Common use of Environmental Dispute Resolution Clause in Contracts

Environmental Dispute Resolution. (i) Seller and Buyer shall attempt in good faith to agree on all Environmental Defects and Remediation Amounts (collectively, the “Environmental Disputes”) prior to Closing. If Seller and Buyer are unable to agree by Closing, (i) the Environmental Disputes will be exclusively and finally resolved by arbitration pursuant to this Section 6.1(e), (ii) the Closing Cash Amount shall be adjusted downwards by the Allocated Value of each Conveyed Interest affected by such Environmental Disputes (together with all associated Conveyed Interests) and such Conveyed Interests shall be deemed to be Excluded Assets until such disputes are finally resolved (including, for the avoidance of doubt, for the purposes of calculating the Adjusted Closing Cash Amount and the Interim Period Carried Costs Amount) and (iii) promptly after such Environmental Disputes are finally resolved, Seller shall, at its sole option with respect to each such Conveyed Interest, elect to either: (a) convey such Conveyed Interest to Buyer in a form substantially similar to the Assignment and cause Buyer to pay to Seller an amount equal to (x) the Allocated Value minus the Environmental Defect Amount, if any (provided that Seller has not elected to assume responsibility for the Remediation of the underlying Environmental Defect, in which case, such deduction will not be made and Seller shall implement and promptly complete such Remediation in a manner which is consistent with the requirements of Environmental Laws), with respect to such Conveyed Interest, subject to Section 6.1(d), plus (y) the sum of all amounts Buyer would have been required to pay to Seller with respect to the development of such Conveyed Interests pursuant to the Development Agreement and any related operating agreements (including any Carried Costs that exceed the portion of the Allocated Value for such Title Defect Property that is attributable to the Carried Costs Obligation) had such Conveyed Interest been conveyed to Buyer at Closing; or (b) retain such Conveyed Interest, in which case such Conveyed Interest will be deemed permanently to be an Excluded Asset. (ii) There will be a single arbitrator, who must be an environmental attorney with at least ten years’ experience in environmental matters involving oil and gas producing properties in any of the regional areas in which the affected Conveyed Interests are located, as selected by mutual agreement of Buyer and Seller within 15 days after the Closing Date (the “Environmental Arbitrator”). If the Parties are unable to mutually agree upon the Environmental Arbitrator, the Houston, Texas office of the AAA shall appoint such Environmental Arbitrator under such conditions as the AAA in its sole discretion deems necessary or advisable. The place of arbitration will be Houston, Texas, and the arbitration shall be conducted in accordance with the AAA Rules, to the extent such rules do not conflict with the terms of this Section 6.1(e). The Environmental Arbitrator’s determination shall be made within 30 days after submission of the Environmental Disputes and will be final and binding upon both Parties, without right of appeal. In making his determination, the Environmental Arbitrator shall be bound by the rules set forth in this Section 6.1 and, subject to the foregoing, may consider such other matters as in the opinion of the Environmental Arbitrator are necessary to make a proper determination. The Environmental Arbitrator, however, may not award Buyer a greater Remediation Amount than the Remediation Amount claimed by Buyer in its applicable Environmental Defect Notice or a lower Remediation Amount than the Remediation Amount claimed by Seller in response to Buyer’s Environmental Defect Notice unless it is determined there was no Environmental Defect. The Environmental Arbitrator shall act for the limited purpose of determining the specific Environmental Disputes submitted by either Party and may not award damages, interest or penalties to either Party with respect to any Environmental Dispute. Seller and Buyer shall each bear its own legal fees and other costs of presenting its case to the Environmental Arbitrator. Each of Seller and Buyer shall bear one-half of the costs and expenses of the Environmental Arbitrator. Subject to Sections 10.4 and 11.4, nothing herein will operate to cause the Closing to be delayed on account of any arbitration conducted pursuant to this Section 6.1(e).

Environmental Dispute Resolution. (i) Seller Whitehorse, on behalf of the Whitehorse Sellers, Siltstone II, on behalf of the Siltstone Sellers, and Buyer shall attempt in good faith to agree on all Environmental Defects and Remediation Amounts (collectively, the “Environmental Disputes”) prior to Closing. If Seller Whitehorse, on behalf of the Whitehorse Sellers, Siltstone II, on behalf of the Siltstone Sellers, and Buyer are unable to agree by Closing, (i) subject to Buyer’s rights pursuant to Section 10.3(b)(ii), all affected Assets shall be conveyed to Buyer at Closing and Buyer shall pay the amount equal to Buyer’s estimate of the Remediation Amount attributable to such unresolved Environmental Defects claimed by Buyer into the Escrow Account and the Environmental Disputes will Defects and/or Remediation Amounts in dispute shall be exclusively and finally resolved by arbitration pursuant to this Section 6.1(e), (ii) the Closing Cash Amount 10.4. There shall be adjusted downwards by the Allocated Value of each Conveyed Interest affected by such Environmental Disputes (together with all associated Conveyed Interests) and such Conveyed Interests shall be deemed to be Excluded Assets until such disputes are finally resolved (including, for the avoidance of doubt, for the purposes of calculating the Adjusted Closing Cash Amount and the Interim Period Carried Costs Amount) and (iii) promptly after such Environmental Disputes are finally resolved, Seller shall, at its sole option with respect to each such Conveyed Interest, elect to either: (a) convey such Conveyed Interest to Buyer in a form substantially similar to the Assignment and cause Buyer to pay to Seller an amount equal to (x) the Allocated Value minus the Environmental Defect Amount, if any (provided that Seller has not elected to assume responsibility for the Remediation of the underlying Environmental Defect, in which case, such deduction will not be made and Seller shall implement and promptly complete such Remediation in a manner which is consistent with the requirements of Environmental Laws), with respect to such Conveyed Interest, subject to Section 6.1(d), plus (y) the sum of all amounts Buyer would have been required to pay to Seller with respect to the development of such Conveyed Interests pursuant to the Development Agreement and any related operating agreements (including any Carried Costs that exceed the portion of the Allocated Value for such Title Defect Property that is attributable to the Carried Costs Obligation) had such Conveyed Interest been conveyed to Buyer at Closing; or (b) retain such Conveyed Interest, in which case such Conveyed Interest will be deemed permanently to be an Excluded Asset. (ii) There will be a single arbitrator, who must shall be an environmental attorney with at least ten fifteen (15) years’ experience in environmental matters involving oil and gas producing properties in any of the regional areas area in which the affected Conveyed Interests Assets are locatedlocated and shall not have worked as an employee or outside counsel for any Party or its Affiliates during the five (5) year period preceding the arbitration or have any financial interest in the dispute, as selected by mutual agreement of Buyer Buyer, on the one hand, and Seller Whitehorse (on behalf of the Whitehorse Sellers) and Siltstone II (on behalf of the Siltstone Sellers), jointly, on the other hand, within 15 fifteen (15) days after the Closing Date Date, and absent such agreement, by the Houston, Texas office of the American Arbitration Association (the “Environmental Arbitrator”). If the Parties are unable to mutually agree upon the Environmental Arbitrator, the The arbitration proceeding shall be held in Houston, Texas office of the AAA shall appoint such Environmental Arbitrator under such conditions as the AAA in its sole discretion deems necessary or advisable. The place of arbitration will be Houston, Texas, and the arbitration shall be conducted in accordance with the AAA RulesCommercial Arbitration Rules of the American Arbitration Association, to the extent such rules do not conflict with the terms of this Section 6.1(e10.3. Each of Buyer, on the one hand, and Whitehorse (on behalf of the Whitehorse Sellers) and Siltstone II (on behalf of the Siltstone Sellers), jointly, on the other hand, shall submit their respective positions and evidence to the Environmental Arbitrator within fifteen (15) days after selection of the Environmental Arbitrator. The Environmental Arbitrator’s determination shall be made within 30 twenty (20) days after submission of the Environmental Disputes matters in dispute and will shall be final and binding upon both the Parties, without right of appeal. The Environmental Arbitrator shall make a separate determination with respect to the existence of each asserted Environmental Defect and/or Remediation Amount, and shall be limited to awarding only Whitehorse and Siltstone II’s joint or Buyer’s final proposed Remediation Amounts exchanged by the Parties as provided above. In making his or her determination, the Environmental Arbitrator shall be bound by the relevant rules set forth in this Section 6.1 Article X and, subject to the foregoing, may consider such other matters as in the opinion of the Environmental Arbitrator are necessary or helpful to make a proper determination. The Environmental Arbitrator, however, may not award Buyer a greater Remediation Amount than the Remediation Amount claimed by Buyer in its applicable Environmental Defect Notice or a lower Remediation Amount than the Remediation Amount claimed by Seller in response to Buyer’s Environmental Defect Notice unless it is determined there was no Environmental Defect. The Environmental Arbitrator shall act as an expert for the limited purpose of determining the specific disputed Environmental Disputes Defects and/or Remediation Amounts submitted by either Party Buyer or Whitehorse (on behalf of the Whitehorse Sellers) and Siltstone II (on behalf of the Siltstone Sellers) jointly, and may not award damages, interest or penalties to either Party with respect to any Environmental Disputematter, but shall award to the prevailing Party its arbitration costs and attorneys’ fees. Seller Sellers, jointly, on the one hand, and Buyer Buyer, on the other hand, shall each bear its own legal fees and other costs of presenting its case to the Environmental Arbitrator. Each of Seller and Buyer shall bear one-half of the costs and expenses of the Environmental Arbitrator. Subject to Sections 10.4 and 11.4, nothing herein will operate to cause Within ten days of the Closing to be delayed on account final resolution of any arbitration conducted pursuant dispute submitted to this Section 6.1(e)the Environmental Arbitrator, Buyer shall be entitled to withdraw from the Escrow Account the amount, if any, so awarded by the Environmental Arbitrator to Buyer plus all earnings thereof, with respect to any Environmental Defect resolved in Buyer’s favor and the balance of the escrow attributable to the resolved Environmental Defect shall be paid to Sellers.

Environmental Dispute Resolution. (ia) Seller and Buyer shall attempt in good faith The parties agree to agree on all Environmental Defects and Remediation Amounts (collectively, resolve disputes concerning the “Environmental Disputes”) prior following matters pursuant to Closing. If Seller and Buyer are unable to agree by Closing, this Section: (i) the existence and scope of an Environmental Disputes will be exclusively and finally resolved by arbitration pursuant to this Section 6.1(e)Defect, (ii) the Closing Cash Amount Environmental Defect Value of an Environmental Defect and Seller's share of same and (iii) the effectiveness of Seller's Remediation (the "DISPUTED ENVIRONMENTAL MATTERS"). The parties agree to attempt to initially resolve all Disputed Environmental Matters through good faith negotiations. If the parties cannot resolve such disputes by May 30, 2003, the Disputed Environmental Matters shall be adjusted downwards finally determined pursuant to Section 5.7(b) by a mutually agreeable environmental consulting firm(s) (the "ENVIRONMENTAL ARBITER"), taking into account the factors set forth in this Agreement. The Closing shall not be delayed due to such unresolved Disputed Environmental Matters and the Assets subject to such unresolved Disputed Environmental Matters shall be assigned and transferred to Buyer at Closing without any reduction to the Purchase Price. (b) For any Disputed Environmental Matters not resolved by May 30, 2003, Buyer and Seller shall, on or before June 11, 2003, present their respective positions in writing to the Environmental Arbiter, together with such evidence as each party deems appropriate. The Environmental Arbiter, shall be instructed to resolve the dispute through a final decision by June 30, 2003. The costs incurred in employing the Environmental Arbiter shall be borne equally by Seller and Buyer. The Environmental Arbiter's final decision shall be binding upon the parties. Within five (5) business days following Seller's receipt of the Environmental Arbiter's final written decision, Seller shall, subject to Section 5.7(c) and at its sole election, elect one of the following with respect to the Asset that is the subject of such decision of the Environmental Arbiter by so notifying Buyer: (i.) Pay to Buyer, within three (3) days of such election, the amount of Seller's share of the Actual Environmental Defect Value determined in the Environmental Arbiter's decision for the Qualifying Environmental Defect which was the subject of such decision, in which event Seller shall have no further obligation or liability relating to such Qualifying Environmental Defect or (ii.) Have Buyer reconvey to Seller the interest in the Asset acquired by Buyer (including a special warranty from Buyer) to which the Qualifying Environmental Defect pertains which was the subject of the Environmental Arbiter's decision and concurrent with such reconveyance Seller shall pay to Buyer the Allocated Value of each Conveyed Interest affected by such Environmental Disputes Asset. Such reconveyance shall occur within three (together with all associated Conveyed Interests3) and such Conveyed Interests days of Buyer's receipt of Seller's election notice, but shall be deemed effective as of the Effective Time. (c) Notwithstanding the other provisions of this Section 5.7, Seller shall not be obligated to elect either of the remedies set forth in Section 5.7(b) above for any Disputed Environmental Matter unless the Environmental Arbiter finds such Disputed Environmental Matter to be Excluded Assets until such disputes are finally resolved (including, for the avoidance of doubt, for the purposes of calculating the Adjusted Closing Cash Amount and the Interim Period Carried Costs Amount) and (iii) promptly after such Environmental Disputes are finally resolved, Seller shall, at its sole option with respect to each such Conveyed Interest, elect to either: (a) convey such Conveyed Interest to Buyer in a form substantially similar to the Assignment and cause Buyer to pay to Seller an amount equal to (x) the Allocated Value minus the Environmental Defect Amount, if any (provided that Seller has not elected to assume responsibility for the Remediation of the underlying Qualifying Environmental Defect, and then only to the extent the sum of Seller's share of all Actual Environmental Defect Values of all Qualifying Environmental Defects established before and after Closing exceeds the Environmental Threshold Amount. If the sum of Seller's share of all Actual Environmental Defect Values of all Qualifying Environmental Defects does not exceed the Environmental Threshold Amount, then Buyer shall retain the interests in which case, such deduction will not be made the Assets subject to all Environmental Defects and Seller shall implement and promptly complete such Remediation in a manner which is consistent with the requirements of have no further obligation or liability relating to any Environmental Laws), with respect to such Conveyed Interest, subject to Section 6.1(d), plus (y) Defects. If the sum of Seller's share of all amounts Buyer would have been required Actual Environmental Defect Values of all Qualifying Environmental Defects exceeds the Environmental Threshold Amount, then (i) Seller shall only be obligated to pay to Seller with respect to elect the development remedies set forth in Section 5.7(b) for that portion of such Conveyed Interests pursuant to the Development Agreement and any related operating agreements (including any Carried Costs that exceed the portion sum of Seller's share of all Actual Environmental Defect Values in excess of the Allocated Value for such Title Defect Property that is attributable to the Carried Costs Obligation) had such Conveyed Interest been conveyed to Buyer at Closing; or (b) retain such Conveyed Interest, in which case such Conveyed Interest will be deemed permanently to be an Excluded Asset. Environmental Threshold Amount and (ii) There will be a single arbitrator, who must be an environmental attorney with at least ten years’ experience Buyer shall retain the interests in environmental matters involving oil and gas producing properties in any the Assets subject to all Qualifying Environmental Defects the sum of Seller's share of the regional areas in which the affected Conveyed Interests are located, as selected by mutual agreement of Buyer and Seller within 15 days after the Closing Date (the “Environmental Arbitrator”). If the Parties are unable to mutually agree upon the Environmental Arbitrator, the Houston, Texas office of the AAA shall appoint such Environmental Arbitrator under such conditions as the AAA in its sole discretion deems necessary or advisable. The place of arbitration will be Houston, Texas, and the arbitration shall be conducted in accordance with the AAA Rules, to the extent such rules do not conflict with the terms of this Section 6.1(e). The Environmental Arbitrator’s determination shall be made within 30 days after submission of the Environmental Disputes and will be final and binding upon both Parties, without right of appeal. In making his determination, the Environmental Arbitrator shall be bound by the rules set forth in this Section 6.1 and, subject to the foregoing, may consider such other matters as in the opinion of the Environmental Arbitrator are necessary to make a proper determination. The Environmental Arbitrator, however, may not award Buyer a greater Remediation Amount than the Remediation Amount claimed by Buyer in its applicable Actual Environmental Defect Notice Values of which is less than or a lower Remediation Amount than the Remediation Amount claimed by Seller in response to Buyer’s Environmental Defect Notice unless it is determined there was no Environmental Defect. The Environmental Arbitrator shall act for the limited purpose of determining the specific Environmental Disputes submitted by either Party and may not award damages, interest or penalties to either Party with respect to any Environmental Dispute. Seller and Buyer shall each bear its own legal fees and other costs of presenting its case equal to the Environmental Arbitrator. Each of Threshold Amount and Seller and Buyer shall bear one-half of the costs and expenses of the have no further obligation or liability relating to all such Qualifying Environmental Arbitrator. Subject to Sections 10.4 and 11.4, nothing herein will operate to cause the Closing to be delayed on account of any arbitration conducted pursuant to this Section 6.1(e)Defects.

Environmental Dispute Resolution. (a) If, prior to Closing, the Parties are unable to agree on a resolution associated with any dispute regarding the existence, cure or remediation of any alleged Environmental Defect that was timely and properly asserted by Buyer under Section 9.2(a) or any Environmental Defect Amount with respect to such an alleged Environmental Defect (each, a “Disputed Environmental Matter”), then (i) the Assets subject to the Disputed Environmental Matter shall not be assigned to Buyer at Closing, (ii) such Assets shall be retained by Seller and deemed to be “Excluded Assets” for all purposes hereunder unless and until such Disputed Environmental Matter is agreed upon by the Parties or is resolved pursuant to this Section 9.3, (iii) subject to Section 9.4(a), the Closing Payment shall be reduced by the aggregate Allocated Values of such Assets at Closing and (iv) subject to Section 10.1 and Section 10.3, the Closing will occur as to the remainder of the Assets. Upon the agreement with respect to or final resolution of any Disputed Environmental Matter pursuant to this Section 9.3, subject to Buyer’s right pursuant to Section 9.2(d), (A) all such affected Assets that were not assigned to Buyer at Closing pursuant to subpart (i) of this Section 9.3 shall again be considered “Assets” hereunder (and no longer considered “Excluded Assets”) and Seller shall convey such affected Assets to Buyer at an agreed upon time and location (but not later than three (3) Business Days after such resolution) (a “Subsequent Closing”) in a manner consistent with the provisions of Section 10.2 and Section 10.4 applicable to the Assets to be conveyed to Buyer in such Subsequent Closing, and (B) contemporaneously with such conveyance, Buyer shall attempt pay to Seller the Allocated Value of such Assets (as adjusted pursuant to Section 3.2 and Section 3.3) by wire transfer of immediately available funds. (b) Notwithstanding the foregoing provisions of Section 9.3(a), within thirty (30) days after the Closing Date, upon any Party’s written request, the Parties shall submit any dispute associated with the existence, cure or remediation of any asserted Environmental Defect or any disputed Environmental Defect Amount associated therewith for prompt resolution to an environmental consultant or attorney experienced in good faith to agree on all Environmental Defects the examination of environmental matters regarding properties located in the State of Texas mutually selected by Buyer and Remediation Amounts Seller (collectively, the “Environmental DisputesReferee”). The Environmental Referee must have at least ten (10) prior to Closingyears’ experience and must not have worked as an employee, consultant or outside counsel for either Party or its Affiliates during the five (5) year period preceding the arbitration or have any financial interest in the dispute other than payments of its fees and expenses for serving as the Environmental Referee hereunder. If Seller and Buyer are unable to cannot agree by Closing, (i) on the Environmental Disputes will Referee, the Houston regional office of the American Arbitration Association shall select such Environmental Referee in accordance with the same criteria within thirty (30) days of the date that either Party refers the dispute thereto. The cost and expenses of any Environmental Referee shall be exclusively borne fifty percent (50%) by Seller and finally resolved fifty percent (50%) by arbitration Buyer. (c) For any such dispute resolution process, Seller and Buyer shall present a written statement of their respective positions on the dispute to the Environmental Referee within thirty (30) Business Days after the Environmental Referee is selected, and the Environmental Referee shall make a determination of all points of disagreement (including whether an alleged Environmental Defect constitutes an Environmental Condition hereunder if such matter is in dispute and/or the Environmental Defect Amount of any Environmental Defect) in accordance with the terms and conditions of this Agreement within thirty (30) Business Days of receipt of such statements. With respect to any disputed Environmental Defect or disputed Environmental Defect Amount submitted to the Environmental Referee pursuant to this Section 6.1(e)9.3, (ii) the Closing Cash Amount Environmental Referee shall be adjusted downwards by make a determination of the Allocated Value existence of each Conveyed Interest affected by such Environmental Disputes (together with all associated Conveyed Interests) and such Conveyed Interests shall be deemed to be Excluded Assets until such disputes are finally resolved (includingDefect and/or, for the avoidance of doubtif applicable, for the purposes of calculating the Adjusted Closing Cash Amount and the Interim Period Carried Costs Amount) and (iii) promptly after such Environmental Disputes are finally resolved, Seller shall, at its sole option with respect to each such Conveyed Interest, elect to either: (a) convey such Conveyed Interest to Buyer in a form substantially similar to the Assignment and cause Buyer to pay to Seller an amount equal to (x) the Allocated Value minus the Environmental Defect Amount, if any (provided that Seller has not elected to assume responsibility for the Remediation of the underlying Environmental Defect, in which case, such deduction will not be made and Seller shall implement and promptly complete such Remediation in a manner which is consistent with the requirements of Environmental Laws), with respect to such Conveyed Interest, subject to Section 6.1(d), plus (y) the sum of all amounts Buyer would have been required to pay to Seller Amount with respect to the development of such Conveyed Interests pursuant to the Development Agreement and any related operating agreements (including any Carried Costs that exceed the portion of the Allocated Value for such Title Defect Property that is attributable to the Carried Costs Obligation) had such Conveyed Interest been conveyed to Buyer at Closing; or (b) retain such Conveyed Interest, in which case such Conveyed Interest will be deemed permanently to be an Excluded Asset. (ii) There will be a single arbitrator, who must be an environmental attorney with at least ten years’ experience in environmental matters involving oil and gas producing properties in any of the regional areas in which the affected Conveyed Interests are located, as selected by mutual agreement of Buyer and Seller within 15 days after the Closing Date (the “Environmental Arbitrator”). If the Parties are unable to mutually agree upon the Environmental Arbitrator, the Houston, Texas office of the AAA shall appoint such Environmental Arbitrator under such conditions as the AAA in its sole discretion deems necessary or advisable. The place of arbitration will be Houston, Texas, and the arbitration shall be conducted in accordance with the AAA Rules, to the extent such rules do not conflict with the terms of this Section 6.1(e). The Environmental Arbitrator’s determination shall be made within 30 days after submission of the Environmental Disputes and will be final and binding upon both Parties, without right of appeal. In making his determination, the Environmental Arbitrator shall be bound by the rules set forth in this Section 6.1 and, subject to the foregoing, may consider such other matters as in the opinion of the Environmental Arbitrator are necessary to make a proper determination. The Environmental Arbitrator, however, may not award Buyer a greater Remediation Amount than the Remediation Amount claimed by Buyer in its applicable Environmental Defect Notice or a lower Remediation Amount than the Remediation Amount claimed by Seller in response to Buyer’s Environmental Defect Notice unless it is determined there was no Environmental Defect. The determination by the Environmental Arbitrator Referee shall be conclusive and binding on the Parties and shall be enforceable against any Party in any court of competent jurisdiction. The Environmental Referee may consult with and engage disinterested third Persons to advise the arbitrator, including environmental attorneys from other states. The Environmental Referee shall act as an expert for the limited purpose of determining the specific Environmental Disputes specified disputed matters submitted by either Party to it pursuant to this Section 9.3 and may not award (i) damages, interest or penalties to either any Party with respect to any matter, (ii) any Environmental DisputeDefect Amount of an alleged Environmental Defect more than the Environmental Defect Amount claimed by Buyer or (iii) any Environmental Defect Amount of an alleged Environmental Defect less than the Environmental Defect Amount claimed by Seller. Seller and Buyer Subject to Section 9.4, upon final resolution of any such dispute regarding the existence or cure of any alleged Environmental Defect or any disputed Environmental Defect Amount, the Purchase Price shall each bear its own legal fees and other costs of presenting its case be reduced by the Environmental Defect Amounts associated with all Environmental Defects submitted to the Environmental Arbitrator. Each of Seller and Buyer shall bear one-half of the costs and expenses of the Environmental Arbitrator. Subject to Sections 10.4 and 11.4, nothing herein will operate to cause the Closing to be delayed on account of any arbitration conducted Referee pursuant to this Section 6.1(e)9.3.