit A-1 or Exhibit A-2 with respect to such Property; provided, however, that if the Title Benefit does not affect a Property throughout the entire productive life of the Property, the Title Benefit Amount determined under this Section 3.9(b)(iii) shall be reduced to take into account the applicable time period only; (iv) if a Title Benefit represents a right, circumstance, or condition of a type not described in subsections (i), (ii) or (iii) of this Section 3.9(b), the Title Benefit Amount shall be determined by taking into account the Allocated Value of the Property so affected, the portion of Seller’s interest in the Property so affected, the legal effect of the Title Benefit, the potential discounted economic effect of the Title Benefit over the productive life of any affected Property, the values placed upon the Title Benefit by Purchaser and Seller, and such other factors as are necessary to make a proper evaluation; and (v) notwithstanding anything to the contrary in this Article 3, an individual claim for a Title Benefit shall only generate an adjustment to the Base Purchase Price if the Title Benefit Amount with respect thereto exceeds One Hundred Thousand Dollars ($100,000). (c) The Environmental Defect Amount resulting from an Environmental Defect shall be determined as follows: (i) if Purchaser and Seller agree on the Environmental Defect Amount, that amount shall be the Environmental Defect Amount; (ii) the Environmental Defect Amount shall include, but shall not exceed, the reasonable cost of the response required and permitted under Environmental Laws that addresses the applicable Environmental Defect to the extent required by applicable Environmental Laws as of the Defect Claim Date in the most cost efficient manner (considered as a whole taking into consideration any material negative impact such response may have on the operations of the relevant Assets (as currently operated) and any potential material additional costs or liabilities that may likely arise as a direct result of such response) as compared to any other response that is required and permitted under Environmental Laws; (iii) the Environmental Defect Amount with respect to an Environmental Defect shall be determined without duplication of any costs or losses included in another Environmental Defect Amount or adjustment to the Base Purchase Price hereunder; and (iv) notwithstanding anything to the contrary in this Article 3: (A) an individual claim for an Environmental Defect for which a valid claim notice is given prior to the Defect Claim Date shall only generate an adjustment to the Base Purchase Price if the Environmental Defect Amount with respect thereto exceeds One Hundred Thousand Dollars ($100,000); provided, that, solely for the purposes of determining whether or not the Environmental Defect Amount for any individual Environmental Defect exceeds One Hundred Thousand Dollars ($100,000), (1) the Environmental Defect Amount attributable to such Environmental Defect shall be aggregated with the Environmental Defect Amount(s) attributable to any other Environmental Defect(s) that arise out of the same release, event, or incident, or (2) solely to the extent that an Environmental Defect is attributable to the failure to have a required environmental Permit or the lack of compliance with an environmental Permit, the Environmental Defect Amount(s) attributable to any Property subject to such Environmental Defect that are covered by such environmental Permit (or would have been covered by such environmental Permit, if obtained) shall be aggregated; and (B) there shall be no adjustment to the Base Purchase Price for Environmental Defects unless and until the sum of (i) all Environmental Defect Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(c)(iv)(A) and (ii) all Title Defect Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(a)(viii)(A) exceed the Aggregate Deductible Amount, and then only to the extent that such aggregate amount exceeds the Aggregate Deductible Amount.
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Samples: Purchase and Sale Agreement (Earthstone Energy Inc), Purchase and Sale Agreement (Earthstone Energy Inc)
Calculation of Title Defect Amounts, Title Benefit Amounts, and Environmental Defect Amounts. (a) The Title Defect Amount resulting from a Title Defect shall be determined as follows:
(i) if Purchaser and Seller agree in writing upon the Title Defect Amount, that amount shall be the Title Defect Amount;
(ii) if the Title Defect is a lien, encumbrance, or other charge which is liquidated in amount, then the Title Defect Amount shall be the amount necessary to be paid to un conditionally remove the Title Defect from Seller’s interest in the affected Property;
(iii) with respect to the Target Interval (except as expressly depth limited within the Target Interval as set forth on Exhibit A-1), if the Title Defect represents a discrepancy between (A) Seller’s aggregate ownership of Net Acres for any Lease and (B) the amount of Net Acres set forth for such Lease in Exhibit A-1, and there is no discrepancy between the aggregate Net Revenue Interest of Seller in such Lease and the Net Revenue Interest set forth for such Lease in A-1 or Exhibit A-1, A-5 then the Title Defect Amount shall be the product of the Allocated Value of such Lease multiplied by a fraction, the numerator of which is the difference between the number of Net Acres owned by Seller in such Lease and the number of Net Acres set forth for such Lease in Exhibit A-1A-1 or Exhibit A-5, as applicable, and the denominator of which is the Net Acres set forth for such Lease in Exhibit A-1A-1 or Exhibit A-5, as applicable;
(iv) with respect to the Target Interval (except as expressly depth limited within the Target Interval as set forth on Exhibit A-1), if the Title Defect represents a discrepancy between (A) the Seller’s aggregate Net Revenue Interest for any Property and (B) the Net Revenue Interest stated in Exhibit A-1 X-0, Xxxxxxx X-0 or Exhibit A-2A-5 for such Property, and for which there is not any change in the Seller’s Working Interest or Net Acre ownership for such Property from that set forth in Exhibit X-0, Xxxxxxx X-0 or Exhibit A-5, as applicable, for such Property, and (1) with respect to Properties that are Xxxxx, the Seller’s (and Purchaser’s, as successor in interest to Seller) Working Interest in such Property is decreased below the Working Interest amount set forth for such Property on Exhibit A-2 in the same proportion as the decrease in Net Revenue Interest in such Property, or (2) with respect to Properties that are Leases, there is no discrepancy with respect to Seller’s (and Purchaser’s, as successor in interest to Seller) Net Acre ownership in such Property and the amount of Net Acres set forth for such Property on Exhibit A-1applicable, then the Title Defect Amount shall be the product of the Allocated Value of such Property multiplied by a fraction, the numerator of which is the decrease in Seller’s aggregate Net Revenue Interest in such Property and the denominator of which is Seller’s Net Revenue Interest stated in on Exhibit A-1 X-0, Xxxxxxx X-0 or Exhibit A-2, as applicable, A-5 for such Property; provided, however, that if the Title Defect does not affect the Property throughout its entire productive life, the Title Defect Amount determined under this Section 3.9(a)(iv) shall be reduced to take into account the applicable time period only;
(v) if the Title Defect represents an obligation, encumbrance, burden, or charge upon, or other defect in title to, the affected Property of a type not described in subsections (i), (ii), (iii), or (iv) of this Section 3.9(a)above, the Title Defect Amount shall be determined by taking into account the Allocated Value of the Property so affected, the portion of Seller’s interest in the Property affected by the Title Defect, the legal effect of the Title Defect, the potential discounted economic effect of the Title Defect over the productive life of the affected Property, the values placed upon the Title Defect by Purchaser and Seller, the age of the factual matters causing or constituting the alleged Title Defect, the probability that title failure will occur with respect to any Title Defect that represents only a possibility of title failure, and such other factors as are necessary to make a proper evaluation;
(vi) if a Title Defect is reasonably susceptible of being cured, the Title Defect Amount shall not be no greater than the reasonable cost and expense of curing such Title Defect;
(vii) the Title Defect Amount with respect to a Title Defect shall be determined without duplication of any costs or losses included in another Title Defect Amount hereunder or for which Purchaser otherwise receives credit in the calculation of the Purchase Price; and
(viii) notwithstanding anything to the contrary in this Article 3:
(A) except with respect to any matter that constitutes a breach Seller’s special warranty of title of Defensible Title in the Assignment, Deed and Xxxx of Sale (or would constitute a breach of such special warranty of title upon Closing and without giving effect to the limitation in this clause (A)), an individual claim for a Title Defect for which a valid claim notice is given prior to the Defect Claim Date shall only generate an adjustment to the Base Unadjusted Purchase Price under this Article 3 if the Title Defect Amount with respect thereto exceeds One Hundred Thousand Dollars ($100,000);
(B) the aggregate Title Defect Amounts attributable to the effects of all Title Defects upon any given Property shall not exceed the Allocated Value of such Property; and
(C) except with respect to any matter that constitutes a breach Seller’s special warranty of title of Defensible Title in the Assignment, Deed and Xxxx of Sale (or would constitute a breach of such special warranty of title upon Closing and without giving effect to the limitation in this clause (C)), there shall be no adjustment to the Base Purchase Price for Title Defects unless and until the sum aggregate of (i) all Title Defect Amounts which would generate an adjustment to the Base Unadjusted Purchase Price pursuant to Section 3.9(a)(viii)(A) exceeds two and one-half percent (ii2.5%) all Environmental Defects Amounts which would generate an adjustment to of the Base Unadjusted Purchase Price pursuant to Section 3.9(c)(iv)(A) exceed the Aggregate Deductible AmountPrice, and then only to the extent that such aggregate amount exceeds two and one-half percent (2.5%) of the Aggregate Deductible AmountUnadjusted Purchase Price.
(b) The Title Benefit Amount resulting from a Title Benefit shall be determined as follows:
(i) if Purchaser and Seller agree in writing upon the Title Benefit Amount, that amount shall be the Title Benefit Amount;
(ii) if the Title Benefit represents a discrepancy between (A) Seller’s aggregate Net Acre ownership in any Lease and (B) amount of Net Acres shown for such Lease in Exhibit A-1, and there is no discrepancy between the aggregate Net Revenue Interest of Seller in such Lease and the Net Revenue Interest set forth for such Lease in A-1 or Exhibit A-1A-5, then the Title Benefit Amount shall be the product of the Allocated Value of such Lease multiplied by a fraction, the numerator of which is difference between the number of Net Acres owned by Seller in such Lease and the number of Net Acres set forth for such Lease in Exhibit A-1A-1 or Exhibit A-5, as applicable, and the denominator of which is the Net Acres set forth for such Lease in Exhibit A-1A-1 or Exhibit A-5, as applicable;
(iii) if the Title Benefit represents a discrepancy between (A) the Net Revenue Interest for any Property and (B) the Net Revenue Interest stated with respect to such Property in Exhibit A-1 X-0, Xxxxxxx X-0 or Exhibit A-2A-5, then the Title Benefit Amount shall be the product of the Allocated Value of the affected Property multiplied by a fraction, the numerator of which is the increase in Seller’s aggregate Net Revenue Interest in such Property increase and the denominator of which is the Net Revenue Interest stated in Exhibit A-1 X-0, Xxxxxxx X-0 or Exhibit A-2 A-5 with respect to such Property; provided, however, that if the Title Benefit does not affect a Property throughout the entire productive life of the Property, the Title Benefit Amount determined under this Section 3.9(b)(iii) shall be reduced to take into account the applicable time period only;
(iv) if a Title Benefit represents a right, circumstance, or condition of a type not described in subsections (i), (ii) or (iii) of this Section 3.9(b)above, the Title Benefit Amount shall be determined by taking into account the Allocated Value of the Property so affected, the portion of Seller’s interest in the Property so affected, the legal effect of the Title Benefit, the potential discounted economic effect of the Title Benefit over the productive life of any affected Property, the values placed upon the Title Benefit by Purchaser and Seller, and such other factors as are necessary to make a proper evaluation; and;
(v) notwithstanding anything to the contrary in this Article 3, an individual claim for a Title Benefit shall only generate an adjustment to the Base Unadjusted Purchase Price if the Title Benefit Amount with respect thereto exceeds One Hundred Thousand Dollars ($100,000); and
(vi) there shall be no adjustment to the Purchase Price for Title Benefits unless and until the aggregate of all Title Benefit Amounts which would generate an adjustment to the Unadjusted Purchase Price pursuant to Section 3.9(b)(v) exceeds two and one-half percent (2.5%) of the Unadjusted Purchase Price, and then only to the extent that such aggregate amount exceeds two and one-half percent (2.5%) of the Unadjusted Purchase Price.
(c) The Environmental Defect Amount resulting from an Environmental Defect shall be determined as follows:
(i) if Purchaser and Seller agree on the Environmental Defect Amount, that amount shall be the Environmental Defect Amount;
(ii) the Environmental Defect Amount shall include, include but shall not exceed, exceed the reasonable cost of the response required and permitted under Environmental Laws that addresses the applicable Environmental Defect to the extent required by applicable applying Environmental Laws as of the Defect Claim Date in the most cost efficient effective manner reasonably available and commercially reasonable and practical (considered as a whole taking into consideration any material negative impact such response may have on the operations of the relevant Assets (as currently operated) and any potential material additional costs or liabilities that may likely arise as a direct result of such response) as compared to any other response that is required and permitted under Environmental Laws);
(iii) the Environmental Defect Amount with respect to an Environmental Defect shall be determined without duplication of any costs or losses included in another Environmental Defect Amount or adjustment to the Base Purchase Price hereunder; and
(iv) notwithstanding anything to the contrary in this Article 3:
(A) an individual claim for an Environmental Defect for which a valid claim notice is given prior to the Defect Claim Date shall only generate an adjustment to the Base Unadjusted Purchase Price if the Environmental Defect Amount with respect thereto exceeds One Hundred Thousand Dollars ($100,000); provided, that, solely ) (for avoidance of doubt the value of any single Environmental Defect that affects multiple Properties may be aggregated across such multiple Properties for purposes of determining whether or not the Environmental Defect Amount for any individual Environmental Defect exceeds One Hundred Thousand Dollars ($100,000if this amount has been met), (1) the Environmental Defect Amount attributable to such Environmental Defect shall be aggregated with the Environmental Defect Amount(s) attributable to any other Environmental Defect(s) that arise out of the same release, event, or incident, or (2) solely to the extent that an Environmental Defect is attributable to the failure to have a required environmental Permit or the lack of compliance with an environmental Permit, the Environmental Defect Amount(s) attributable to any Property subject to such Environmental Defect that are covered by such environmental Permit (or would have been covered by such environmental Permit, if obtained) shall be aggregated; and
(B) there shall be no adjustment to the Base Unadjusted Purchase Price for Environmental Defects unless and until the sum aggregate of (i) all Environmental Defect Amounts which would generate an adjustment to the Base Unadjusted Purchase Price pursuant to Section 3.9(c)(iv)(A) exceeds two and one-half percent (ii2.5%) all Title Defect Amounts which would generate an adjustment to of the Base Unadjusted Purchase Price pursuant to Section 3.9(a)(viii)(A) exceed the Aggregate Deductible AmountPrice, and then only to the extent that such aggregate amount exceeds two and one-half percent (2.5%) of the Aggregate Deductible AmountUnadjusted Purchase Price.
Appears in 1 contract
Calculation of Title Defect Amounts, Title Benefit Amounts, and Environmental Defect Amounts. (a) The Title Defect Amount resulting from a Title Defect shall be determined as follows:
(i) if Purchaser and Seller agree in writing upon the Title Defect Amount, that amount shall be the Title Defect Amount;
(ii) if the Title Defect is a lien, encumbrance, or other charge which is liquidated in amount, then the Title Defect Amount shall be the amount necessary to be paid to remove the Title Defect from Seller’s interest in the affected Property;
(iii) with respect to the Target Interval [reserved];
(except as expressly depth limited within the Target Interval as set forth on Exhibit A-1), iv) if the Title Defect represents a discrepancy between (A) Seller’s aggregate ownership of Net Acres Revenue Interest for any Lease and (B) the amount of Net Acres set forth for such Lease in Exhibit A-1, and there is no discrepancy between the aggregate Net Revenue Interest of Seller in such Lease and the Net Revenue Interest set forth for such Lease in Exhibit A-1, then the Title Defect Amount shall be the product of the Allocated Value of such Lease multiplied by a fraction, the numerator of which is the difference between the number of Net Acres owned by Seller in such Lease and the number of Net Acres set forth for such Lease in Exhibit A-1, and the denominator of which is the Net Acres set forth for such Lease in Exhibit A-1;
(iv) with respect as to the Target Interval (except as otherwise expressly depth limited within the Target Interval as set forth on Exhibit A-1A-1 with respect to such Lease), if the Title Defect represents a discrepancy between (A) the Seller’s aggregate Net Revenue Interest for any Property or Well and (B) the Net Revenue Interest stated in Exhibit A-1 or Exhibit A-2, as applicable, for such Property, and Lease (1) as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to Properties that are Xxxxxsuch Lease)) or Well, the and for which there is not at least a proportionate decrease in Seller’s (and Purchaser’sWorking Interest ownership, as successor in interest applicable, for such applicable Lease (as to Seller) Working Interest in such Property is decreased below the Working Interest amount Target Interval (except as otherwise expressly set forth for such Property on Exhibit A-2 in the same proportion as the decrease in Net Revenue Interest in such Property, or (2) A-1 with respect to Properties such Lease)) or Well from that are Leasesset forth in Exhibit A-1 or Exhibit A-2, there is no discrepancy as applicable, for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to Seller’s (and Purchaser’s, as successor in interest to Sellersuch Lease)) Net Acre ownership in such Property and the amount of Net Acres set forth for such Property on Exhibit A-1or Well, then the Title Defect Amount shall be the product of the Allocated Value of such Property Lease or Well multiplied by a fraction, the numerator of which is the decrease in Seller’s aggregate Net Revenue Interest in such Property Lease or Well and the denominator of which is Seller’s Net Revenue Interest stated in Exhibit A-1 or Exhibit A-2, as applicable, for such PropertyLease or Well; provided, however, that if the Title Defect does not affect the Property such Lease or Well throughout its entire productive life, the Title Defect Amount determined under this Section 3.9(a)(iv3.9(a)(iv) shall be reduced to take into account the applicable time period only;
(v) if the Title Defect represents an obligation, encumbrance, burden, or charge upon, or other defect in title to, the affected Property of a type not described in subsections (i(i), (ii(ii), (iii(iii), or (iv(iv) of this Section 3.9(a)3.9, the Title Defect Amount shall be determined by taking into account the Allocated Value of the Property so affected, the portion of Seller’s interest in the Property affected by the Title Defect, the legal effect of the Title Defect, the potential discounted economic effect of the Title Defect over the productive life of the affected Property, the values placed upon the Title Defect by Purchaser and Seller, the age of the factual matters causing or constituting the alleged Title Defect, the probability that title failure will occur with respect to any Title Defect that represents only a possibility of title failure, and such other factors as are necessary to make a proper evaluation;
(vi) if a Title Defect is reasonably susceptible of being cured, the Title Defect Amount shall not be greater than the reasonable cost and expense of curing such Title Defect;
(vii) the Title Defect Amount with respect to a Title Defect shall be determined without duplication of any costs or losses included in another Title Defect Amount hereunder or for which Purchaser otherwise receives credit in the calculation of the Purchase Price; and
(viiivii) notwithstanding anything to the contrary in this Article Article 3:
(A) except with respect to any matter that constitutes a breach Seller’s special warranty of title of Defensible Title in the Assignment, Deed and Xxxx of Sale (or would constitute a breach of such special warranty of title upon Closing and without giving effect to the limitation in this clause (A)), an individual claim for a Title Defect for which a valid claim notice Title Defect Claim Notice is given prior to the Defect Claim Date shall only generate an adjustment to the Base Unadjusted Purchase Price under this Article Article 3 if the Title Defect Amount with respect thereto exceeds One Hundred Sixty-Five Thousand Dollars ($100,00065,000) (the “Individual Defect Threshold”); provided, however, that if a specific Title Defect affects more than one Title Defect Property, then the Title Defect Amounts associated with such specific Title Defect may be aggregated by Purchaser for determining whether the Individual Defect Threshold is met with respect to all such Properties affected by such specific Title Defect;
(B) the aggregate Title Defect Amounts attributable to the effects of all Title Defects upon any given Property shall not exceed the Allocated Value of such Property; and
(C) except with respect to any matter that constitutes a breach Seller’s special warranty of title of Defensible Title in the Assignment, Deed and Xxxx of Sale (or would constitute a breach of such special warranty of title upon Closing and without giving effect to the limitation in this clause (C)), there shall be no adjustment to the Base Purchase Price for Title Defects or Environmental Defects unless and until the sum aggregate of (i) all Title Defect Amounts which would generate an adjustment and Environmental Defect Amounts that exceed (or are deemed to exceed) the Base Purchase Price pursuant to Section 3.9(a)(viii)(A) and (ii) Individual Defect Threshold less the aggregate of all Environmental Defects Title Benefit Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(c)(iv)(A) that exceed the Aggregate Deductible AmountTitle Benefit Threshold, exceeds an amount equal to two percent (2%) of the Unadjusted Purchase Price, and then only to the extent that such aggregate amount exceeds two percent (2%) of the Aggregate Deductible AmountUnadjusted Purchase Price. For purposes of this Section 3.9(a)(vii)(C), the Unadjusted Purchase Price shall be reduced by the Allocated Value of any Assets excluded pursuant to Section 3.4(a), Section 3.7(d) or Section 3.12 and references to the Unadjusted Purchase Price in this Section 3.9(a)(vii)(C) shall be deemed and construed to reference the Unadjusted Purchase Price as reduced by any such reductions described herein.
(b) The Title Benefit Amount resulting from a Title Benefit shall be determined as follows:
(i) if Purchaser and Seller agree in writing upon the Title Benefit Amount, that amount shall be the Title Benefit Amount;
(ii) if the Title Benefit represents a discrepancy between (A) Seller’s aggregate Net Acre ownership in any Lease and (B) amount of Net Acres shown for such Lease in Exhibit A-1, and there is no discrepancy between the aggregate Net Revenue Interest of Seller in such Lease and the Net Revenue Interest set forth for such Lease in Exhibit A-1, then the Title Benefit Amount shall be the product of the Allocated Value of such Lease multiplied by a fraction, the numerator of which is difference between the number of Net Acres owned by Seller in such Lease and the number of Net Acres set forth for such Lease in Exhibit A-1, and the denominator of which is the Net Acres set forth for such Lease in Exhibit A-1[reserved];
(iii) if the Title Benefit represents a discrepancy between (A) the Net Revenue Interest for any Property Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well and (B) the Net Revenue Interest stated with respect to such Property Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well, as applicable, in Exhibit A-1 A–1 or Exhibit A-2, then the Title Benefit Amount shall be the product of the Allocated Value of the affected Property Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well multiplied by a fraction, the numerator of which is the increase in Seller’s aggregate Net Revenue Interest in such Property Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well and the denominator of which is the Net Revenue Interest stated in Exhibit A-1 A–1 or Exhibit A-2 with respect to such PropertyLease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well; provided, however, that if the Title Benefit does not affect a Property Lease or Well throughout the entire productive life of the Propertythereof, the Title Benefit Amount determined under this Section 3.9(b)(iii3.9(b)(iii) shall be reduced to take into account the applicable time period only;
(iv) if a Title Benefit represents a right, circumstance, or condition of a type not described in subsections (i(i), (ii(ii) or (iii(iii) of this Section 3.9(b3.9(b), the Title Benefit Amount shall be determined by taking into account the Allocated Value of the Property so affected, the portion of Seller’s interest in the Property so affected, the legal effect of the Title Benefit, the potential discounted economic effect of the Title Benefit over the productive life of any affected Property, the values placed upon the Title Benefit by Purchaser and Seller, and such other factors as are necessary to make a proper evaluation; and
(v) notwithstanding anything to the contrary in this Article Article 3, an individual claim for a Title Benefit shall only generate an adjustment serve to offset the Base Purchase Price any applicable Title Defect Amounts and/or Environmental Defect Amounts if the Title Benefit Amount with respect thereto exceeds One Hundred Sixty-Five Thousand Dollars ($100,00065,000) (the “Title Benefit Threshold”).
(c) The Environmental Defect Amount resulting from an Environmental Defect shall be determined as follows:
(i) if Purchaser and Seller agree on the Environmental Defect Amount, that amount shall be the Environmental Defect Amount;
(ii) the Environmental Defect Amount shall include, but shall not exceed, the reasonable cost of the response required and permitted under Environmental Laws that addresses the applicable Environmental Defect to the extent required by applicable Environmental Laws as of the Defect Claim Date in with the most cost efficient manner cost-effective remediation of such Environmental Defect (considered as a whole whole, taking into consideration any material negative impact impacts such response may have on the operations continued, safe, and prudent operation of the relevant Assets (as currently operated) and any potential material additional costs or liabilities that may likely arise as a direct result of such response) as compared to any other response that is required and permitted under Environmental Laws);
(iii) the Environmental Defect Amount with respect to an Environmental Defect shall be determined without duplication of any costs or losses included in another Environmental Defect Amount or adjustment to the Base Purchase Price hereunder; and
(iv) notwithstanding anything to the contrary in this Article Article 3:
(A) , an individual claim for an Environmental Defect for which a valid claim notice Environmental Defect Claim Notice is given prior to the Defect Claim Date shall only generate an adjustment to the Base Unadjusted Purchase Price if the Environmental Defect Amount with respect thereto exceeds One Hundred Thousand Dollars ($100,000); provided, that, solely for the purposes of determining whether or not the Environmental Individual Defect Amount for any individual Environmental Defect exceeds One Hundred Thousand Dollars ($100,000), (1) the Environmental Defect Amount attributable to such Environmental Defect shall be aggregated with the Environmental Defect Amount(s) attributable to any other Environmental Defect(s) that arise out of the same release, event, or incident, or (2) solely to the extent that an Environmental Defect is attributable to the failure to have a required environmental Permit or the lack of compliance with an environmental Permit, the Environmental Defect Amount(s) attributable to any Property subject to such Environmental Defect that are covered by such environmental Permit (or would have been covered by such environmental Permit, if obtained) shall be aggregated; and
(B) there shall be no adjustment to the Base Purchase Price for Environmental Defects unless and until the sum of (i) all Environmental Defect Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(c)(iv)(A) and (ii) all Title Defect Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(a)(viii)(A) exceed the Aggregate Deductible Amount, and then only to the extent that such aggregate amount exceeds the Aggregate Deductible AmountThreshold.
Appears in 1 contract
Samples: Purchase and Sale Agreement (Laredo Petroleum, Inc.)
Calculation of Title Defect Amounts, Title Benefit Amounts, and Environmental Defect Amounts. (a) The Title Defect Amount resulting from a Title Defect shall be determined as follows:
(i) if Purchaser and Seller agree in writing upon the Title Defect Amount, that amount shall be the Title Defect Amount;
(ii) if the Title Defect is a lien, encumbrance, or other charge which is liquidated in amount, then the Title Defect Amount shall be the amount necessary to be paid to remove the Title Defect from Seller’s interest in the affected Property;
(iii) with respect to the Target Interval (except as expressly depth limited within the Target Interval as set forth on Exhibit A-1), if the Title Defect represents a discrepancy between (A) Seller’s aggregate ownership of Net Acres for any Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) and (B) the amount of Net Acres set forth for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) in Exhibit A-1A–1, and there is no discrepancy between the aggregate Net Revenue Interest of Seller in such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) and the Net Revenue Interest set forth for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) in Exhibit A-1, then the Title Defect Amount shall be the product of the Allocated Value of such Lease multiplied by a fraction, the numerator of which is the difference between the number of Net Acres owned by Seller in such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) and the number of Net Acres set forth for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) in Exhibit A-1A–1, and the denominator of which is the Net Acres set forth for such Lease in Exhibit A-1;
(iv) with respect as to the Target Interval (except as otherwise expressly depth limited within the Target Interval as set forth on Exhibit A-1A-1 with respect to such Lease), ) in Exhibit A–1;
(iv) if (x) the Title Defect represents a discrepancy between (A) the Seller’s aggregate Net Revenue Interest for any Property Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well and (B) the Net Revenue Interest stated in Exhibit A-1 or Exhibit A-2, as applicable, for such PropertyLease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well, and (1y) there is a proportionate decrease in Seller’s Working Interest or Net Acre ownership, as applicable, for such applicable Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to Properties such Lease)) or Well from that are Xxxxx, the Seller’s (and Purchaser’sset forth in Exhibit A-1 or Exhibit A-2, as successor in interest applicable, for such Lease (as to Seller) Working Interest in such Property is decreased below the Working Interest amount Target Interval (except as otherwise expressly set forth for such Property on Exhibit A-2 in the same proportion as the decrease in Net Revenue Interest in such Property, or (2) A-1 with respect to Properties that are Leases, there is no discrepancy with respect to Seller’s (and Purchaser’s, as successor in interest to Sellersuch Lease)) Net Acre ownership in such Property and the amount of Net Acres set forth for such Property on Exhibit A-1or Well, then the Title Defect Amount shall be the product of the Allocated Value of such Property Lease or Well multiplied by a fraction, the numerator of which is the decrease in Seller’s aggregate Net Revenue Interest in such Property Lease or Well and the denominator of which is Seller’s Net Revenue Interest stated in Exhibit A-1 or Exhibit A-2, as applicable, for such PropertyLease or Well; provided, however, that if the Title Defect does not affect the Property such Lease or Well throughout its entire productive life, the Title Defect Amount determined under this Section 3.9(a)(iv) shall be reduced to take into account the applicable time period only;
(v) if the Title Defect represents an obligation, encumbrance, burden, or charge upon, or other defect in title to, the affected Property of a type not described in subsections (i), (ii), (iii), or (iv) of this Section 3.9(a)3.9, the Title Defect Amount shall be determined by taking into account the Allocated Value of the Property so affected, the portion of Seller’s interest in the Property affected by the Title Defect, the legal effect of the Title Defect, the potential discounted economic effect of the Title Defect over the productive life of the affected Property, the values placed upon the Title Defect by Purchaser and Seller, the age of the factual matters causing or constituting the alleged Title Defect, the probability that title failure will occur with respect to any Title Defect that represents only a possibility of title failure, and such other factors as are necessary to make a proper evaluation;
(vi) if a Title Defect is reasonably susceptible of being cured, the Title Defect Amount shall not be greater than the reasonable cost and expense of curing such Title Defect;
(vii) the Title Defect Amount with respect to a Title Defect shall be determined without duplication of any costs or losses included in another Title Defect Amount hereunder or for which Purchaser otherwise receives credit in the calculation of the Purchase Price; and
(viiivii) notwithstanding anything to the contrary in this Article 3:
(A) except with respect to any matter that constitutes a breach Seller’s special warranty of title of Defensible Title in the Assignment, Deed and Xxxx of Sale (or would constitute a breach of such special warranty of title upon Closing and without giving effect to the limitation in this clause (A)), an individual claim for a Title Defect for which a valid claim notice Title Defect Claim Notice is given prior to the Defect Claim Date shall only generate an adjustment to the Base Unadjusted Purchase Price under this Article 3 if the Title Defect Amount with respect thereto exceeds One Hundred Seventy-Five Thousand Dollars ($100,00075,000) (the “Individual Defect Threshold”); provided, however, that if a specific Title Defect affects more than one Title Defect Property, then the Title Defect Amounts associated with such specific Title Defect may be aggregated by Purchaser for determining whether the Individual Defect Threshold is met with respect to all such Properties affected by such specific Title Defect;
(B) except with respect to Title Defects described in Section 3.9(a)(ii) the aggregate Title Defect Amounts attributable to the effects of all Title Defects upon any given Property shall not exceed the Allocated Value of such Property; and
(C) except with respect to any matter that constitutes a breach Seller’s special warranty of title of Defensible Title in the Assignment, Deed and Xxxx of Sale (or would constitute a breach of such special warranty of title upon Closing and without giving effect to the limitation in this clause (C)), there shall be no adjustment to the Base Purchase Price for Title Defects or Environmental Defects unless and until the sum aggregate of (i) all Title Defect Amounts which would generate an adjustment and Environmental Defect Amounts that exceed (or are deemed to exceed) the Base Purchase Price pursuant to Section 3.9(a)(viii)(A) and (ii) Individual Defect Threshold less the aggregate of all Environmental Defects Title Benefit Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(c)(iv)(A) that exceed the Aggregate Deductible AmountTitle Benefit Threshold, exceeds an amount equal to two percent (2%) of the Unadjusted Purchase Price, and then only to the extent that such aggregate amount exceeds two percent (2%) of the Aggregate Deductible AmountUnadjusted Purchase Price. For purposes of this Section 3.9(a)(vii)(C), the Unadjusted Purchase Price shall be reduced by the Allocated Value of any Assets excluded pursuant to Section 3.4(a), Section 3.7(d), 3.7(e), or Section 3.12 and references to the Unadjusted Purchase Price in this Section 3.9(a)(vii)(C) shall be deemed and construed to reference the Unadjusted Purchase Price as reduced by any such reductions described herein.
(b) The Title Benefit Amount resulting from a Title Benefit shall be determined as follows:
(i) if Purchaser and Seller agree in writing upon the Title Benefit Amount, that amount shall be the Title Benefit Amount;
(ii) if the Title Benefit represents a discrepancy between (A) Seller’s aggregate Net Acre ownership in any Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) and (B) the amount of Net Acres shown for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) in Exhibit A-1A–1, and there is no discrepancy between the aggregate Net Revenue Interest of Seller in such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) and the Net Revenue Interest set forth for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) in Exhibit A-1, then the Title Benefit Amount shall be the product of the Allocated Value of such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) multiplied by a fraction, the numerator of which is difference between the number of Net Acres owned by Seller in such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) and the number of Net Acres set forth for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) in Exhibit A-1A–1, and the denominator of which is the Net Acres set forth for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) in Exhibit A-1A–1;
(iii) if (x) the Title Benefit represents a discrepancy between (A) the Net Revenue Interest for any Property Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well and (B) the Net Revenue Interest stated with respect to such Property Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well, as applicable, in Exhibit A–1 or Exhibit A-2, and (y) there is a proportionate increase in Seller’s Working Interest, for such applicable Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well from that set forth in Exhibit A-1 or Exhibit A-2, as applicable, for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well, then the Title Benefit Amount shall be the product of the Allocated Value of the affected Property Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well multiplied by a fraction, the numerator of which is the increase in Seller’s aggregate Net Revenue Interest in such Property Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well and the denominator of which is the Net Revenue Interest stated in Exhibit A-1 A–1 or Exhibit A-2 with respect to such PropertyLease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well; provided, however, that if the Title Benefit does not affect a Property Lease or Well throughout the entire productive life of the Propertythereof, the Title Benefit Amount determined under this Section 3.9(b)(iii) shall be reduced to take into account the applicable time period only;
(iv) if a Title Benefit represents a right, circumstance, or condition of a type not described in subsections (i), (ii) or (iii) of this Section 3.9(b), the Title Benefit Amount shall be determined by taking into account the Allocated Value of the Property so affected, the portion of Seller’s interest in the Property so affected, the legal effect of the Title Benefit, the potential discounted economic effect of the Title Benefit over the productive life of any affected Property, the values placed upon the Title Benefit by Purchaser and Seller, and such other factors as are necessary to make a proper evaluation; and
(v) notwithstanding anything to the contrary in this Article 3, an individual claim for a Title Benefit shall only generate an adjustment serve to offset the Base Purchase Price any applicable Title Defect Amounts and/or Environmental Defect Amounts if the Title Benefit Amount with respect thereto exceeds One Hundred Seventy-Five Thousand Dollars ($100,00075,000) (the “Title Benefit Threshold”).
(c) The Environmental Defect Amount resulting from an Environmental Defect shall be determined as follows:
(i) if Purchaser and Seller agree on the Environmental Defect Amount, that amount shall be the Environmental Defect Amount;
(ii) the Environmental Defect Amount shall include, but shall not exceed, the reasonable cost of the response required and permitted or allowed under Environmental Laws in effect on the Execution Date that addresses and resolves (for current and future use in the same manner as currently used) the applicable Environmental Defect to the extent required by applicable Environmental Laws as of the Defect Claim Date in with the most cost efficient manner cost-effective remediation of such Environmental Defect (considered as a whole whole, taking into consideration any material negative impact impacts such response may have on the operations continued, safe, and prudent operation of the relevant Assets (as currently operated) and any potential material additional costs or liabilities that may likely arise as a direct result of such response) as compared to any other response that is required and permitted under Environmental Laws);
(iii) the Environmental Defect Amount with respect to an Environmental Defect shall be determined without duplication of any costs or losses included in another Environmental Defect Amount or adjustment to the Base Purchase Price hereunder; and
(iv) notwithstanding anything to the contrary in this Article 3:
(A) , an individual claim for an Environmental Defect for which a valid claim notice Environmental Defect Claim Notice is given prior to the Defect Claim Date shall only generate an adjustment to the Base Unadjusted Purchase Price if the Environmental Defect Amount with respect thereto exceeds One Hundred Thousand Dollars ($100,000); provided, that, solely for the purposes of determining whether or not the Environmental Individual Defect Amount for any individual Environmental Defect exceeds One Hundred Thousand Dollars ($100,000), (1) the Environmental Defect Amount attributable to such Environmental Defect shall be aggregated with the Environmental Defect Amount(s) attributable to any other Environmental Defect(s) that arise out of the same release, event, or incident, or (2) solely to the extent that an Environmental Defect is attributable to the failure to have a required environmental Permit or the lack of compliance with an environmental Permit, the Environmental Defect Amount(s) attributable to any Property subject to such Environmental Defect that are covered by such environmental Permit (or would have been covered by such environmental Permit, if obtained) shall be aggregated; and
(B) there shall be no adjustment to the Base Purchase Price for Environmental Defects unless and until the sum of (i) all Environmental Defect Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(c)(iv)(A) and (ii) all Title Defect Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(a)(viii)(A) exceed the Aggregate Deductible Amount, and then only to the extent that such aggregate amount exceeds the Aggregate Deductible AmountThreshold.
Appears in 1 contract
Calculation of Title Defect Amounts, Title Benefit Amounts, and Environmental Defect Amounts. (a) The Title Defect Amount resulting from a Title Defect shall be determined as follows:
(i) if Purchaser and Seller agree in writing upon the Title Defect Amount, that amount shall be the Title Defect Amount;
(ii) if the Title Defect is a lien, encumbrance, or other charge which is liquidated in amount, then the Title Defect Amount shall be the amount necessary to be paid to remove the Title Defect from Seller’s interest in the affected Property;
(iii) with respect to the Target Interval (except as expressly depth limited within the Target Interval as set forth on Exhibit A-1), if the Title Defect represents a discrepancy between (A) Seller’s aggregate ownership of Net Acres for any Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) and (B) the amount of Net Acres set forth for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) in Exhibit A-1A–1, and there is no discrepancy between the aggregate Net Revenue Interest of Seller in such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) and the Net Revenue Interest set forth for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) in Exhibit A-1, then the Title Defect Amount shall be the product of the Allocated Value of such Lease multiplied by a fraction, the numerator of which is the difference between the number of Net Acres owned by Seller in such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) and the number of Net Acres set forth for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) in Exhibit A-1A–1, and the denominator of which is the Net Acres set forth for such Lease in Exhibit A-1;
(iv) with respect as to the Target Interval (except as otherwise expressly depth limited within the Target Interval as set forth on Exhibit A-1A-1 with respect to such Lease), ) in Exhibit A–1;
(iv) if (x) the Title Defect represents a discrepancy between (A) the Seller’s aggregate Net Revenue Interest for any Property Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well and (B) the Net Revenue Interest stated in Exhibit A-1 or Exhibit A-2, as applicable, for such PropertyLease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well, and (1y) there is a proportionate decrease in Seller’s Working Interest or Net Acre ownership, as applicable, for such applicable Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to Properties such Lease)) or Well from that are Xxxxx, the Seller’s (and Purchaser’sset forth in Exhibit A-1 or Exhibit A-2, as successor in interest applicable, for such Lease (as to Seller) Working Interest in such Property is decreased below the Working Interest amount Target Interval (except as otherwise expressly set forth for such Property on Exhibit A-2 in the same proportion as the decrease in Net Revenue Interest in such Property, or (2) A-1 with respect to Properties that are Leases, there is no discrepancy with respect to Seller’s (and Purchaser’s, as successor in interest to Sellersuch Lease)) Net Acre ownership in such Property and the amount of Net Acres set forth for such Property on Exhibit A-1or Well, then the Title Defect Amount shall be the product of the Allocated Value of such Property Lease or Well multiplied by a fraction, the numerator of which is the decrease in Seller’s aggregate Net Revenue Interest in such Property Lease or Well and the denominator of which is Seller’s Net Revenue Interest stated in Exhibit A-1 or Exhibit A-2, as applicable, for such PropertyLease or Well; provided, however, that if the Title Defect does not affect the Property such Lease or Well throughout its entire productive life, the Title Defect Amount determined under this Section 3.9(a)(iv) shall be reduced to take into account the applicable time period only;
(v) if the Title Defect represents an obligation, encumbrance, burden, or charge upon, or other defect in title to, the affected Property of a type not described in subsections (i), (ii), (iii), or (iv) of this Section 3.9(a)3.9, the Title Defect Amount shall be determined by taking into account the Allocated Value of the Property so affected, the portion of Seller’s interest in the Property affected by the Title Defect, the legal effect of the Title Defect, the potential discounted economic effect of the Title Defect over the productive life of the affected Property, the values placed upon the Title Defect by Purchaser and Seller, the age of the factual matters causing or constituting the alleged Title Defect, the probability that title failure will occur with respect to any Title Defect that represents only a possibility of title failure, and such other factors as are necessary to make a proper evaluation;
(vi) if a Title Defect is reasonably susceptible of being cured, the Title Defect Amount shall not be greater than the reasonable cost and expense of curing such Title Defect;
(vii) the Title Defect Amount with respect to a Title Defect shall be determined without duplication of any costs or losses included in another Title Defect Amount hereunder or for which Purchaser otherwise receives credit in the calculation of the Purchase Price; and
(viiivii) notwithstanding anything to the contrary in this Article 3:
(A) except with respect to any matter that constitutes a breach Seller’s special warranty of title of Defensible Title in the Assignment, Deed and Xxxx of Sale (or would constitute a breach of such special warranty of title upon Closing and without giving effect to the limitation in this clause (A)), an individual claim for a Title Defect for which a valid claim notice Title Defect Claim Notice is given prior to the Defect Claim Date shall only generate an adjustment to the Base Unadjusted Purchase Price under this Article 3 if the Title Defect Amount with respect thereto exceeds One Hundred Thousand Dollars $75,000 ($100,000the “Individual Defect Threshold”); provided, however, that if a specific Title Defect affects more than one Title Defect Property, then the Title Defect Amounts associated with such specific Title Defect may be aggregated by Purchaser for determining whether the Individual Defect Threshold is met with respect to all such Properties affected by such specific Title Defect;
(B) except with respect to Title Defects described in Section 3.9(a)(ii) the aggregate Title Defect Amounts attributable to the effects of all Title Defects upon any given Property shall not exceed the Allocated Value of such Property; and
(C) except with respect to any matter that constitutes a breach Seller’s special warranty of title of Defensible Title in the Assignment, Deed and Xxxx of Sale (or would constitute a breach of such special warranty of title upon Closing and without giving effect to the limitation in this clause (C)), there shall be no adjustment to the Base Purchase Price for Title Defects or Environmental Defects unless and until the sum aggregate of (i) all Title Defect Amounts which would generate an adjustment and Environmental Defect Amounts that exceed (or are deemed to exceed) the Base Purchase Price pursuant to Section 3.9(a)(viii)(A) and (ii) Individual Defect Threshold less the aggregate of all Environmental Defects Title Benefit Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(c)(iv)(A) that exceed the Aggregate Deductible AmountTitle Benefit Threshold, exceeds an amount equal to two percent (2%) of the Unadjusted Purchase Price, and then only to the extent that such aggregate amount exceeds two percent (2%) of the Aggregate Deductible AmountUnadjusted Purchase Price. For purposes of this Section 3.9(a)(vii)(C), the Unadjusted Purchase Price shall be reduced by the Allocated Value of any Assets excluded pursuant to Section 3.4(a), 3.7(d), or 3.7(e) and references to the Unadjusted Purchase Price in this Section 3.9(a)(vii)(C) shall be deemed and construed to reference the Unadjusted Purchase Price as reduced by any such reductions described herein.
(b) The Title Benefit Amount resulting from a Title Benefit shall be determined as follows:
(i) if Purchaser and Seller agree in writing upon the Title Benefit Amount, that amount shall be the Title Benefit Amount;
(ii) if the Title Benefit represents a discrepancy between (A) Seller’s aggregate Net Acre ownership in any Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) and (B) the amount of Net Acres shown for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) in Exhibit A-1A–1, and there is no discrepancy between the aggregate Net Revenue Interest of Seller in such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) and the Net Revenue Interest set forth for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) in Exhibit A-1, then the Title Benefit Amount shall be the product of the Allocated Value of such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) multiplied by a fraction, the numerator of which is difference between the number of Net Acres owned by Seller in such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) and the number of Net Acres set forth for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) in Exhibit A-1A–1, and the denominator of which is the Net Acres set forth for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) in Exhibit A-1A–1;
(iii) if (x) the Title Benefit represents a discrepancy between (A) the Net Revenue Interest for any Property Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well and (B) the Net Revenue Interest stated with respect to such Property Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well, as applicable, in Exhibit A–1 or Exhibit A-2, and (y) there is a proportionate increase in Seller’s Working Interest, for such applicable Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well from that set forth in Exhibit A-1 or Exhibit A-2, as applicable, for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well, then the Title Benefit Amount shall be the product of the Allocated Value of the affected Property Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well multiplied by a fraction, the numerator of which is the increase in Seller’s aggregate Net Revenue Interest in such Property Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well and the denominator of which is the Net Revenue Interest stated in Exhibit A-1 A–1 or Exhibit A-2 with respect to such PropertyLease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well; provided, however, that if the Title Benefit does not affect a Property Lease or Well throughout the entire productive life of the Propertythereof, the Title Benefit Amount determined under this Section 3.9(b)(iii) shall be reduced to take into account the applicable time period only;
(iv) if a Title Benefit represents a right, circumstance, or condition of a type not described in subsections (i), (ii) or (iii) of this Section 3.9(b), the Title Benefit Amount shall be determined by taking into account the Allocated Value of the Property so affected, the portion of Seller’s interest in the Property so affected, the legal effect of the Title Benefit, the potential discounted economic effect of the Title Benefit over the productive life of any affected Property, the values placed upon the Title Benefit by Purchaser and Seller, and such other factors as are necessary to make a proper evaluation; and
(v) notwithstanding anything to the contrary in this Article 3, an individual claim for a Title Benefit shall only generate an adjustment serve to offset the Base Purchase Price any applicable Title Defect Amounts and/or Environmental Defect Amounts if the Title Benefit Amount with respect thereto exceeds One Hundred Seventy-Five Thousand Dollars ($100,00075,000) (the “Title Benefit Threshold”).
(c) The Environmental Defect Amount resulting from an Environmental Defect shall be determined as follows:
(i) if Purchaser and Seller agree on the Environmental Defect Amount, that amount shall be the Environmental Defect Amount;
(ii) the Environmental Defect Amount shall include, but shall not exceed, the reasonable cost of the response required and permitted or allowed under Environmental Laws in effect on the Execution Date that addresses and resolves (for current and future use in the same manner as currently used) the applicable Environmental Defect to the extent required by applicable Environmental Laws as of the Defect Claim Date in with the most cost efficient manner cost-effective remediation of such Environmental Defect (considered as a whole whole, taking into consideration any material negative impact impacts such response may have on the operations continued, safe, and prudent operation of the relevant Assets (as currently operated) and any potential material additional costs or liabilities that may likely arise as a direct result of such response) as compared to any other response that is required and permitted under Environmental Laws);
(iii) the Environmental Defect Amount with respect to an Environmental Defect shall be determined without duplication of any costs or losses included in another Environmental Defect Amount or adjustment to the Base Purchase Price hereunder; and
(iv) notwithstanding anything to the contrary in this Article 3:
(A) , an individual claim for an Environmental Defect for which a valid claim notice Environmental Defect Claim Notice is given prior to the Defect Claim Date shall only generate an adjustment to the Base Unadjusted Purchase Price if the Environmental Defect Amount with respect thereto exceeds One Hundred Thousand Dollars ($100,000); provided, that, solely for the purposes of determining whether or not the Environmental Individual Defect Amount for any individual Environmental Defect exceeds One Hundred Thousand Dollars ($100,000), (1) the Environmental Defect Amount attributable to such Environmental Defect shall be aggregated with the Environmental Defect Amount(s) attributable to any other Environmental Defect(s) that arise out of the same release, event, or incident, or (2) solely to the extent that an Environmental Defect is attributable to the failure to have a required environmental Permit or the lack of compliance with an environmental Permit, the Environmental Defect Amount(s) attributable to any Property subject to such Environmental Defect that are covered by such environmental Permit (or would have been covered by such environmental Permit, if obtained) shall be aggregated; and
(B) there shall be no adjustment to the Base Purchase Price for Environmental Defects unless and until the sum of (i) all Environmental Defect Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(c)(iv)(A) and (ii) all Title Defect Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(a)(viii)(A) exceed the Aggregate Deductible Amount, and then only to the extent that such aggregate amount exceeds the Aggregate Deductible AmountThreshold.
Appears in 1 contract
Calculation of Title Defect Amounts, Title Benefit Amounts, and Environmental Defect Amounts. (a) The Title Defect Amount resulting from a Title Defect shall be determined as follows:
(i) if Purchaser and Seller agree in writing upon the Title Defect Amount, that amount shall be the Title Defect Amount;
(ii) if the Title Defect is a lien, encumbrance, or other charge which is liquidated in amount, then the Title Defect Amount shall be the amount necessary to be paid to unconditionally remove the Title Defect from Seller’s interest in the affected Property;
(iii) with respect to the Target Interval (except as expressly depth limited within the Target Interval as set forth on Exhibit A-1), if the Title Defect represents a discrepancy between (A) Seller’s aggregate ownership of Net Acres for any Lease and (B) the amount of Net Acres set forth for such Lease in Exhibit A-1, and there is no discrepancy between the aggregate Net Revenue Interest of Seller in such Lease and the Net Revenue Interest set forth for such Lease in Exhibit A-1A‑1, then the Title Defect Amount shall be the product of the Allocated Value of such Lease multiplied by a fraction, the numerator of which is the difference between the number of Net Acres owned by Seller in such Lease and the number of Net Acres set forth for such Lease in Exhibit A-1, A‑1 and the denominator of which is the Net Acres set forth for such Lease in Exhibit A-1A‑1;
(iv) with respect to the Target Interval (except as expressly depth limited within the Target Interval as set forth on Exhibit A-1), if the Title Defect represents a discrepancy between (A) the Seller’s aggregate Net Revenue Interest for any Property and (B) the Net Revenue Interest stated in Exhibit A-1 A‑1 or Exhibit A-2A‑2 for such Property, and for which there is not at least a proportionate increase in Seller’s Working Interest or Net Acre ownership for such Property from that set forth in Exhibit A‑1 or Exhibit A‑2, as applicable, for such Property, and (1) with respect to Properties that are Xxxxx, the Seller’s (and Purchaser’s, as successor in interest to Seller) Working Interest in such Property is decreased below the Working Interest amount set forth for such Property on Exhibit A-2 in the same proportion as the decrease in Net Revenue Interest in such Property, or (2) with respect to Properties that are Leases, there is no discrepancy with respect to Seller’s (and Purchaser’s, as successor in interest to Seller) Net Acre ownership in such Property and the amount of Net Acres set forth for such Property on Exhibit A-1applicable, then the Title Defect Amount shall be the product of the Allocated Value of such Property multiplied by a fraction, the numerator of which is the decrease in Seller’s aggregate Net Revenue Interest in such Property and the denominator of which is Seller’s Net Revenue Interest stated in on Exhibit A-1 A‑1 or Exhibit A-2, as applicable, A‑2 for such Property; provided, however, that if the Title Defect does not affect the Property throughout its entire productive life, the Title Defect Amount determined under this Section 3.9(a)(iv) shall be reduced to take into account the applicable time period only;
(v) if the Title Defect represents an obligation, encumbrance, burden, or charge upon, or other defect in title to, the affected Property of a type not described in subsections (i), (ii), (iii), or (iv) of this Section 3.9(a)above, the Title Defect Amount shall be determined by taking into account the Allocated Value of the Property so affected, the portion of Seller’s interest in the Property affected by the Title Defect, the legal effect of the Title Defect, the potential discounted economic effect of the Title Defect over the productive life of the affected Property, the values placed upon the Title Defect by Purchaser and Seller, the age of the factual matters causing or constituting the alleged Title Defect, the probability that title failure will occur with respect to any Title Defect that represents only a possibility of title failure, and such other factors as are necessary to make a proper evaluation;
(vi) if a Title Defect is reasonably susceptible of being cured, the Title Defect Amount shall not be no greater than the reasonable cost and expense of curing such Title Defect;
(vii) the Title Defect Amount with respect to a Title Defect shall be determined without duplication of any costs or losses included in another Title Defect Amount hereunder or for which Purchaser otherwise receives credit in the calculation of the Purchase Price; and
(viii) notwithstanding anything to the contrary in this Article 3:
(A) except with respect to any matter that constitutes a breach Seller’s special warranty of title of Defensible Title in the Assignment, Deed and Xxxx of Sale (or would constitute a breach of such special warranty of title upon Closing and without giving effect to the limitation in this clause (A)), an individual claim for a Title Defect for which a valid claim notice is given prior to the Defect Claim Date Deadline shall only generate an adjustment to the Base Unadjusted Purchase Price under this Article 3 if the Title Defect Amount with respect thereto exceeds One Hundred Fifty Thousand Dollars ($100,00050,000); provided, however, for purposes of determining whether the Title Defect Amount of a Property that is a Lease exceeds Fifty Thousand Dollars ($50,000), the Title Defect Amounts of all Properties that are a part of such Lease will be aggregated;
(B) the aggregate Title Defect Amounts attributable to the effects of all Title Defects upon any given Property shall not exceed the Allocated Value of such Property; and
(C) except with respect to any matter that constitutes a breach Seller’s special warranty of title of Defensible Title in the Assignment, Deed and Xxxx of Sale (or would constitute a breach of such special warranty of title upon Closing and without giving effect to the limitation in this clause (C)), there shall be no adjustment to the Base Purchase Price for Title Defects unless and until the sum aggregate of (i) all Title Defect Amounts which would generate an adjustment to the Base Unadjusted Purchase Price pursuant to Section 3.9(a)(viii)(A) exceeds one and one-half percent (ii1.5%) all Environmental Defects Amounts which would generate an adjustment to of the Base Unadjusted Purchase Price pursuant to Section 3.9(c)(iv)(A) exceed the Aggregate Deductible AmountPrice, and then only to the extent that such aggregate amount exceeds one and one-half percent (1.5%) of the Aggregate Deductible AmountUnadjusted Purchase Price.
(b) The Title Benefit Amount resulting from a Title Benefit shall be determined as follows:
(i) if Purchaser and Seller agree in writing upon the Title Benefit Amount, that amount shall be the Title Benefit Amount;
(ii) if the Title Benefit represents a discrepancy between (A) Seller’s aggregate Net Acre ownership in any Lease and (B) the amount of Net Acres shown for such Lease in Exhibit A-1, and there is no discrepancy between the aggregate Net Revenue Interest of Seller in such Lease and the Net Revenue Interest set forth for such Lease in Exhibit A-1A‑1, then the Title Benefit Amount shall be the product of the Allocated Value of such Lease multiplied by a fraction, the numerator of which is difference between the number of Net Acres owned by Seller in such Lease and the number of Net Acres set forth for such Lease in Exhibit A-1, A‑1 and the denominator of which is the Net Acres set forth for such Lease in Exhibit A-1A‑1;
(iii) if the Title Benefit represents a discrepancy between (A) the Net Revenue Interest for any Property and (B) the Net Revenue Interest stated with respect to such Property in Exhibit A-1 A‑1 or Exhibit A-2A‑2, then the Title Benefit Amount shall be the product of the Allocated Value of the affected Property multiplied by a fraction, the numerator of which is the increase in Seller’s aggregate Net Revenue Interest in such Property increase and the denominator of which is the Net Revenue Interest stated in Exhibit A-1 A‑1 or Exhibit A-2 A‑2 with respect to such Property; provided, however, that if the Title Benefit does not affect a Property throughout the entire productive life of the Property, the Title Benefit Amount determined under this Section 3.9(b)(iii) shall be reduced to take into account the applicable time period only;
(iv) if a Title Benefit represents a right, circumstance, or condition of a type not described in subsections (i), (ii) or (iii) of this Section 3.9(b)above, the Title Benefit Amount shall be determined by taking into account the Allocated Value of the Property so affectedaffected (or in the event the Title Benefit is of the type discussed in clause (iv) of the definition of thereof, the Allocated Value of the Properties nearest by of the same or similar type and covering the same Target Formation(s)), the portion of Seller’s interest in the Property so affected, the legal effect of the Title Benefit, the potential discounted economic effect of the Title Benefit over the productive life of any affected Property, the values placed upon the Title Benefit by Purchaser and Seller, and such other factors as are necessary to make a proper evaluation; and
(v) notwithstanding anything to the contrary in this Article 3, :
(A) an individual claim for a Title Benefit for which a valid claim notice is given prior to the Defect Claim Deadline shall only generate an adjustment be taken into account under this Article 3 to the Base Purchase Price offset Title Defect Amounts if the Title Benefit Amount with respect thereto exceeds One Hundred Fifty Thousand Dollars ($100,00050,000); provided, however, for purposes of determining whether the Title Benefit Amount of a Property that is a Lease exceeds Fifty Thousand Dollars ($50,000), the Title Benefit Amounts of all Properties that are a part of such Lease will be aggregated; and
(B) in no event shall the Purchase Price be increased in respect of any Title Benefit or Title Benefit Amount; rather the amount of all individual Title Benefits that individually exceed the threshold described in clause (v) above shall offset any downward adjustment to the Purchase Price to which Purchaser would otherwise be entitled pursuant to this Agreement in respect of Title Defects.
(c) The Environmental Defect Amount resulting from an Environmental Defect shall be determined as follows:
(i) if Purchaser and Seller agree on the Environmental Defect Amount, that amount shall be the Environmental Defect Amount;
(ii) the Environmental Defect Amount shall include, include but shall not exceed, exceed the reasonable cost of the response required and permitted under Environmental Laws that addresses the applicable Environmental Defect to the extent required by applicable Environmental Laws as of the Defect Claim Date in with the most cost efficient manner cost-effective Remediation of such Environmental Defect (considered as a whole whole, taking into consideration any material negative impact impacts such response may have on the operations continued, safe and prudent operation of the relevant Assets (as currently operated) and any potential material additional costs or liabilities that may likely arise as a direct result of such response) as compared to any other response that is required and permitted under Environmental LawsAffected Asset);
(iii) the Environmental Defect Amount with respect to an Environmental Defect shall be determined without duplication of any costs or losses included in another Environmental Defect Amount or adjustment to the Base Purchase Price hereunder; and
(iv) notwithstanding anything to the contrary in this Article 3:
(A) an individual claim for an Environmental Defect for which a valid claim notice is given prior to the Defect Claim Date Deadline shall only generate an adjustment to the Base Unadjusted Purchase Price if the Environmental Defect Amount with respect thereto exceeds One Hundred Thousand Dollars ($100,000); provided, that, solely for the purposes of determining whether or not the Environmental Defect Amount for any individual Environmental Defect exceeds One Hundred Thousand Dollars ($100,000), (1) the Environmental Defect Amount attributable to such Environmental Defect shall be aggregated with the Environmental Defect Amount(s) attributable to any other Environmental Defect(s) that arise out of the same release, event, or incident, or (2) solely to the extent that an Environmental Defect is attributable to the failure to have a required environmental Permit or the lack of compliance with an environmental Permit, the Environmental Defect Amount(s) attributable to any Property subject to such Environmental Defect that are covered by such environmental Permit (or would have been covered by such environmental Permit, if obtained) shall be aggregated; and;
(B) there shall be no adjustment to the Base Unadjusted Purchase Price for Environmental Defects unless and until the sum aggregate of (i) all Environmental Defect Amounts which would generate an adjustment to the Base Unadjusted Purchase Price pursuant to Section 3.9(c)(iv)(A) exceeds one and one-half percent (ii1.5 %) all Title Defect Amounts which would generate an adjustment to of the Base Unadjusted Purchase Price pursuant to Section 3.9(a)(viii)(A) exceed the Aggregate Deductible AmountPrice, and then only to the extent that such aggregate amount exceeds one and one-half percent (1.5 %) of the Aggregate Deductible AmountUnadjusted Purchase Price.
Appears in 1 contract
Calculation of Title Defect Amounts, Title Benefit Amounts, and Environmental Defect Amounts. (a) The Title Defect Amount amount by which the Purchase Price should be adjusted downward resulting from a an individual Title Defect shall be determined as follows:, subject to Section 12.10(d) (such amount, as applicable, the “Title Defect Amount”):
(i) if Purchaser and Seller Sellers agree in writing upon the Title Defect Amount, that amount shall be the Title Defect Amount;
(ii) if the Title Defect is a lien, encumbrance, or other charge an Encumbrance which is liquidated in amount, then the Title Defect Amount shall be the amount necessary to be paid to remove fully discharge the Title Defect from SellerCompany Group’s interest in the affected PropertyAsset;
(iii) with respect to the Target Interval (except as expressly depth limited within the Target Interval as set forth on Exhibit A-1), if the Title Defect represents a negative discrepancy between (A) SellerCompany Group’s Net Revenue Interest in the Target Formation for any Lease Tract or Well and (B) the Net Revenue Interest stated for such Lease Tract or Well (and there is no change in the Net Acres for such Lease Tract, or the Working Interest in the applicable Well is decreased proportionately, in each case, as to the applicable Target Formation), then the Title Defect Amount shall be the product of (x) the Allocated Value of such Lease Tract or Well, multiplied by (y) a fraction, the (1) numerator of which is the decrease in Company Group’s Net Revenue Interest, and (2) denominator of which is Company Group’s Net Revenue Interest stated on Exhibit A-1 or Exhibit A-2, as applicable;
(iv) if the Title Defect represents a negative discrepancy between (A) Company Group’s aggregate ownership of Net Acres as to a Target Formation for any Lease Tract and (B) the amount of Net Acres set forth as to such Target Formation for such Lease Tract in Exhibit A-1, and there is no discrepancy between the aggregate Net Revenue Interest of Seller Company Group in such Target Formation as to such Lease Tract and the Net Revenue Interest set forth for such Target Formation as to such Lease Tract in Exhibit A-1, then the Title Defect Amount shall be the product of the Allocated Value of such Target Formation as to such Lease Tract multiplied by a fraction, the numerator of which is the difference between the number of Net Acres owned by Seller Company Group in such Target Formation as to such Lease Tract and the number of Net Acres set forth for such Target Formation as to such Lease Tract in Exhibit A-1, A-1 and the denominator of which is the Net Acres set forth for such Target Formation as to such Lease Tract in Exhibit A-1;
(iv) with respect to the Target Interval (except as expressly depth limited within the Target Interval as set forth on Exhibit A-1), if the Title Defect represents a discrepancy between (A) the Seller’s aggregate Net Revenue Interest for any Property and (B) the Net Revenue Interest stated in Exhibit A-1 or Exhibit A-2, as applicable, for such Property, and (1) with respect to Properties that are Xxxxx, the Seller’s (and Purchaser’s, as successor in interest to Seller) Working Interest in such Property is decreased below the Working Interest amount set forth for such Property on Exhibit A-2 in the same proportion as the decrease in Net Revenue Interest in such Property, or (2) with respect to Properties that are Leases, there is no discrepancy with respect to Seller’s (and Purchaser’s, as successor in interest to Seller) Net Acre ownership in such Property and the amount of Net Acres set forth for such Property on Exhibit A-1, then the Title Defect Amount shall be the product of the Allocated Value of such Property multiplied by a fraction, the numerator of which is the decrease in Seller’s aggregate Net Revenue Interest in such Property and the denominator of which is Seller’s Net Revenue Interest stated in Exhibit A-1 or Exhibit A-2, as applicable, for such Property; provided, however, that if the Title Defect does not affect the Property throughout its entire productive life, the Title Defect Amount determined under this Section 3.9(a)(iv) shall be reduced to take into account the applicable time period only;
(v) if the Title Defect represents an obligation, encumbranceEncumbrance, burdenBurden, or charge upon, or other defect in title to, the affected Property Lease Tract or Well of a type not described in subsections (i), (ii), (iii), or Section 12.10(a)(i) through (iv) of this Section 3.9(a), the Title Defect Amount shall be determined by taking into account the Allocated Value of the Property Lease Tract or Well so affected, the portion of SellerCompany Group’s interest in the Property relevant Lease Tract or Well affected by the Title Defect, the legal effect of the Title Defect, the potential discounted economic effect of the Title Defect over the productive life of the affected PropertyLease Tract or Well, the values placed upon the Title Defect by Purchaser Pxxxxxxxx and SellerSellers, the age of the factual matters causing or constituting the alleged Title Defect, the probability that title failure will occur with respect to any Title Defect that represents only a possibility of title failure, and such other factors as are necessary to make a proper evaluation;
(vi) if a the Title Defect is reasonably susceptible of being cureddoes not affect the affected Lease Tract or Well throughout its entire productive life, the Title Defect Amount shall not be greater than reduced to take into account the reasonable cost and expense of curing such Title Defect;applicable time period only; and
(vii) the Title Defect Amount with respect to a Title Defect shall be determined without duplication of any costs or losses included in another Title Defect Amount hereunder or for which Purchaser otherwise receives credit in the calculation of the Adjusted Purchase Price; and
(viii) notwithstanding anything to the contrary in this Article 3:
(A) except with respect to any matter that constitutes a breach Seller’s special warranty of title of Defensible Title in the Assignment, Deed and Xxxx of Sale (or would constitute a breach of such special warranty of title upon Closing and without giving effect to the limitation in this clause (A)), an individual claim for a Title Defect for which a valid claim notice is given prior to the Defect Claim Date shall only generate an adjustment to the Base Purchase Price under this Article 3 if the Title Defect Amount with respect thereto exceeds One Hundred Thousand Dollars ($100,000);
(B) the aggregate Title Defect Amounts attributable to the effects of all Title Defects upon any given Property shall not exceed the Allocated Value of such Property; and
(C) except with respect to any matter that constitutes a breach Seller’s special warranty of title of Defensible Title in the Assignment, Deed and Xxxx of Sale (or would constitute a breach of such special warranty of title upon Closing and without giving effect to the limitation in this clause (C)), there shall be no adjustment to the Base Purchase Price for Title Defects unless and until the sum of (i) all Title Defect Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(a)(viii)(A) and (ii) all Environmental Defects Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(c)(iv)(A) exceed the Aggregate Deductible Amount, and then only to the extent that such aggregate amount exceeds the Aggregate Deductible Amount.
(b) The Title Benefit Amount resulting from a Title Benefit shall be determined as follows:
(i) if Purchaser and Seller Sellers agree in writing upon the Title Benefit Amount, that amount shall be the Title Benefit Amount;
(ii) if the Title Benefit represents a positive discrepancy between (A) SellerCompany Group’s aggregate Net Acre ownership Revenue Interest in the Target Formation for any Lease Tract or Well and (B) amount of the Net Acres shown Revenue Interest stated on Exhibit A-1 or Exhibit A-2, as applicable, for such Target Formation and Lease in Exhibit A-1, Tract or Well (and there is no discrepancy between the aggregate Net Revenue Interest of Seller change in such Lease and the Net Revenue Interest set forth Acres for such Lease Tract, or the Working Interest in Exhibit A-1the applicable Well is increased proportionately, in each case, as to the applicable Target Formation) then the Title Benefit Amount shall be the product of (x) the Allocated Value of such Lease Tract or Well, multiplied by a fraction, the (1) numerator of which is difference between the number of Net Acres owned by Seller in such Lease and the number of Net Acres set forth for such Lease in Exhibit A-1, and the denominator of which is the Net Acres set forth for such Lease in Exhibit A-1;
(iii) if the Title Benefit represents a discrepancy between (A) the Net Revenue Interest for any Property increase, and (B2) the Net Revenue Interest stated with respect to such Property in Exhibit A-1 or Exhibit A-2, then the Title Benefit Amount shall be the product of the Allocated Value of the affected Property multiplied by a fraction, the numerator of which is the increase in Seller’s aggregate Net Revenue Interest in such Property and the denominator of which is the Net Revenue Interest stated in on Exhibit A-1 or Exhibit A-2 with respect to such Property; providedA-2, however, that as applicable;
(iii) if the a Title Benefit does not affect a Property Lease Tract or Well throughout the entire productive life of the PropertyLease Tract or Well, the Title Benefit Amount determined under this Section 3.9(b)(iii) shall be reduced to take into account the applicable time period only;; and
(iv) if a Title Benefit represents a right, circumstance, or condition of a type not described in subsections (i), (iiSection 12.10(b)(i) or through (iii) of this Section 3.9(b), the Title Benefit Amount shall be determined by taking into account the Allocated Value of the Property Lease Tract or Well so affected, the portion of SellerCompany Group’s interest in the Property Lease Tract or Well so affected, the legal effect of the Title Benefit, the potential discounted economic effect of the Title Benefit over the productive life of any affected PropertyLease Tract or Well, the values placed upon the Title Benefit by Purchaser and SellerSellers, and such other factors as are necessary to make a proper evaluation; and
(v) notwithstanding anything to the contrary in this Article 3, an individual claim for a Title Benefit shall only generate an adjustment to the Base Purchase Price if the Title Benefit Amount with respect thereto exceeds One Hundred Thousand Dollars ($100,000).
(c) The Environmental Defect Amount amount by which the Purchase Price should be adjusted downward resulting from an individual Environmental Defect shall be determined as follows:follows (such amount, as applicable, the “Environmental Defect Amount”):
(i) if Purchaser and Seller Sellers agree on the Environmental Defect Amount, that amount shall be the Environmental Defect Amount;
(ii) the Environmental Defect Amount shall include, but shall not exceed, estimated present value of the reasonable cost of costs and expenses chargeable to the response required Company Group’s Working Interest to Remediate the Oil and permitted under Gas Property subject to such Environmental Laws Defect that addresses cures, addresses, implements, and resolves the applicable Environmental Defect to the extent required by applicable Environmental Laws as of the Defect Claim Date in the most cost efficient cost-effective manner (considered as a whole taking into consideration any material negative impact such response may have on the operations of the relevant Assets (as currently operated) and any potential material additional costs or liabilities that may likely arise as a direct result of such response) reasonably available as compared to any other response that is required and permitted allowed under Environmental Laws;; provided, that, the most cost-effective response or Remediation may include taking no action, leaving the condition unaddressed, periodic monitoring or the recording of notices in lieu of Remediation, to the extent such responses are permitted under, and are in compliance with, Environmental Laws; and
(iii) the Environmental Defect Amount with respect to shall not include: (A) the costs of Purchaser’s or its Affiliates’ (including, from and after Closing, Company Group’s) employees, or, if Seller is conducting the Remediation, Purchaser’s project manager(s) or attorneys; (B) expenses for matters that are ordinary costs of doing business regardless of the presence of an Environmental Defect shall (e.g., those costs that would ordinarily be determined without duplication incurred in the day-to-day operations of the Assets or in connection with Permit renewal activities); (C) overhead, general and administrative costs of Purchaser or any of its Affiliates (including, from and after Closing, Company Group); (D) any costs or expenses relating to the assessment, Remediation, removal, abatement, transportation and disposal of any asbestos, asbestos-containing materials or NORM, except to the extent required to address a violation of or liability under Environmental Law as of the Defect Claim Date; or (E) duplicative costs or losses included in another Environmental Defect Amount or adjustment to the Base Purchase Price hereunder; and.
(ivd) notwithstanding Notwithstanding anything to the contrary in this Article 312:
(i) (A) an individual claim for Title Defect affecting a Lease Tract or Well shall only be considered in determining the aggregate Title Defect Amount under this Article 12 if the Title Defect Amount as to such affected Lease Tract or Well exceeds $200,000 (the “Title Defect Threshold”) and (B) an individual Environmental Defect for which a valid claim notice is given prior to the Defect Claim Date affecting an Asset shall only generate an adjustment to be considered in determining the Base Purchase Price aggregate Environmental Defect Amount under this Article 12 if the Environmental Defect Amount with respect thereto exceeds One Hundred Thousand Dollars $200,000 ($100,000the “Environmental Defect Threshold”); provided, and otherwise, the relevant Title Defect or Environmental Defect shall be deemed not to exist, provided that, solely for clarity, multiple Title Defects which affect the same Asset, or a single Title Defect that affects multiple Wxxxx, or multiple Lease Tracts (or multiple Target Formations for a single Lease Tract) for a single Lease, shall be subject to a single application of the Title Defect Threshold, in each case, for purposes of determining whether the Title Defect Amount for any such Title Defects exceeds the Title Defect Threshold; provided, further, that (A) if an Environmental Defect that is not based on a physical condition and represents a regulatory deficiency (such as missing or not incorrect Permits or the failure to prepare and submit required plans, reports or other regulatory filings) is present at multiple Assets, then the Environmental Defect Amounts for such Environmental Defects may be aggregated for purposes of meeting the Environmental Defect Threshold and (B) for clarity, if an Environmental Defect arising from a single event or condition impacts multiple Assets, then the Environmental Defect Amount for any individual Environmental Defect exceeds One Hundred Thousand Dollars ($100,000), (1) the Environmental Defect Amount attributable to such Environmental Defect shall be aggregated will take into account all such affected Assets;
(ii) except with the Environmental Defect Amount(s) attributable respect to any other Environmental Defect(s) that arise out of the same release, event, or incident, or (2) solely to the extent that an Environmental Title Defect which is attributable to the failure to have a required environmental Permit or the lack of compliance with an environmental Permitliquidated in amount, the Environmental Title Defect Amount(s) attributable Amount with respect to any Property subject to such Environmental a Title Defect that are covered by such environmental Permit (affects a Lease Tract or would have been covered by such environmental Permit, if obtained) Well shall be aggregated; andnot exceed the Allocated Value of that Lease Tract or Well;
(Biii) there shall be no downward adjustment to the Base Purchase Price for Environmental Title Defects unless and until until, (A) the sum of (iI) all Title Defect Amounts that exceed the Title Defect Threshold in the aggregate (excluding any Title Defect Amounts attributable to Title Defects cured by Sellers or waived in writing by Purchaser), minus (II) the aggregate amount of all Title Benefit Amounts to the extent such Title Benefit Amounts do not exceed such Title Defect Amounts, plus (III) all Environmental Defect Amounts which would generate an adjustment that exceed the Environmental Defect Threshold in the aggregate (excluding any Environmental Defect Amounts attributable to Environmental Defects cured by Sellers or waived in writing by Purchaser), exceeds (B) two and one-quarter percent (2.25%) of the Base Purchase Price pursuant to Section 3.9(c)(iv)(A) and (ii) all Title the “Defect Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(a)(viii)(A) exceed the Aggregate Deductible AmountDeductible”), and then only to the extent that such aggregate amount exceeds the Aggregate Deductible AmountDefect Deductible.
Appears in 1 contract
Samples: Membership Interest Purchase Agreement (Civitas Resources, Inc.)
Calculation of Title Defect Amounts, Title Benefit Amounts, and Environmental Defect Amounts. (a) The Title Defect Amount resulting from a Title Defect shall be determined as follows:
(i) if Purchaser and Seller agree in writing upon the Title Defect Amount, that amount shall be the Title Defect Amount;
(ii) if the Title Defect is a lien, encumbrance, or other charge which is liquidated in amount, then the Title Defect Amount shall be the amount necessary to be paid to remove the Title Defect from Seller’s interest in the affected Property;
(iii) with respect to the Target Interval [reserved];
(except as expressly depth limited within the Target Interval as set forth on Exhibit A-1), iv) if (x) the Title Defect represents a discrepancy between (A) Seller’s aggregate ownership of Net Acres Revenue Interest for any Lease AV Unit (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1, Exhibit A-3 or Schedule 2.2 with respect to such AV Unit)) or Well and (B) the amount of Net Acres Revenue Interest stated in Schedule 2.2 or Exhibit A-2, as applicable, for such AV Unit (as to the Target Interval (except as otherwise expressly set forth for such Lease in on Exhibit A-1, Exhibit A-3 or Schedule 2.2 with respect to such AV Unit)) or Well, and (y) there is no discrepancy between a proportionate decrease in Seller’s Working Interest for such applicable AV Unit (as to the aggregate Net Revenue Interest of Seller in such Lease and the Net Revenue Interest Target Interval (except as otherwise expressly set forth on Exhibit A-1, Exhibit A-3 or Schedule 2.2 with respect to such AV Unit)) or Well from that set forth in Schedule 2.2 or Exhibit A-2, as applicable, for such Lease in AV Unit (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1, Exhibit A-3 or Schedule 2.2 with respect to such AV Unit)) or Well, then the Title Defect Amount shall be the product of the Allocated Value of such Lease multiplied by a fraction, the numerator of which is the difference between the number of Net Acres owned by Seller in such Lease and the number of Net Acres set forth for such Lease in Exhibit A-1, and the denominator of which is the Net Acres set forth for such Lease in Exhibit A-1;
(iv) with respect to the Target Interval (except as expressly depth limited within the Target Interval as set forth on Exhibit A-1), if the Title Defect represents a discrepancy between (A) the Seller’s aggregate Net Revenue Interest for any Property and (B) the Net Revenue Interest stated in Exhibit A-1 AV Unit or Exhibit A-2, as applicable, for such Property, and (1) with respect to Properties that are Xxxxx, the Seller’s (and Purchaser’s, as successor in interest to Seller) Working Interest in such Property is decreased below the Working Interest amount set forth for such Property on Exhibit A-2 in the same proportion as the decrease in Net Revenue Interest in such Property, or (2) with respect to Properties that are Leases, there is no discrepancy with respect to Seller’s (and Purchaser’s, as successor in interest to Seller) Net Acre ownership in such Property and the amount of Net Acres set forth for such Property on Exhibit A-1, then the Title Defect Amount shall be the product of the Allocated Value of such Property Well multiplied by a fraction, the numerator of which is the decrease in Seller’s aggregate Net Revenue Interest in such Property AV Unit or Well and the denominator of which is Seller’s Net Revenue Interest stated in Exhibit A-1 Schedule 2.2 or Exhibit A-2, as applicable, for such PropertyAV Unit or Well; provided, however, that if the Title Defect does not affect the Property such AV Unit or Well throughout its entire productive life, the Title Defect Amount determined under this Section 3.9(a)(iv) shall be reduced to take into account the applicable time period only;
(v) if the Title Defect represents an obligation, encumbrance, burden, or charge upon, or other defect in title to, the affected Property of a type not described in subsections (i), (ii), (iii), or (iv) of this Section 3.9(a)3.9, the Title Defect Amount shall be determined by taking into account the Allocated Value of the Property so affected, the portion of Seller’s interest in the Property affected by the Title Defect, the legal effect of the Title Defect, the potential discounted economic effect of the Title Defect over the productive life of the affected Property, the values placed upon the Title Defect by Purchaser and Seller, the age of the factual matters causing or constituting the alleged Title Defect, the probability that title failure will occur with respect to any Title Defect that represents only a possibility of title failure, and such other factors as are necessary to make a proper evaluation;
(vi) if a Title Defect is reasonably susceptible of being cured, the Title Defect Amount shall not be greater than the reasonable cost and expense of curing such Title Defect;
(vii) the Title Defect Amount with respect to a Title Defect shall be determined without duplication of any costs or losses included in another Title Defect Amount hereunder or for which Purchaser otherwise receives credit in the calculation of the Purchase Price; and
(viiivii) notwithstanding anything to the contrary in this Article 3:
(A) except with respect to any matter that constitutes a breach Seller’s special warranty of title of Defensible Title in the Assignment, Deed and Xxxx of Sale (or would constitute a breach of such special warranty of title upon Closing and without giving effect to the limitation in this clause (A)), an individual claim for a Title Defect for which a valid claim notice Title Defect Claim Notice is given prior to the Defect Claim Date shall only generate an adjustment to the Base Unadjusted Purchase Price under this Article 3 if the Title Defect Amount with respect thereto exceeds One Hundred Seventy-Five Thousand Dollars ($100,00075,000) (the “Individual Defect Threshold”); provided, however, that if a specific Title Defect affects more than one Title Defect Property, then the Title Defect Amounts associated with such specific Title Defect may be aggregated by Purchaser for determining whether the Individual Defect Threshold is met with respect to all such Properties affected by such specific Title Defect;
(B) except with respect to Title Defects described in Section 3.9(a)(ii) the aggregate Title Defect Amounts attributable to the effects of all Title Defects upon any given Property shall not exceed the Allocated Value of such Property; and
(C) except with respect to any matter that constitutes a breach Seller’s special warranty of title of Defensible Title in the Assignment, Deed and Xxxx of Sale (or would constitute a breach of such special warranty of title upon Closing and without giving effect to the limitation in this clause (C)), there shall be no adjustment to the Base Purchase Price for Title Defects or Environmental Defects unless and until the sum aggregate of (i) all Title Defect Amounts which would generate and Environmental Defect Amounts that exceed (or are deemed to exceed) the Individual Defect Threshold less the aggregate of all Title Benefit Amounts that exceed the Title Benefit Threshold, exceeds an adjustment amount equal to two percent (2%) of the Base Unadjusted Purchase Price pursuant to Section 3.9(a)(viii)(A) and (ii) all Environmental Defects Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(c)(iv)(A) exceed the “Aggregate Deductible AmountDeductible”), and then only to the extent that such aggregate amount exceeds the Aggregate Deductible AmountDeductible. For purposes of this Section 3.9(a)(vii)(C), the Unadjusted Purchase Price shall be reduced by the Allocated Value of any Assets excluded pursuant to Section 3.4(a), Section 3.7(d), 3.7(e), or Section 3.12 and references to the Unadjusted Purchase Price in this Section 3.9(a)(vii)(C) shall be deemed and construed to reference the Unadjusted Purchase Price as reduced by any such reductions described herein.
(b) The Title Benefit Amount resulting from a Title Benefit shall be determined as follows:
(i) if Purchaser and Seller agree in writing upon the Title Benefit Amount, that amount shall be the Title Benefit Amount;
(ii) if the Title Benefit represents a discrepancy between (A) Seller’s aggregate Net Acre ownership in any Lease and (B) amount of Net Acres shown for such Lease in Exhibit A-1, and there is no discrepancy between the aggregate Net Revenue Interest of Seller in such Lease and the Net Revenue Interest set forth for such Lease in Exhibit A-1, then the Title Benefit Amount shall be the product of the Allocated Value of such Lease multiplied by a fraction, the numerator of which is difference between the number of Net Acres owned by Seller in such Lease and the number of Net Acres set forth for such Lease in Exhibit A-1, and the denominator of which is the Net Acres set forth for such Lease in Exhibit A-1[reserved];
(iii) if (x) the Title Benefit represents a discrepancy between (A) the Net Revenue Interest for any Property AV Unit (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1, Exhibit A-3 or Schedule 2.2 with respect to such AV Unit)) or Well and (B) the Net Revenue Interest stated with respect to such Property AV Unit (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1, Exhibit A-3 or Schedule 2.2 with respect to such AV Unit)) or Well, as applicable, in Exhibit A-1 Schedule 2.2 or Exhibit A-2, and (y) there is a proportionate increase in Seller’s Working Interest, for such applicable AV Unit (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1, Exhibit A-3 or Schedule 2.2 with respect to such AV Unit)) or Well from that set forth in Schedule 2.2 or Exhibit A-2, as applicable, for such AV Unit (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1, Exhibit A-3 or Schedule 2.2 with respect to such AV Unit)) or Well, then the Title Benefit Amount shall be the product of the Allocated Value of the affected Property AV Unit (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1, Exhibit A-3 or Schedule 2.2 with respect to such AV Unit)) or Well multiplied by a fraction, the numerator of which is the increase in Seller’s aggregate Net Revenue Interest in such Property AV Unit (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1, Exhibit A-3 or Schedule 2.2 with respect to such AV Unit)) or Well and the denominator of which is the Net Revenue Interest stated in Exhibit A-1 Schedule 2.2 or Exhibit A-2 with respect to such PropertyAV Unit (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1, Exhibit A-3 or Schedule 2.2 with respect to such AV Unit)) or Well; provided, however, that if the Title Benefit does not affect a Property an AV Unit or Well throughout the entire productive life of the Propertythereof, the Title Benefit Amount determined under this Section 3.9(b)(iii) shall be reduced to take into account the applicable time period only;
(iv) if a Title Benefit represents a right, circumstance, or condition of a type not described in subsections (i), (ii) or (iii) of this Section 3.9(b), the Title Benefit Amount shall be determined by taking into account the Allocated Value of the Property so affected, the portion of Seller’s interest in the Property so affected, the legal effect of the Title Benefit, the potential discounted economic effect of the Title Benefit over the productive life of any affected Property, the values placed upon the Title Benefit by Purchaser and Seller, and such other factors as are necessary to make a proper evaluation; and
(v) notwithstanding anything to the contrary in this Article 3, an individual claim for a Title Benefit shall only generate an adjustment serve to offset the Base Purchase Price any applicable Title Defect Amounts and/or Environmental Defect Amounts if the Title Benefit Amount with respect thereto exceeds One Hundred Seventy-Five Thousand Dollars ($100,00075,000) (the “Title Benefit Threshold”).
(c) The Environmental Defect Amount resulting from an Environmental Defect shall be determined as follows:
(i) if Purchaser and Seller agree on the Environmental Defect Amount, that amount shall be the Environmental Defect Amount;
(ii) the Environmental Defect Amount shall include, but shall not exceed, the reasonable cost of the response required and permitted or allowed under Environmental Laws in effect on the Execution Date that addresses and resolves (for current and future use in the same manner as currently used) the applicable Environmental Defect to the extent required by applicable Environmental Laws as of the Defect Claim Date in with the most cost efficient manner cost-effective remediation of such Environmental Defect (considered as a whole whole, taking into consideration any material negative impact impacts such response may have on the operations continued, safe, and prudent operation of the relevant Assets (as currently operated) and any potential material additional costs or liabilities that may likely arise as a direct result of such response) as compared to any other response that is required and permitted under Environmental Laws);
(iii) the Environmental Defect Amount with respect to an Environmental Defect shall be determined without duplication of any costs or losses included in another Environmental Defect Amount or adjustment to the Base Purchase Price hereunder; and
(iv) notwithstanding anything to the contrary in this Article 3:
(A) , an individual claim for an Environmental Defect for which a valid claim notice Environmental Defect Claim Notice is given prior to the Defect Claim Date shall only generate an adjustment to the Base Unadjusted Purchase Price if the Environmental Defect Amount with respect thereto exceeds One Hundred Thousand Dollars ($100,000); provided, that, solely for the purposes of determining whether or not the Environmental Individual Defect Amount for any individual Environmental Defect exceeds One Hundred Thousand Dollars ($100,000), (1) the Environmental Defect Amount attributable to such Environmental Defect shall be aggregated with the Environmental Defect Amount(s) attributable to any other Environmental Defect(s) that arise out of the same release, event, or incident, or (2) solely to the extent that an Environmental Defect is attributable to the failure to have a required environmental Permit or the lack of compliance with an environmental Permit, the Environmental Defect Amount(s) attributable to any Property subject to such Environmental Defect that are covered by such environmental Permit (or would have been covered by such environmental Permit, if obtained) shall be aggregated; and
(B) there shall be no adjustment to the Base Purchase Price for Environmental Defects unless and until the sum of (i) all Environmental Defect Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(c)(iv)(A) and (ii) all Title Defect Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(a)(viii)(A) exceed the Aggregate Deductible Amount, and then only to the extent that such aggregate amount exceeds the Aggregate Deductible AmountThreshold.
Appears in 1 contract
Calculation of Title Defect Amounts, Title Benefit Amounts, and Environmental Defect Amounts. (a) The Title Defect Amount resulting from a Title Defect shall be determined as follows:
(i) if Purchaser and Seller agree in writing upon the Title Defect Amount, that amount shall be the Title Defect Amount;
(ii) if the Title Defect is a lien, encumbrance, or other charge which is liquidated in amount, then the Title Defect Amount shall be the amount necessary to be paid to remove the Title Defect from Seller’s interest in the affected Property;
(iii) with respect to the Target Interval (except as expressly depth limited within the Target Interval as set forth on Exhibit A-1), if the Title Defect represents a discrepancy between (A) Seller’s aggregate ownership of Net Acres for any Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) and (B) the amount of Net Acres set forth for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) in Exhibit A-1A–1, and there is no discrepancy between the aggregate Net Revenue Interest of Seller in such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) and the Net Revenue Interest set forth for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) in Exhibit A-1, then the Title Defect Amount shall be the product of the Allocated Value of such Lease multiplied by a fraction, the numerator of which is the difference between the number of Net Acres owned by Seller in such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) and the number of Net Acres set forth for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) in Exhibit A-1A–1, and the denominator of which is the Net Acres set forth for such Lease in Exhibit A-1;
(iv) with respect as to the Target Interval (except as otherwise expressly depth limited within the Target Interval as set forth on Exhibit A-1A-1 with respect to such Lease), ) in Exhibit A–1;
(iv) if the Title Defect represents a discrepancy between (A) the Seller’s aggregate Net Revenue Interest for any Property Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well and (B) the Net Revenue Interest stated in Exhibit A-1 or Exhibit A-2, as applicable, for such Property, and Lease (1) as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to Properties that are Xxxxxsuch Lease)) or Well, the and for which there is not at least a proportionate decrease in Seller’s (and Purchaser’sWorking Interest or Net Acre ownership, as successor in interest applicable, for such applicable Lease (as to Seller) Working Interest in such Property is decreased below the Working Interest amount Target Interval (except as otherwise expressly set forth for such Property on Exhibit A-2 in the same proportion as the decrease in Net Revenue Interest in such Property, or (2) A-1 with respect to Properties such Lease)) or Well from that are Leasesset forth in Exhibit A-1 or Exhibit A-2, there is no discrepancy as applicable, for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to Seller’s (and Purchaser’s, as successor in interest to Sellersuch Lease)) Net Acre ownership in such Property and the amount of Net Acres set forth for such Property on Exhibit A-1or Well, then the Title Defect Amount shall be the product of the Allocated Value of such Property Lease or Well multiplied by a fraction, the numerator of which is the decrease in Seller’s aggregate Net Revenue Interest in such Property Lease or Well and the denominator of which is Seller’s Net Revenue Interest stated in Exhibit A-1 or Exhibit A-2, as applicable, for such PropertyLease or Well; provided, however, that if the Title Defect does not affect the Property such Lease or Well throughout its entire productive life, the Title Defect Amount determined under this Section 3.9(a)(iv3.9(a)(iv) shall be reduced to take into account the applicable time period only;
(v) if the Title Defect represents an obligation, encumbrance, burden, or charge upon, or other defect in title to, the affected Property of a type not described in subsections (i(i), (ii(ii), (iii(iii), or (iv(iv) of this Section 3.9(a)3.9, the Title Defect Amount shall be determined by taking into account the Allocated Value of the Property so affected, the portion of Seller’s interest in the Property affected by the Title Defect, the legal effect of the Title Defect, the potential discounted economic effect of the Title Defect over the productive life of the affected Property, the values placed upon the Title Defect by Purchaser and Seller, the age of the factual matters causing or constituting the alleged Title Defect, the probability that title failure will occur with respect to any Title Defect that represents only a possibility of title failure, and such other factors as are necessary to make a proper evaluation;
(vi) if a Title Defect is reasonably susceptible of being cured, the Title Defect Amount shall not be greater than the reasonable cost and expense of curing such Title Defect;
(vii) the Title Defect Amount with respect to a Title Defect shall be determined without duplication of any costs or losses included in another Title Defect Amount hereunder or for which Purchaser otherwise receives credit in the calculation of the Purchase Price; and
(viiivii) notwithstanding anything to the contrary in this Article Article 3:
(A) except with respect to any matter that constitutes a breach Seller’s special warranty of title of Defensible Title in the Assignment, Deed and Xxxx of Sale (or would constitute a breach of such special warranty of title upon Closing and without giving effect to the limitation in this clause (A)), an individual claim for a Title Defect for which a valid claim notice Title Defect Claim Notice is given prior to the Defect Claim Date shall only generate an adjustment to the Base Unadjusted Purchase Price under this Article Article 3 if the Title Defect Amount with respect thereto exceeds One Hundred Sixty-Five Thousand Dollars ($100,00065,000) (the “Individual Defect Threshold”); provided, however, that if a specific Title Defect affects more than one Title Defect Property, then the Title Defect Amounts associated with such specific Title Defect may be aggregated by Purchaser for determining whether the Individual Defect Threshold is met with respect to all such Properties affected by such specific Title Defect;
(B) the aggregate Title Defect Amounts attributable to the effects of all Title Defects upon any given Property shall not exceed the Allocated Value of such Property; and
(C) except with respect to any matter that constitutes a breach Seller’s special warranty of title of Defensible Title in the Assignment, Deed and Xxxx of Sale (or would constitute a breach of such special warranty of title upon Closing and without giving effect to the limitation in this clause (C)), there shall be no adjustment to the Base Purchase Price for Title Defects or Environmental Defects unless and until the sum aggregate of (i) all Title Defect Amounts which would generate an adjustment and Environmental Defect Amounts that exceed (or are deemed to exceed) the Base Purchase Price pursuant to Section 3.9(a)(viii)(A) and (ii) Individual Defect Threshold less the aggregate of all Environmental Defects Title Benefit Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(c)(iv)(A) that exceed the Aggregate Deductible AmountTitle Benefit Threshold, exceeds an amount equal to two percent (2%) of the Unadjusted Purchase Price, and then only to the extent that such aggregate amount exceeds two percent (2%) of the Aggregate Deductible AmountUnadjusted Purchase Price. For purposes of this Section 3.9(a)(vii)(C), the Unadjusted Purchase Price shall be reduced by the Allocated Value of any Assets excluded pursuant to Section 3.4(a), Section 3.7(d) or Section 3.12 and references to the Unadjusted Purchase Price in this Section 3.9(a)(vii)(C) shall be deemed and construed to reference the Unadjusted Purchase Price as reduced by any such reductions described herein.
(b) The Title Benefit Amount resulting from a Title Benefit shall be determined as follows:
(i) if Purchaser and Seller agree in writing upon the Title Benefit Amount, that amount shall be the Title Benefit Amount;
(ii) if the Title Benefit represents a discrepancy between (A) Seller’s aggregate Net Acre ownership in any Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) and (B) the amount of Net Acres shown for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) in Exhibit A-1A–1, and there is no discrepancy between the aggregate Net Revenue Interest of Seller in such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) and the Net Revenue Interest set forth for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) in Exhibit A-1, then the Title Benefit Amount shall be the product of the Allocated Value of such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) multiplied by a fraction, the numerator of which is difference between the number of Net Acres owned by Seller in such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) and the number of Net Acres set forth for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) in Exhibit A-1A–1, and the denominator of which is the Net Acres set forth for such Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) in Exhibit A-1A–1;
(iii) if the Title Benefit represents a discrepancy between (A) the Net Revenue Interest for any Property Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well and (B) the Net Revenue Interest stated with respect to such Property Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well, as applicable, in Exhibit A-1 A–1 or Exhibit A-2, then the Title Benefit Amount shall be the product of the Allocated Value of the affected Property Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well multiplied by a fraction, the numerator of which is the increase in Seller’s aggregate Net Revenue Interest in such Property Lease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well and the denominator of which is the Net Revenue Interest stated in Exhibit A-1 A–1 or Exhibit A-2 with respect to such PropertyLease (as to the Target Interval (except as otherwise expressly set forth on Exhibit A-1 with respect to such Lease)) or Well; provided, however, that if the Title Benefit does not affect a Property Lease or Well throughout the entire productive life of the Propertythereof, the Title Benefit Amount determined under this Section 3.9(b)(iii3.9(b)(iii) shall be reduced to take into account the applicable time period only;
(iv) if a Title Benefit represents a right, circumstance, or condition of a type not described in subsections (i(i), (ii(ii) or (iii(iii) of this Section 3.9(b3.9(b), the Title Benefit Amount shall be determined by taking into account the Allocated Value of the Property so affected, the portion of Seller’s interest in the Property so affected, the legal effect of the Title Benefit, the potential discounted economic effect of the Title Benefit over the productive life of any affected Property, the values placed upon the Title Benefit by Purchaser and Seller, and such other factors as are necessary to make a proper evaluation; and
(v) notwithstanding anything to the contrary in this Article Article 3, an individual claim for a Title Benefit shall only generate an adjustment serve to offset the Base Purchase Price any applicable Title Defect Amounts and/or Environmental Defect Amounts if the Title Benefit Amount with respect thereto exceeds One Hundred Sixty-Five Thousand Dollars ($100,00065,000) (the “Title Benefit Threshold”).
(c) The Environmental Defect Amount resulting from an Environmental Defect shall be determined as follows:
(i) if Purchaser and Seller agree on the Environmental Defect Amount, that amount shall be the Environmental Defect Amount;
(ii) the Environmental Defect Amount shall include, but shall not exceed, the reasonable cost of the response required and permitted under Environmental Laws that addresses the applicable Environmental Defect to the extent required by applicable Environmental Laws as of the Defect Claim Date in with the most cost efficient manner cost-effective remediation of such Environmental Defect (considered as a whole whole, taking into consideration any material negative impact impacts such response may have on the operations continued, safe, and prudent operation of the relevant Assets (as currently operated) and any potential material additional costs or liabilities that may likely arise as a direct result of such response) as compared to any other response that is required and permitted under Environmental Laws);
(iii) the Environmental Defect Amount with respect to an Environmental Defect shall be determined without duplication of any costs or losses included in another Environmental Defect Amount or adjustment to the Base Purchase Price hereunder; and
(iv) notwithstanding anything to the contrary in this Article Article 3:
(A) , an individual claim for an Environmental Defect for which a valid claim notice Environmental Defect Claim Notice is given prior to the Defect Claim Date shall only generate an adjustment to the Base Unadjusted Purchase Price if the Environmental Defect Amount with respect thereto exceeds One Hundred Thousand Dollars ($100,000); provided, that, solely for the purposes of determining whether or not the Environmental Individual Defect Amount for any individual Environmental Defect exceeds One Hundred Thousand Dollars ($100,000), (1) the Environmental Defect Amount attributable to such Environmental Defect shall be aggregated with the Environmental Defect Amount(s) attributable to any other Environmental Defect(s) that arise out of the same release, event, or incident, or (2) solely to the extent that an Environmental Defect is attributable to the failure to have a required environmental Permit or the lack of compliance with an environmental Permit, the Environmental Defect Amount(s) attributable to any Property subject to such Environmental Defect that are covered by such environmental Permit (or would have been covered by such environmental Permit, if obtained) shall be aggregated; and
(B) there shall be no adjustment to the Base Purchase Price for Environmental Defects unless and until the sum of (i) all Environmental Defect Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(c)(iv)(A) and (ii) all Title Defect Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(a)(viii)(A) exceed the Aggregate Deductible Amount, and then only to the extent that such aggregate amount exceeds the Aggregate Deductible AmountThreshold.
Appears in 1 contract
Samples: Purchase and Sale Agreement (Laredo Petroleum, Inc.)
Calculation of Title Defect Amounts, Title Benefit Amounts, and Environmental Defect Amounts. (a) The Title Defect Amount amount by which the Purchase Price should be adjusted downward resulting from a an individual Title Defect shall be determined as follows:, subject to Section 12.10(d) (such amount, as applicable, the “Title Defect Amount”):
(i) if Purchaser and Seller Sellers agree in writing upon the Title Defect Amount, that amount shall be the Title Defect Amount;
(ii) if the Title Defect is a lien, encumbrance, or other charge an Encumbrance which is liquidated in amount, then the Title Defect Amount shall be the amount necessary to be paid to remove fully discharge the Title Defect from Sellerthe applicable Company Group’s interest in the affected PropertyAsset;
(iii) with respect to the Target Interval (except as expressly depth limited within the Target Interval as set forth on Exhibit A-1), if the Title Defect represents a negative discrepancy between (A) Sellerthe applicable Company Group’s aggregate ownership of actual Net Acres Revenue Interest in the applicable Target Formation for any Lease DSU or Well and (B) the amount of Net Acres set forth for such Lease in Exhibit A-1, and there is no discrepancy between the aggregate Net Revenue Interest of Seller stated for such Company Group in such Lease Target Formation for such DSU or Well in the applicable Annex to Exhibit A-4 for such DSU or the applicable Annex to Exhibit A-2 for such Well (and the Net Revenue Working Interest set forth for of such Lease Company Group in Exhibit A-1such DSU or Well is decreased proportionately as to such Target Formation), then the Title Defect Amount shall be the product of (x) the Allocated Value of such Lease DSU or Well for such Target Formation, multiplied by (y) a fraction, the (1) numerator of which is the difference between the number of Net Acres owned by Seller decrease in such Lease and the number of Company Group’s Net Acres set forth Revenue Interest for such Lease in Exhibit A-1DSU or Well for such Target Formation, and the (2) denominator of which is the Net Acres set forth for such Lease in Exhibit A-1;
(iv) with respect to the Target Interval (except as expressly depth limited within the Target Interval as set forth on Exhibit A-1), if the Title Defect represents a discrepancy between (A) the SellerCompany Group’s aggregate Net Revenue Interest for any Property and (B) the Net Revenue Interest stated in the applicable Annex to Exhibit A-1 A-4 or Exhibit A-2, as applicable, for such Property, and (1) with respect to Properties that are Xxxxx, the Seller’s (and Purchaser’s, as successor in interest to Seller) Working Interest in such Property is decreased below the Working Interest amount set forth DSU or Well for such Property on Exhibit A-2 in the same proportion as the decrease in Net Revenue Interest in such Property, or (2) with respect to Properties that are Leases, there is no discrepancy with respect to Seller’s (and Purchaser’s, as successor in interest to Seller) Net Acre ownership in such Property and the amount of Net Acres set forth for such Property on Exhibit A-1, then the Title Defect Amount shall be the product of the Allocated Value of such Property multiplied by a fraction, the numerator of which is the decrease in Seller’s aggregate Net Revenue Interest in such Property and the denominator of which is Seller’s Net Revenue Interest stated in Exhibit A-1 or Exhibit A-2, as applicable, for such Property; provided, however, that if the Title Defect does not affect the Property throughout its entire productive life, the Title Defect Amount determined under this Section 3.9(a)(iv) shall be reduced to take into account the applicable time period onlyTarget Formation;
(viv) if the Title Defect represents an obligation, encumbranceEncumbrance, burdenBurden, or charge upon, or other defect in title to, the affected Property DSU or Well of a type not described in subsections (i), (ii), Section 12.10(a)(i) through (iii), or (iv) of this Section 3.9(a), the Title Defect Amount shall be determined by taking into account the Allocated Value of the Property DSU or Well so affected, the portion of Sellerthe applicable Company Group’s interest in the Property relevant DSU or Well affected by the Title Defect, the legal effect of the Title Defect, the potential discounted economic effect of the Title Defect over the productive life of the affected PropertyDSU or Well, the values placed upon the Title Defect by Purchaser and SellerSellers, the age of the factual matters causing or constituting the alleged Title Defect, the probability that title failure will occur with respect to any Title Defect that represents only a possibility of title failure, and such other factors as are necessary to make a proper evaluation;
(viv) if a the Title Defect is reasonably susceptible of being cureddoes not affect the affected DSU or Well throughout its entire productive life, the Title Defect Amount shall not be greater than reduced to take into account the reasonable cost and expense of curing such Title Defect;applicable time period only; and
(viivi) the Title Defect Amount with respect to a Title Defect shall be determined without duplication of any costs or losses included in another Title Defect Amount hereunder or for which Purchaser otherwise receives credit in the calculation of the Adjusted Purchase Price; and
(viii) notwithstanding anything to the contrary in this Article 3:
(A) except with respect to any matter that constitutes a breach Seller’s special warranty of title of Defensible Title in the Assignment, Deed and Xxxx of Sale (or would constitute a breach of such special warranty of title upon Closing and without giving effect to the limitation in this clause (A)), an individual claim for a Title Defect for which a valid claim notice is given prior to the Defect Claim Date shall only generate an adjustment to the Base Purchase Price under this Article 3 if the Title Defect Amount with respect thereto exceeds One Hundred Thousand Dollars ($100,000);
(B) the aggregate Title Defect Amounts attributable to the effects of all Title Defects upon any given Property shall not exceed the Allocated Value of such Property; and
(C) except with respect to any matter that constitutes a breach Seller’s special warranty of title of Defensible Title in the Assignment, Deed and Xxxx of Sale (or would constitute a breach of such special warranty of title upon Closing and without giving effect to the limitation in this clause (C)), there shall be no adjustment to the Base Purchase Price for Title Defects unless and until the sum of (i) all Title Defect Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(a)(viii)(A) and (ii) all Environmental Defects Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(c)(iv)(A) exceed the Aggregate Deductible Amount, and then only to the extent that such aggregate amount exceeds the Aggregate Deductible Amount.
(b) The Title Benefit Amount resulting from a Title Benefit shall be determined as follows:
(i) if Purchaser and Seller Sellers agree in writing upon the Title Benefit Amount, that amount shall be the Title Benefit Amount;
(ii) if the Title Benefit represents a positive discrepancy between (A) Sellerthe applicable Company Group’s aggregate Net Acre ownership Revenue Interest in the applicable Target Formation for any Lease DSU or Well and (B) amount of Net Acres shown for such Lease in Exhibit A-1, and there is no discrepancy between the aggregate Net Revenue Interest of Seller in such Lease and the Net Revenue Interest set forth stated for such Lease Company Group in the applicable Annex to Exhibit A-1A-4 for such DSU or the applicable Annex to Exhibit A-2 for such Well, as applicable, for such Target Formation (and the Working Interest of such Company Group in such DSU or Well, as applicable, is increased proportionately as to such Target Formation) then the Title Benefit Amount shall be the product of (x) the Allocated Value of such Lease DSU or Well, multiplied by a fraction, the (1) numerator of which is difference between the number of Net Acres owned by Seller in such Lease and the number of Net Acres set forth for such Lease in Exhibit A-1, and the denominator of which is the Net Acres set forth for such Lease in Exhibit A-1;
(iii) if the Title Benefit represents a discrepancy between (A) the Net Revenue Interest for any Property increase, and (B2) the Net Revenue Interest stated with respect to such Property in Exhibit A-1 or Exhibit A-2, then the Title Benefit Amount shall be the product of the Allocated Value of the affected Property multiplied by a fraction, the numerator of which is the increase in Seller’s aggregate Net Revenue Interest in such Property and the denominator of which is the Net Revenue Interest stated for such Company Group in the applicable Annex to Exhibit A-1 A-4 for such DSU or the applicable Annex to Exhibit A-2 with respect for such Well, as applicable, as to such Property; provided, however, that Target Formation;
(iii) if the a Title Benefit does not affect a Property DSU or Well throughout the entire productive life of the PropertyDSU or Well, the Title Benefit Amount determined under this Section 3.9(b)(iii) shall be reduced to take into account the applicable time period only;; and
(iv) if a Title Benefit represents a right, circumstance, or condition of a type not described in subsections (i), (iiSection 12.10(b)(i) or through (iii) of this Section 3.9(b), the Title Benefit Amount shall be determined by taking into account the Allocated Value of the Property DSU or Well so affected, the portion of Sellerthe applicable Company Group’s interest in the Property DSU or Well so affected, the legal effect of the Title Benefit, the potential discounted economic effect of the Title Benefit over the productive life of any affected PropertyDSU or Well, the values placed upon the Title Benefit by Purchaser and SellerSellers, and such other factors as are necessary to make a proper evaluation; and
(v) notwithstanding anything to the contrary in this Article 3, an individual claim for a Title Benefit shall only generate an adjustment to the Base Purchase Price if the Title Benefit Amount with respect thereto exceeds One Hundred Thousand Dollars ($100,000).
(c) The Environmental Defect Amount amount by which the Purchase Price should be adjusted downward resulting from an individual Environmental Defect shall be determined as follows:follows (such amount, as applicable, the “Environmental Defect Amount”):
(i) if Purchaser and Seller Sellers agree on the Environmental Defect Amount, that amount shall be the Environmental Defect Amount;
(ii) the Environmental Defect Amount shall include, but shall not exceed, estimated present value of the reasonable cost of costs and expenses chargeable to the response required applicable Company Group’s Working Interest to Remediate the Oil and permitted under Gas Property subject to such Environmental Laws Defect that addresses cures, addresses, implements, and resolves the applicable Environmental Defect to the extent required by applicable Environmental Laws as of the Defect Claim Date in the most cost efficient cost-effective manner (considered as a whole taking into consideration any material negative impact such response may have on the operations of the relevant Assets (as currently operated) and any potential material additional costs or liabilities that may likely arise as a direct result of such response) reasonably available as compared to any other response that is required and permitted allowed under Environmental Laws;; provided, that, the most cost-effective response or Remediation may include taking no action, leaving the condition unaddressed, periodic monitoring or the recording of notices in lieu of Remediation, to the extent such responses are permitted under, and are in compliance with, Environmental Laws; and
(iii) the Environmental Defect Amount with respect to shall not include: (A) the costs of Purchaser’s or its Affiliates’ (including, from and after Closing, any Company Group’s) employees, or, if Seller is conducting the Remediation, Purchaser’s project manager(s) or attorneys; (B) expenses for matters that are ordinary costs of doing business regardless of the presence of an Environmental Defect shall (e.g., those costs that would ordinarily be determined without duplication incurred in the day-to-day operations of the Assets or in connection with Permit renewal activities); (C) overhead, general and administrative costs of Purchaser or any of its Affiliates (including, from and after Closing, any Company Group); (D) any costs or expenses relating to the assessment, Remediation, removal, abatement, transportation and disposal of any asbestos, asbestos-containing materials or NORM, except to the extent required to address a violation of or liability under Environmental Law as of the Defect Claim Date; or (E) duplicative costs or losses included in another Environmental Defect Amount or adjustment to the Base Purchase Price hereunder; and.
(ivd) notwithstanding Notwithstanding anything to the contrary in this Article 312:
(A) an individual claim for Title Defect affecting a DSU or Well shall only be considered in determining the aggregate Title Defect Amount under this Article 12 if the Title Defect Amount as to such affected DSU or Well exceeds $200,000 (the “Title Defect Threshold”) and (B) an individual Environmental Defect for which a valid claim notice is given prior to the Defect Claim Date affecting an Asset shall only generate an adjustment to be considered in determining the Base Purchase Price aggregate Environmental Defect Amount under this Article 12 if the Environmental Defect Amount with respect thereto exceeds One Hundred Thousand Dollars $200,000 ($100,000the “Environmental Defect Threshold”); provided, and otherwise, the relevant Title Defect or Environmental Defect shall be deemed not to exist, provided that, solely for clarity, multiple Title Defects which affect the same DSU or Well, or a single Title Defect that affects multiple Xxxxx or multiple DSUs (or multiple Target Formations for a single DSU) shall be subject to a single application of the Title Defect Threshold, in each case, for purposes of determining whether the Title Defect Amount for any such Title Defects exceeds the Title Defect Threshold; provided, further, that (A) if an Environmental Defect that is not based on a physical condition and represents a regulatory deficiency (such as missing or not incorrect Permits or the failure to prepare and submit required plans, reports or other regulatory filings) is present at multiple Assets, then the Environmental Defect Amounts for such Environmental Defects may be aggregated for purposes of meeting the Environmental Defect Threshold and (B) for clarity, if an Environmental Defect arising from a single physical event or condition impacts multiple Assets, then the Environmental Defect Amount for any individual Environmental Defect exceeds One Hundred Thousand Dollars ($100,000), (1) the Environmental Defect Amount attributable to such Environmental Defect shall be aggregated will take into account all such affected Assets;
(ii) except with the Environmental Defect Amount(s) attributable respect to any other Environmental Defect(sTitle Defect which constitutes an Encumbrance that (A) that arise out is liquidated in amount, (B) the obligation secured by such Encumbrance constitutes a personal obligation of the same release, event, or incident, or (2) solely a Company Group Member rather than recourse only to the extent that an Environmental Defect is attributable Assets burdened by such Encumbrance, and (C) does not otherwise result in or form the basis or part of any other downward adjustment hereunder to the failure Purchase Price in an amount equal to have a required environmental Permit or the lack of compliance with an environmental Permitsuch liquidated amount, the Environmental Title Defect Amount(s) attributable Amount with respect to any Property subject to such Environmental a Title Defect that are covered by such environmental Permit (affects a DSU or would have been covered by such environmental Permit, if obtained) Well shall be aggregated; andnot exceed the Allocated Value of that DSU or Well;
(Biii) there shall be no downward adjustment to the Base Purchase Price for Environmental Title Defects unless and until until, (A) the sum of (iI) all Title Defect Amounts that exceed the Title Defect Threshold in the aggregate (excluding any Title Defect Amounts attributable to Title Defects cured by Sellers or waived in writing by Purchaser), minus (II) the aggregate amount of all Title Benefit Amounts to the extent such Title Benefit Amounts do not exceed such Title Defect Amounts, plus (III) all Environmental Defect Amounts which would generate an adjustment that exceed the Environmental Defect Threshold in the aggregate (excluding any Environmental Defect Amounts attributable to Environmental Defects cured by Sellers or waived in writing by Purchaser), exceeds (B) two and one-quarter percent (2.25%) of the Base Purchase Price pursuant to Section 3.9(c)(iv)(A) and (ii) all Title the “Defect Amounts which would generate an adjustment to the Base Purchase Price pursuant to Section 3.9(a)(viii)(A) exceed the Aggregate Deductible AmountDeductible”), and then only to the extent that such aggregate amount exceeds the Aggregate Defect Deductible; and
(iv) solely amongst the Sellers, the Defect Deductible Amountshall be allocated amongst the Sellers and the adjustments to the unadjusted Purchase Price shall be allocated as to each Seller by the Sellers’ Representative and the Purchaser shall have no obligations to make or direct such allocations.
Appears in 1 contract
Samples: Membership Interest Purchase Agreement (Civitas Resources, Inc.)
