Title Defect Adjustments. (a) No action (including no adjustment to the Purchase Price) shall be required under Section 5.02(c) below in respect of any individual Title Defect unless the value of such Title Defect equals or exceeds a threshold of (■) with respect to a Property. With respect to all Title Defects meeting such threshold, no action (including no adjustment to the Purchase Price) shall be required under Section 5.02(c) except and only to the extent that the aggregate value of all such Title Defects and all timely asserted Adverse Environmental Conditions meeting the individual claim threshold set forth in Section 6.02(a), net of all Title Benefit Offsets, exceeds a deductible equal to one and (■) of the Purchase Price as to all Seller Parties. (b) Buyer shall give Seller written notice of any Title Defects alleged by Buyer within forty-five (45) days after the Execution Date. Such notice (a “Defect Notice”) shall be in writing and shall include: (i) a description of each Title Defect; (ii) the Allocated Value of the Properties affected by each Title Defect; (iii) the amount by which Buyer believes the Allocated Value of each of such Properties has been reduced because of each Title Defect, and (iv) documentation or other evidence reasonably supporting Buyer’s assertion of each Title Defect and the reduction in Allocated Value asserted pursuant to the preceding clause (iii) with respect thereto, including the specific computations on which Buyer is relying for such reduction. For the purposes of this Section 5.02(b), Buyer shall be deemed to have waived all Title Defects of which Seller has not been given timely notice and all Title Defects that do not meet the requirements set forth in Section 5.02(a). All adjustments to the Purchase Price based on Title Defects will be based on the Allocated Values attributable to the affected Properties. Upon timely delivery of a Defect Notice under this Section 5.02, Buyer and Seller Party will in good faith negotiate the validity of the Title Defect and the amount of any adjustment to the Purchase Price using the following criteria: (i) If the alleged Title Defect is based on owning a Net Revenue Interest in a Property which is less than the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title in such Property, then a downward adjustment to the Purchase Price shall be calculated by multiplying the Allocated Value set forth on Schedule 5.01(a-1) or Schedule 5.01(a-2) for such Property by a fraction, the numerator of which is an amount equal to the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title to such Property, less the Net Revenue Interest to which the Seller Party is actually entitled taking such Title Defect into account, and the denominator of which is the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title to such Property. (ii) If the Title Defect is based on a lien upon a Property that is liquidated in amount, then the adjustment is the lesser of the amount necessary to remove such lien from the affected Property or the Allocated Value of the affected Property. (iii) If the Title Defect is based on an obligation, burden or liability upon a Property for which the Buyer’s economic detriment is not liquidated but can be estimated with reasonable certainty, then, subject to the other provisions hereof, the adjustment is the lesser of the amount necessary to compensate Buyer for the adverse economic effect on the affected Property or the Allocated Value of the affected Property. (iv) If the Title Defect is based on owning fewer Net Acres in a Property that is identified on Schedule 5.01(a-2) than those represented on Schedule 5.01(a-2), then the adjustment shall be calculated by multiplying the Allocated Value set forth for such Property on Schedule 5.01(a-2) by a fraction, the numerator of which is the number of Net Acres shown on Schedule 5.01(a-2) for such Property minus the actual number of Net Acres owned within such Property taking into account such Title Defect, and the denominator of which is the number of Net Acres shown on Schedule 5.01(a-2) for such Property. (c) Subject to the limitations contained in Section 5.02(a), a Property affected by a Title Defect shall be excluded from the Assets to be purchased by Buyer hereunder and the Purchase Price shall be reduced by an amount equal to the Allocated Value of such Property unless, prior to one (1) day before the Closing Date, either: (i) the Title Defect has been cured by Seller to the reasonable satisfaction of Buyer; (ii) Buyer agrees to waive the relevant Title Defect and purchase the affected Asset(s) notwithstanding such Title Defect; or (iii) if such Title Defect is described in Section 5.02(b), Buyer and Seller agree upon a reduction of the Purchase Price with respect to such Title Defect in accordance with the provisions thereof. (d) With respect to any Property affected by a Title Defect which is excluded from the Assets pursuant to Section 5.02(c), Seller shall have ninety (90) days after the Closing to cure any such Title Defect, and to the extent that such Title Defect is cured to Buyer’s reasonable satisfaction or waived by Buyer, the Parties shall include in the Second Closing each of the excluded Assets for which the Title Defects have been cured or waived. If any Title Defects have not been cured by Seller or waived by Buyer by the date of the Second Closing, then either Party shall have the right to elect to have the validity of such Title Defect and the amount of any adjustment to the Purchase Price determined by an Independent Expert pursuant to ARTICLE XI.
Appears in 2 contracts
Samples: Purchase and Sale Agreement (Carbon Natural Gas Co), Purchase and Sale Agreement (Carbon Natural Gas Co)
Title Defect Adjustments. The Parties shall proceed as follows with respect to any Notice of Title Defect:
(a) No action (including no adjustment Seller shall have the option, but not the obligation, to attempt to cure to the Purchase Price) shall be required reasonable satisfaction of Buyer, on or before the applicable Title Curative Date, any curable Non-De Minimus Title Defect affecting the Assets that is timely identified in the Notice of Title Defect under Section 5.02(c) below in respect of any individual Title Defect unless the value of such Title Defect equals or exceeds a threshold of (■) with respect to a Property. With respect to all Title Defects meeting such threshold, no action (including no adjustment to the Purchase Price) shall be required under Section 5.02(c) except and only to the extent that the aggregate value of all such Title Defects and all timely asserted Adverse Environmental Conditions meeting the individual claim threshold set forth in Section 6.02(a), net of all Title Benefit Offsets, exceeds a deductible equal to one and (■) of the Purchase Price as to all Seller Parties.
(b) 4.4 by providing Buyer shall give Seller written notice of any Title Defects alleged by Buyer within forty-five (45) such election no later than 7 days after the Execution DateTitle Defect Notice Deadline (the “Cure Election Notice Deadline”). Such notice At Closing, the Title Defect Value of any such Non-De Minimus Title Defect that is not cured to the reasonable satisfaction of Buyer by Closing (a and for which the Title Curative Date has not yet passed), shall be deposited into an escrow account (the “Defect NoticeEscrow Account”), pursuant to an escrow agreement, the form of which is mutually acceptable to the Parties, to be executed by the Parties at Closing pursuant to Section 12.2(k) herein, and established with a mutually agreeable escrow agent (the “Escrow Agent”) and shall be deducted in writing and shall include: the calculation of the Closing Amount. On each Title Curative Date, (i) a description of each Title Defect; (ii) if the Allocated Value of the Properties affected by each Title Defect; (iii) the amount by which Buyer believes the Allocated Value of each of such Properties has been reduced because of each Title Defect, and (iv) documentation or other evidence reasonably supporting Buyer’s assertion of each Title Defect and the reduction in Allocated Value asserted pursuant to the preceding clause (iii) with respect thereto, including the specific computations on which Buyer is relying for such reduction. For the purposes of this Section 5.02(b), Buyer shall be deemed to have waived all Title Defects of which Seller has not been given timely notice and all Title Defects that do not meet the requirements set forth in Section 5.02(a). All adjustments to the Purchase Price based on Title Defects will be based on the Allocated Values attributable to the affected Properties. Upon timely delivery of a Defect Notice under this Section 5.02, Buyer and Seller Party will in good faith negotiate the validity of the Title Defect and the amount of any adjustment to the Purchase Price using the following criteria:
(i) If the alleged applicable Non-De Minimus Title Defect is based on owning a Net Revenue Interest in a Property which is less than the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title in such Property, then a downward adjustment to the Purchase Price shall be calculated by multiplying the Allocated Value set forth on Schedule 5.01(a-1) or Schedule 5.01(a-2) for such Property by a fraction, the numerator of which is an amount equal to the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title to such Property, less the Net Revenue Interest to which the Seller Party is actually entitled taking such Title Defect into account, and the denominator of which is the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title to such Property.
(ii) If the Title Defect is based on a lien upon a Property that is liquidated in amount, then the adjustment is the lesser of the amount necessary to remove such lien from the affected Property or the Allocated Value of the affected Property.
(iii) If the Title Defect is based on an obligation, burden or liability upon a Property for which the Buyer’s economic detriment is not liquidated but can be estimated with reasonable certainty, then, subject to the other provisions hereof, the adjustment is the lesser of the amount necessary to compensate Buyer for the adverse economic effect on the affected Property or the Allocated Value of the affected Property.
(iv) If the Title Defect is based on owning fewer Net Acres in a Property that is identified on Schedule 5.01(a-2) than those represented on Schedule 5.01(a-2), then the adjustment shall be calculated by multiplying the Allocated Value set forth for such Property on Schedule 5.01(a-2) by a fraction, the numerator of which is the number of Net Acres shown on Schedule 5.01(a-2) for such Property minus the actual number of Net Acres owned within such Property taking into account such Title Defect, and the denominator of which is the number of Net Acres shown on Schedule 5.01(a-2) for such Property.
(c) Subject to the limitations contained in Section 5.02(a), a Property affected by a Title Defect shall be excluded from the Assets to be purchased by Buyer hereunder and the Purchase Price shall be reduced by an amount equal to the Allocated Value of such Property unless, prior to one (1) day before the Closing Date, either: (i) the Title Defect has been cured by Seller to the reasonable satisfaction of Buyer; , Seller and Buyer shall execute and deliver joint written instructions to the Escrow Agent to disburse the associated Title Defect Value (and any interest and earnings thereon) to Seller and (ii) Buyer agrees to waive if the relevant Title Defect and purchase the affected Asset(s) notwithstanding such Title Defect; or (iii) if such applicable Non-De Minimus Title Defect is described in Section 5.02(b), not cured by Seller to the reasonable satisfaction of Buyer and (x) the Title Defect Deductible has been satisfied as of such date, Seller agree upon a reduction and Buyer shall execute and deliver joint written instructions to the Escrow Agent to disburse the associated Title Defect Value (and any interest and earnings thereon) to Buyer and (y) the Title Defect Deductible has not been satisfied as of such date, Seller and Buyer shall execute and deliver joint written instructions to the Escrow Agent to disburse the associated Title Defect Value (and any interest and earnings thereon) to Seller to the extent such disbursement does not result in satisfaction of the Purchase Price with respect to such Title Defect in accordance with the provisions thereofDeductible.
(db) With respect to any Property affected by a each Non-De Minimus Title Defect which is excluded from affecting an Asset identified in the Assets Notice of Title Defect that Seller has not elected to cure pursuant to Section 5.02(c4.5(a) (or Seller has elected to cure pursuant to Section 4.5(a) but the Title Curative Date applicable to such Non-De Minimus Title Defect has passed), Seller shall have ninety (90) the Parties shall, no later than 7 days after the Closing Cure Election Notice Deadline, attempt in good faith to cure any such Title Defect, and to reach agreement on the extent that such Title Defect is cured to Buyer’s reasonable satisfaction or waived by Buyer, the Parties shall include in the Second Closing each of the excluded Assets for which the Title Defects have been cured or waived. If any Title Defects have not been cured by Seller or waived by Buyer by the date of the Second Closing, then either Party shall have the right to elect to have the validity existence of such Title Defect and the Title Defect Value. In the event that the Parties do not reach such an agreement by the date that is 7 days after the Cure Election Notice Deadline, then:
(i) Seller and Buyer shall each have the option to submit the existence of such Non-De Minimus Title Defect and/or the Title Defect Value to binding determination by the Title Expert pursuant to Section 4.7;
(ii) Seller and Buyer may mutually agree to exclude the affected Asset from the Assets being sold to Buyer under this Agreement, in which event the Base Purchase Price shall be reduced by the Allocated Value of such Asset and such Asset shall thereafter be treated as an Excluded Asset; or
(iii) Seller and Buyer may mutually agree that Seller shall indemnify, defend, save, and hold harmless Buyer under Section 14.3(a)(vii) (subject to the other provisions of this Section 4.5(b)(iii) and Article 14) for all Claims and Losses arising out of, attributable to, or in connection with such Title Defect (an “Indemnified Title Defect”), subject to the following:
(A) The amount of any adjustment Loss or Claim arising out of, attributable to, or in connection with each Indemnified Title Defect must exceed the Title Defect Minimum before Seller shall have any Liability or obligation under this Section 4.5(b)(iii) (or Section 15.3(a)(viii)) with respect to such Loss or Claim.
(B) The aggregate Liability of Seller for all Losses and Claims arising out of, attributable to, or in connection with all Indemnified Title Defects shall not exceed the difference of: (1) the aggregate sum of the Title Defect Values assigned to Non-De Minimus Title Defects by Buyer in its Notices of Title Defect; minus (2) the Title Defect Deductible.
(C) The aggregate Liability of Seller for all Losses and Claims arising out of, attributable to, or in connection with any particular Indemnified Title Defect shall not exceed the Title Defect Value assigned thereto by Buyer in its Notice of Title Defect for such Indemnified Title Defect. At Closing, the Title Defect Value of any Non-De Minimus Title Defect that is submitted for dispute pursuant to Section 4.5(b)(i) shall be deposited into the Defect Escrow Account and shall be deducted in the calculation of the Closing Amount. On the date that the dispute relating to such Non-De Minimus Title Defect is resolved pursuant to Section 4.7, Seller and Buyer shall execute and deliver joint written instructions to the Purchase Price determined by an Independent Escrow Agent to disburse the associated Title Defect Value (and any interest and earnings thereon) in accordance with the decision of the Title Expert pursuant (for the avoidance of doubt, if the Title Defect Deductible has not been satisfied at the time of such disbursement, the Title Defect Value shall be disbursed to ARTICLE XISeller until satisfaction of the Title Defect Deductible).
Appears in 2 contracts
Samples: Purchase and Sale Agreement (Cimarex Energy Co), Purchase and Sale Agreement (Callon Petroleum Co)
Title Defect Adjustments. (a) No action (including no adjustment to the Purchase Price) shall be required under Section 5.02(c) below in respect of any individual Title Defect unless the value of such Title Defect equals or exceeds a threshold of (■) with respect to a Property. With respect to all Title Defects meeting such threshold, no action (including no adjustment to the Purchase Price) shall be required under Section 5.02(c) except and only to the extent that the aggregate value of all such Title Defects and all timely asserted Adverse Environmental Conditions meeting the individual claim threshold set forth in Section 6.02(a), net of all Title Benefit Offsets, exceeds a deductible equal to one and (■) of the Purchase Price as to all Seller Parties.
(b) Buyer shall give Seller written notice of any Title Defects alleged by Buyer within forty-five at least three (453) days after prior to the Execution Closing Date. Such notice (a “Defect Notice”) shall be in writing and shall include: (i) a description of each Title Defect; (ii) the Allocated Value of the Properties affected by each Title Defect; (iii) the amount by which Buyer believes the Allocated Value of each of such Properties has been reduced because of each Title Defect, and (iv) documentation or other evidence reasonably supporting Buyer’s 's assertion of each Title Defect and the reduction in Allocated Value asserted pursuant to the preceding clause (iii) with respect thereto, including the specific computations on which Buyer is relying for such reduction. For the purposes of this Section 5.02(b), Buyer shall be deemed to have waived all Title Defects of which Seller has not been given timely notice and all Title Defects that that, individually or in the aggregate, do not meet the requirements set forth in Section 5.02(a5.03(a) and 5.03(b). All adjustments to the Purchase Price based on Title Defects will be based on the Allocated Values attributable to the affected Properties. Upon timely delivery of a Defect Notice under this Section 5.025.03, Buyer and Seller Party will in good faith negotiate the validity of the Title Defect and the amount of any adjustment to the Purchase Price using the following criteria:
(ia) If the alleged Title Defect is based on owning a Net Revenue Interest in a Property which is less than the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title in such Property, then a downward No action (including no adjustment to the Purchase Price Price) shall be calculated by multiplying required under this Article V in respect of any individual Title Defect unless the Allocated Value set forth on Schedule 5.01(a-1) or Schedule 5.01(a-2) for such Property by a fraction, the numerator value of which is an amount equal to the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title to such Property, less the Net Revenue Interest to which the Seller Party is actually entitled taking such Title Defect into accountequals or exceeds a threshold of One Thousand Five Hundred Dollars ($1,500.00) with respect to an Oil and Gas Property. With respect to all Title Defects meeting such threshold, no action (including no adjustment to the Purchase Price) shall be required under this Article V except and only to the denominator extent that the aggregate value of which is all such Title Defects and all timely asserted Adverse Environmental Conditions meeting the Net Revenue Interest percentage necessary for individual claim threshold set forth in Article VI, net of all Title Benefit Offsets, exceeds a deductible equal to one percent (1%) of the Seller Party to have had Good and Defensible Title to such PropertyPurchase Price.
(iib) If the With respect to each Well or Lease affected by any Title Defect is based on a lien upon a Property that is liquidated in amountreported under this Article V, then the adjustment is the lesser of the amount necessary to remove such lien from the affected Property or the Allocated Value of the affected Property.
(iii) If the Title Defect is based on an obligation, burden or liability upon a Property for which the Buyer’s economic detriment is not liquidated but can be estimated with reasonable certainty, then, subject to the other provisions hereof, the adjustment is the lesser of the amount necessary to compensate Buyer for the adverse economic effect on the affected Property or the Allocated Value of the affected Property.
(iv) If the Title Defect is based on owning fewer Net Acres in a Property that is identified on Schedule 5.01(a-2) than those represented on Schedule 5.01(a-2), then the adjustment shall be calculated by multiplying the Allocated Value set forth for such Property on Schedule 5.01(a-2) by a fraction, the numerator of which is the number of Net Acres shown on Schedule 5.01(a-2) for such Property minus the actual number of Net Acres owned within such Property taking into account such Title Defect, and the denominator of which is the number of Net Acres shown on Schedule 5.01(a-2) for such Property.
(c) Subject to the limitations contained in Section 5.02(a), a Property affected by a Title Defect shall be excluded from the Assets to be purchased by Buyer hereunder and the Purchase Price shall be reduced by an amount (the “Title Defect Amount”) equal to the reduction in the Allocated Value of for such Property unless, prior to one (1) day before the Closing Date, either: (i) the Title Defect has been cured Well or Lease caused by Seller to the reasonable satisfaction of Buyer; (ii) Buyer agrees to waive the relevant Title Defect and purchase the affected Asset(s) notwithstanding such Title Defect; or (iii) if such Title Defect is described in Section 5.02(b), Buyer and Seller agree upon a reduction of the Purchase Price with respect to such Title Defect in accordance with the provisions thereof.
(d) With respect to any Property affected by a Title Defect which is excluded from the Assets pursuant to Section 5.02(c), Seller shall have ninety (90) days after the Closing to cure any such Title Defect, and to the extent that such Title Defect is cured to Buyer’s reasonable satisfaction or waived by Buyer, the Parties shall include in the Second Closing each of the excluded Assets for which the Title Defects have been cured or waived. If any Title Defects have not been cured by Seller or waived by Buyer by the date of the Second Closing, then either Party shall have the right to elect to have the validity of such Title Defect and the amount of any adjustment to the Purchase Price as determined by an Independent Expert pursuant to ARTICLE XISection 5.03.
Appears in 1 contract
Title Defect Adjustments. (a) No action (including no adjustment to the Purchase Price) Price for Title Defects shall be required under Section 5.02(c) below in respect of any individual Title Defect made unless the value of such Title Defect equals or exceeds a threshold of (■) with respect to a Property. With respect to all Title Defects meeting such thresholdand until, no action (including no adjustment to the Purchase Price) shall be required under Section 5.02(c) except and only to the extent that the aggregate individual value of each Title Defect exceeds $25,000 net to Seller’s Working Interest in the Well or Lease affected by the Title Defect or exceeds $75,000 in the aggregate for all such Title Defects and in all timely asserted Adverse Environmental Conditions meeting the individual claim threshold set forth in Section 6.02(a), net of all Title Benefit Offsets, exceeds a deductible equal to one and (■) of the Purchase Price as to all Seller PartiesXxxxx or Leases.
(b) Buyer shall give Seller written notice of any Title Defects alleged by Buyer within forty-five ten (4510) days after prior to the Execution Closing Date. Such notice (a “Defect Notice”) shall be in writing and shall include: include (i) a description of each the Title Defect; , and (ii) the Allocated Value of the Properties affected by each Title Defect; (iii) the amount by which Buyer believes the Allocated Value of each of such Properties Well or Lease has been reduced because of each such Title Defect, and (iv) documentation or other evidence reasonably supporting Buyer’s assertion of each Title Defect and the reduction in Allocated Value asserted pursuant to the preceding clause (iii) with respect thereto, including the specific computations on which Buyer is relying for such reduction. For the purposes of this Section 5.02(b), Buyer shall be deemed to have waived all Title Defects of which Seller has not been given timely notice by Buyer and all Title Defects that do not meet the requirements thresholds for an adjustment set forth in Section 5.02(a5.2(a). All adjustments to the Purchase Price based on Title Defects will be based on the Allocated Values attributable to the affected Properties. Upon timely delivery of a Defect Notice under this Section 5.02, Buyer and Seller Party will in good faith negotiate the validity of the Title Defect and the amount of any adjustment to the Purchase Price using the following criteria:
(i) If the alleged Title Defect is based on owning a Net Revenue Interest in a Property which is less than the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title in such Property, then a downward adjustment to the Purchase Price shall be calculated by multiplying the Allocated Value set forth on Schedule 5.01(a-1) or Schedule 5.01(a-2) for such Property by a fraction, the numerator of which is an amount equal to the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title to such Property, less the Net Revenue Interest to which the Seller Party is actually entitled taking such Title Defect into account, and the denominator of which is the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title to such Property.
(ii) If the Title Defect is based on a lien upon a Property that is liquidated in amount, then the adjustment is the lesser of the amount necessary to remove such lien from the affected Property or the Allocated Value of the affected Property.
(iii) If the Title Defect is based on an obligation, burden or liability upon a Property for which the Buyer’s economic detriment is not liquidated but can be estimated with reasonable certainty, then, subject to the other provisions hereof, the adjustment is the lesser of the amount necessary to compensate Buyer for the adverse economic effect on the affected Property or the Allocated Value of the affected Property.
(iv) If the Title Defect is based on owning fewer Net Acres in a Property that is identified on Schedule 5.01(a-2) than those represented on Schedule 5.01(a-2), then the adjustment shall be calculated by multiplying the Allocated Value set forth for such Property on Schedule 5.01(a-2) by a fraction, the numerator of which is the number of Net Acres shown on Schedule 5.01(a-2) for such Property minus the actual number of Net Acres owned within such Property taking into account such Title Defect, and the denominator of which is the number of Net Acres shown on Schedule 5.01(a-2) for such Property.
(c) Subject to the limitations limitation contained in Section 5.02(a5.2(a), a Property affected by a Title Defect of a Well and the Leases comprising the production unit or proration unit for the Well shall be excluded from the Assets to be purchased by Buyer hereunder and the Purchase Price shall be reduced by an amount equal cured to the Allocated Value reasonable satisfaction of such Property unlessBuyer before the Closing, prior provided that Seller may cure the Title Defect to one (1) day Buyer’s reasonable satisfaction within 30 days following Closing. If the Title Defect cannot be cured before the Closing Date, either: (i) or within the Title Defect has been cured by Seller 30 day period following Closing to the reasonable satisfaction of Buyer; , then the parties shall negociate a reduction of the Purchase Price to reflect the diminution of value due to the Title Defect in accordance with Section 2.2 unless prior to closing, (iii) Buyer agrees to waive the relevant Title Defect and purchase the affected Asset(s) Interests notwithstanding such Title Defect; the defect, or (iiiii) if such Title Defect is described in Section 5.02(b)Seller agrees to indemnify Buyer against all losses, Buyer costs, expenses and Seller agree upon a reduction of the Purchase Price liabilities with respect to such Title Defect in accordance with the provisions thereofDefect.
(d) With respect to any Property affected by a Title Defect which is excluded from the Assets pursuant to Section 5.02(c), Seller shall have ninety (90) days after the Closing to cure any such Title Defect, and to the extent that such Title Defect is cured to Buyer’s reasonable satisfaction or waived by Buyer, the Parties shall include in the Second Closing each of the excluded Assets for which the Title Defects have been cured or waived. If any Title Defects have not been cured by Seller or waived by Buyer by the date of the Second Closing, then either Party shall have the right to elect to have the validity of such Title Defect and the amount of any adjustment to the Purchase Price determined by an Independent Expert pursuant to ARTICLE XI.
Appears in 1 contract
Samples: Purchase and Sale Agreement (Republic Resources Inc /Co/)
Title Defect Adjustments. (a) No action (including no adjustment to the Purchase Price) Price for Title Defects shall be required under Section 5.02(c) below in respect of any individual Title Defect made unless the value of such Title Defect equals or exceeds a threshold of (■) with respect to a Property. With respect to all Title Defects meeting such thresholdand until, no action (including no adjustment to the Purchase Price) shall be required under Section 5.02(c) except and only to the extent that the aggregate individual value of each Title Defect exceeds $25,000 net to Seller's Working Interest in the Well or Lease affected by the Title Defect or exceeds $75,000 in the aggregate for all such Title Defects and in all timely asserted Adverse Environmental Conditions meeting the individual claim threshold set forth in Section 6.02(a), net of all Title Benefit Offsets, exceeds a deductible equal to one and (■) of the Purchase Price as to all Seller PartiesXxxxx or Leases.
(b) Buyer shall give Seller written notice of any Title Defects alleged by Buyer within forty-five ten (4510) days after prior to the Execution Closing Date. Such notice (a “Defect Notice”) shall be in writing and shall include: include (i) a description of each the Title Defect; , and (ii) the Allocated Value of the Properties affected by each Title Defect; (iii) the amount by which Buyer believes the Allocated Value of each of such Properties Well or Lease has been reduced because of each such Title Defect, and (iv) documentation or other evidence reasonably supporting Buyer’s assertion of each Title Defect and the reduction in Allocated Value asserted pursuant to the preceding clause (iii) with respect thereto, including the specific computations on which Buyer is relying for such reduction. For the purposes of this Section 5.02(b), Buyer shall be deemed to have waived all Title Defects of which Seller has not been given timely notice by Buyer and all Title Defects that do not meet the requirements thresholds for an adjustment set forth in Section 5.02(a5.2(a). All adjustments to the Purchase Price based on Title Defects will be based on the Allocated Values attributable to the affected Properties. Upon timely delivery of a Defect Notice under this Section 5.02, Buyer and Seller Party will in good faith negotiate the validity of the Title Defect and the amount of any adjustment to the Purchase Price using the following criteria:
(i) If the alleged Title Defect is based on owning a Net Revenue Interest in a Property which is less than the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title in such Property, then a downward adjustment to the Purchase Price shall be calculated by multiplying the Allocated Value set forth on Schedule 5.01(a-1) or Schedule 5.01(a-2) for such Property by a fraction, the numerator of which is an amount equal to the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title to such Property, less the Net Revenue Interest to which the Seller Party is actually entitled taking such Title Defect into account, and the denominator of which is the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title to such Property.
(ii) If the Title Defect is based on a lien upon a Property that is liquidated in amount, then the adjustment is the lesser of the amount necessary to remove such lien from the affected Property or the Allocated Value of the affected Property.
(iii) If the Title Defect is based on an obligation, burden or liability upon a Property for which the Buyer’s economic detriment is not liquidated but can be estimated with reasonable certainty, then, subject to the other provisions hereof, the adjustment is the lesser of the amount necessary to compensate Buyer for the adverse economic effect on the affected Property or the Allocated Value of the affected Property.
(iv) If the Title Defect is based on owning fewer Net Acres in a Property that is identified on Schedule 5.01(a-2) than those represented on Schedule 5.01(a-2), then the adjustment shall be calculated by multiplying the Allocated Value set forth for such Property on Schedule 5.01(a-2) by a fraction, the numerator of which is the number of Net Acres shown on Schedule 5.01(a-2) for such Property minus the actual number of Net Acres owned within such Property taking into account such Title Defect, and the denominator of which is the number of Net Acres shown on Schedule 5.01(a-2) for such Property.
(c) Subject to the limitations limitation contained in Section 5.02(a5.2(a), a Property affected by a Title Defect of a Well and the Leases comprising the production unit or proration unit for the Well shall be excluded from the Assets to be purchased by Buyer hereunder and the Purchase Price shall be reduced by an amount equal cured to the Allocated Value reasonable satisfaction of such Property unlessBuyer before the Closing, prior provided that Seller may cure the Title Defect to one (1) day Buyer's reasonable satisfaction within 30 days following Closing. If the Title Defect cannot be cured before the Closing Date, either: (i) or within the Title Defect has been cured by Seller 30 day period following Closing to the reasonable satisfaction of Buyer; , then the parties shall negociate a reduction of the Purchase Price to reflect the diminution of value due to the Title Defect in accordance with Section 2.2 unless prior to closing, (iii) Buyer agrees to waive the relevant Title Defect and purchase the affected Asset(s) Interests notwithstanding such Title Defect; the defect, or (iiiii) if such Title Defect is described in Section 5.02(b)Seller agrees to indemnify Buyer against all losses, Buyer costs, expenses and Seller agree upon a reduction of the Purchase Price liabilities with respect to such Title Defect in accordance with the provisions thereofDefect.
(d) With respect to any Property affected by a Title Defect which is excluded from the Assets pursuant to Section 5.02(c), Seller shall have ninety (90) days after the Closing to cure any such Title Defect, and to the extent that such Title Defect is cured to Buyer’s reasonable satisfaction or waived by Buyer, the Parties shall include in the Second Closing each of the excluded Assets for which the Title Defects have been cured or waived. If any Title Defects have not been cured by Seller or waived by Buyer by the date of the Second Closing, then either Party shall have the right to elect to have the validity of such Title Defect and the amount of any adjustment to the Purchase Price determined by an Independent Expert pursuant to ARTICLE XI.
Appears in 1 contract
Title Defect Adjustments. (a) No action (including no adjustment to the Purchase Price) shall be required under Section 5.02(c) below in respect of any individual Title Defect unless the value of such Title Defect equals or exceeds a threshold of (■) with respect to a Property. With respect to all Title Defects meeting such threshold, no action (including no adjustment to the Purchase Price) shall be required under Section 5.02(c) except and only to the extent that the aggregate value of all such Title Defects and all timely asserted Adverse Environmental Conditions meeting the individual claim threshold set forth in Section 6.02(a), net of all Title Benefit Offsets, exceeds a deductible equal to one and (■) of the Purchase Price as to all Seller Parties.
(b) Buyer shall give Seller written notice of any Title Defects alleged by Buyer within forty-five at least three (453) days after prior to the Execution Closing Date. Such notice (a “Defect Notice”) shall be in writing and shall include: (i) a description of each Title Defect; (ii) the Allocated Value of the Properties affected by each Title Defect; (iii) the amount by which Buyer believes the Allocated Value of each of such Properties has been reduced because of each Title Defect, and (iv) documentation or other evidence reasonably supporting Buyer’s 's assertion of each Title Defect and the reduction in Allocated Value asserted pursuant to the preceding clause (iii) with respect thereto, including the specific computations on which Buyer is relying for such reduction. For the purposes of this Section 5.02(b), Buyer shall be deemed to have waived all Title Defects of which Seller has not been given timely notice and all Title Defects that that, individually or in the aggregate, do not meet the requirements set forth in Section 5.02(a5.03(a) and 5.03(b). All adjustments to the Purchase Price based on Title Defects will be based on the Allocated Values attributable to the affected Properties. Upon timely delivery of a Defect Notice under this Section 5.025.03, Buyer and Seller Party will in good faith negotiate the validity of the Title Defect and the amount of any adjustment to the Purchase Price using the following criteria:
(ia) If the alleged Title Defect is based on owning a Net Revenue Interest in a Property which is less than the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title in such Property, then a downward No action (including no adjustment to the Purchase Price Price) shall be calculated by multiplying required under this Article V in respect of any individual Title Defect unless the Allocated Value set forth on Schedule 5.01(a-1) or Schedule 5.01(a-2) for such Property by a fraction, the numerator value of which is an amount equal to the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title to such Property, less the Net Revenue Interest to which the Seller Party is actually entitled taking such Title Defect into accountequals or exceeds a threshold of One Thousand Five Hundred Dollars ($1,500.00) with respect to an Oil and Gas Property. With respect to all Title Defects meeting such threshold, no action (including no adjustment to the Purchase Price) shall be required under this Article V except and only to the denominator extent that the aggregate value of which is all such Title Defects and all timely asserted Adverse Environmental Conditions meeting the Net Revenue Interest percentage necessary for individual claim threshold set forth in Article VI, net of all Title Benefit Offsets, exceeds a deductible equal to one percent (1%) of the Seller Party to have had Good and Defensible Title to such PropertyPurchase Price.
(iib) If the With respect to each Well or Lease affected by any Title Defect is based on a lien upon a Property that is liquidated in amountreported under this Article V , then the adjustment is the lesser of the amount necessary to remove such lien from the affected Property or the Allocated Value of the affected Property.
(iii) If the Title Defect is based on an obligation, burden or liability upon a Property for which the Buyer’s economic detriment is not liquidated but can be estimated with reasonable certainty, then, subject to the other provisions hereof, the adjustment is the lesser of the amount necessary to compensate Buyer for the adverse economic effect on the affected Property or the Allocated Value of the affected Property.
(iv) If the Title Defect is based on owning fewer Net Acres in a Property that is identified on Schedule 5.01(a-2) than those represented on Schedule 5.01(a-2), then the adjustment shall be calculated by multiplying the Allocated Value set forth for such Property on Schedule 5.01(a-2) by a fraction, the numerator of which is the number of Net Acres shown on Schedule 5.01(a-2) for such Property minus the actual number of Net Acres owned within such Property taking into account such Title Defect, and the denominator of which is the number of Net Acres shown on Schedule 5.01(a-2) for such Property.
(c) Subject to the limitations contained in Section 5.02(a), a Property affected by a Title Defect shall be excluded from the Assets to be purchased by Buyer hereunder and the Purchase Price shall be reduced by an amount (the “Title Defect Amount”) equal to the reduction in the Allocated Value of for such Property unless, prior to one (1) day before the Closing Date, either: (i) the Title Defect has been cured Well or Lease caused by Seller to the reasonable satisfaction of Buyer; (ii) Buyer agrees to waive the relevant Title Defect and purchase the affected Asset(s) notwithstanding such Title Defect; or (iii) if such Title Defect is described in Section 5.02(b), Buyer and Seller agree upon a reduction of the Purchase Price with respect to such Title Defect in accordance with the provisions thereof.
(d) With respect to any Property affected by a Title Defect which is excluded from the Assets pursuant to Section 5.02(c), Seller shall have ninety (90) days after the Closing to cure any such Title Defect, and to the extent that such Title Defect is cured to Buyer’s reasonable satisfaction or waived by Buyer, the Parties shall include in the Second Closing each of the excluded Assets for which the Title Defects have been cured or waived. If any Title Defects have not been cured by Seller or waived by Buyer by the date of the Second Closing, then either Party shall have the right to elect to have the validity of such Title Defect and the amount of any adjustment to the Purchase Price as determined by an Independent Expert pursuant to ARTICLE XISection 5.03.
Appears in 1 contract
Samples: Membership Interest Purchase Agreement (EV Energy Partners, LP)
Title Defect Adjustments. (a) No action (including no adjustment to the Purchase Price) shall be required under Section 5.02(c) below in respect of any individual Title Defect unless the value of such Title Defect equals or exceeds a threshold of One Thousand Five Hundred Dollars (■$1,500.00) with respect to a Property. With respect to all Title Defects meeting such threshold, no action (including no adjustment to the Purchase Price) shall be required under Section 5.02(c) except and only to the extent that the aggregate value of all such Title Defects and all timely asserted Adverse Environmental Conditions meeting the individual claim threshold set forth in Section 6.02(a), net of all Title Benefit Offsets, exceeds a deductible equal to one and percent (■1%) of the Purchase Price as to all both Seller Parties.
(b) Buyer shall give Seller written notice of any Title Defects alleged by Buyer within forty-five at least three (453) days after prior to the Execution Closing Date. Such notice (a “Defect Notice”) shall be in writing and shall include: (i) a description of each Title Defect; (ii) the Allocated Value of the Properties affected by each Title Defect; (iii) the amount by which Buyer believes the Allocated Value of each of such Properties has been reduced because of each Title Defect, and (iv) documentation or other evidence reasonably supporting Buyer’s assertion of each Title Defect and the reduction in Allocated Value asserted pursuant to the preceding clause (iii) with respect thereto, including the specific computations on which Buyer is relying for such reduction. For the purposes of this Section 5.02(b)Article V, Buyer shall be deemed to have waived all Title Defects of which Seller has not been given timely notice and all Title Defects that do not meet the requirements set forth in Section 5.02(a). All adjustments to the Purchase Price based on Title Defects will be based on the Allocated Values attributable to the affected Properties. Upon timely delivery of a Defect Notice under this Section 5.02, Buyer and Seller Party will in good faith negotiate the validity of the Title Defect and the amount of any adjustment to the Purchase Price using the following criteria:
(i) If the alleged Title Defect is based on owning a Net Revenue Interest in a Property which is less than the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title in such Property, then a downward adjustment to the Purchase Price shall be calculated by multiplying the Allocated Value set forth on Schedule 5.01(a-1) or Schedule 5.01(a-25.01(a) for such Property by a fraction, the numerator of which is an amount equal to the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title to such Property, less the Net Revenue Interest to which the Seller Party is actually entitled taking such Title Defect into account, and the denominator of which is the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title to such Property.
(ii) If the Title Defect is based on a lien upon a Property that is liquidated in amount, then the adjustment is the lesser of the amount necessary to remove such lien from the affected Property or the Allocated Value of the affected Property.
(iii) If the Title Defect is based on an obligation, burden or liability upon a Property for which the Buyer’s economic detriment is not liquidated but can be estimated with reasonable certainty, then, subject to the other provisions hereof, the adjustment is the lesser of the amount necessary to compensate Buyer for the adverse economic effect on the affected Property or the Allocated Value of the affected Property.
(iv) If the Title Defect is based on owning fewer Net Acres in a Property that is identified on Schedule 5.01(a-2) than those represented on Schedule 5.01(a-2), then the adjustment shall be calculated by multiplying the Allocated Value set forth for such Property on Schedule 5.01(a-2) by a fraction, the numerator of which is the number of Net Acres shown on Schedule 5.01(a-2) for such Property minus the actual number of Net Acres owned within such Property taking into account such Title Defect, and the denominator of which is the number of Net Acres shown on Schedule 5.01(a-2) for such Property.
(c) Subject to the limitations contained in Section 5.02(a), a Property affected by a Title Defect shall be excluded from the Assets to be purchased by Buyer hereunder and the Purchase Price shall be reduced by an amount equal to the Allocated Value of such Property unless, prior to one (1) day before the Closing Date, either: (i) the Title Defect has been cured by Seller to the reasonable satisfaction of Buyer; (ii) Buyer agrees to waive the relevant Title Defect and purchase the affected Asset(s) notwithstanding such Title Defect; or (iii) if such Title Defect is described in Section 5.02(b), Buyer and Seller agree upon a reduction of the Purchase Price with respect to such Title Defect in accordance with the provisions thereofDefect.
(d) With respect to any Property property affected by a Title Defect which is excluded from the Assets pursuant to Section 5.02(c), the Seller shall have ninety sixty (9060) days after the Closing to cure any such Title Defect, and to the extent that such Title Defect is cured to Buyer’s reasonable satisfaction or waived by Buyersatisfaction, the Parties shall include in the Second Closing each of the excluded Assets for which the Title Defects have been cured or waivedcured. If any Title Defects have not been cured by Seller or waived by Buyer by the date of the Second Closing, then either Party the affected Assets, automatically and without need to amend this Agreement, shall be removed from this Agreement and the Parties shall have the right no further obligations to elect to have the validity of such Title Defect and the amount of any adjustment each other with respect to the Purchase Price determined by an Independent Expert pursuant same, unless Seller and Buyer agree in writing to ARTICLE XIproceed with a closing on such Assets.
Appears in 1 contract
Samples: Purchase and Sale Agreement (EV Energy Partners, LP)
Title Defect Adjustments. (a) No action (including no Purchaser and Sellers shall, with respect to each Title Defect Property, attempt to agree upon an appropriate adjustment to the Base Purchase PricePrice (the "Defect Adjustment Amount") shall be required under Section 5.02(cto account for such matters, in accordance with the following principles:
(A) below in respect of any individual If the Title Defect unless is a mortgage, lien, encumbrance or other charge which is liquidated in amount, then the value of such adjustment would be the amount necessary to be paid to remove the Title Defect equals or exceeds a threshold of (■) with respect to a from the affected Property. With respect to all Title Defects meeting such threshold, no action (including no adjustment to the Purchase Price) shall be required under Section 5.02(c) except and only to the extent that the aggregate value of all such Title Defects and all timely asserted Adverse Environmental Conditions meeting the individual claim threshold set forth in Section 6.02(a), net of all Title Benefit Offsets, exceeds a deductible equal to one and (■) of the Purchase Price as to all Seller Parties.
(bB) Buyer shall give Seller written notice of any Title Defects alleged by Buyer within forty-five (45) days after the Execution Date. Such notice (a “Defect Notice”) shall be in writing and shall include: (i) a description of each Title Defect; (ii) the Allocated Value of the Properties affected by each Title Defect; (iii) the amount by which Buyer believes the Allocated Value of each of such Properties has been reduced because of each Title Defect, and (iv) documentation or other evidence reasonably supporting Buyer’s assertion of each Title Defect and the reduction in Allocated Value asserted pursuant to the preceding clause (iii) with respect thereto, including the specific computations on which Buyer is relying for such reduction. For the purposes of this Section 5.02(b), Buyer shall be deemed to have waived all Title Defects of which Seller has not been given timely notice and all Title Defects that do not meet the requirements set forth in Section 5.02(a). All adjustments to the Purchase Price based on Title Defects will be based on the Allocated Values attributable to the affected Properties. Upon timely delivery of a Defect Notice under this Section 5.02, Buyer and Seller Party will in good faith negotiate the validity of If the Title Defect and the amount of results from any adjustment to the Purchase Price using the following criteria:
(i) If the alleged Title Defect is based on owning Seller having a lesser Net Revenue Interest in a Property which is less than the Net Revenue Interest percentage necessary for specified therefor in Exhibit A, the Seller Party to have had Good and Defensible Title in such Property, then a downward adjustment Defect Adjustment Amount shall be equal to the Purchase Price shall be calculated product obtained by multiplying the Allocated Value set forth on Schedule 5.01(a-1) or Schedule 5.01(a-2) for Proportionate Share of such Property by a fraction, the numerator of which is an amount equal to the reduction in the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title to such Property, less the Net Revenue Interest to which the Seller Party is actually entitled taking such Title Defect into account, and the denominator of which is the Net Revenue Interest percentage necessary specified for such Property in Exhibit A. If the Title Defect results from any Seller having a greater Working Interest in a Property than the Working Interest specified therefor in Exhibit A, the Defect Adjustment Amount shall be equal to the discounted value of the increase in the costs and expenses forecasted with respect to such Property for the Seller Party period from and after the Effective Time which is attributable to have had Good such increase in a Seller's Working Interest. No Defect Adjustment Amount shall be allowed on account of and Defensible Title to the extent that an increase in a Seller's Working Interest in a Property has the effect of proportionately increasing such Seller's Net Revenue Interest in such Property.
(iiC) If the Title Defect is based on a lien represents an obligation, encumbrance, burden, discrepancy or charge upon a Property that is liquidated or other defect in amount, then the adjustment is the lesser of the amount necessary title to remove such lien from the affected Property of a type not described in paragraphs (A) or (B) above, the Allocated Value adjustment amount shall be determined by taking into account the Proportionate Share of the Property so affected, the portion of the Property affected by the Title Defect, the legal effect of the Title Defect, the potential economic effect of the Title Defect over the life of the affected Property and such other factors as are necessary to make a proper evaluation of the value of the Title Defect.
(D) Notwithstanding any other provision contained herein, the aggregate adjustment attributable to the effect of all Title Defects related to a given Property (other than those described in Section 6.1(A)) shall not exceed the Proportionate Share of such Property.
(iiiE) Should the Parties be unable to agree upon an appropriate adjustment in light of the factors set forth in this Section 6.1, then Sellers shall have the right prior to Closing to elect to either (i) refer the matter for arbitration in accordance with the provisions of Section 6.1(G) below, in which case, subject to Section 6.1(F), the price to be paid at Closing shall be reduced by the average of Sellers' and Purchaser's estimates of the diminution in the value of the Property affected thereby resulting from such Title Defect (based in part on each Party's assertion of the applicable Proportionate Share), or (ii) exclude the interest of Sellers in the Property affected thereby from the transaction contemplated hereby, in which case the Base Purchase Price will be reduced by the Proportionate Share of the Property affected thereby asserted by Purchaser and such Property will become an Excluded Asset. Notwithstanding anything herein provided to the contrary, Sellers shall have the right on or before 90 days following the Closing Date (the "Final Cure Date") to cure (in a manner acceptable to a reasonable purchaser of oil and gas properties) any Title Defect not cured by Sellers on or before the Closing Date which relate to a Property that was either conveyed to Purchaser at the Closing or excluded from the sale of Assets pursuant to Section 5.1(B). If the any such Title Defect is based on an obligationso cured by Sellers, burden or liability upon a Property for Purchaser agrees to promptly pay to Sellers the amount, if any, by which the Buyer’s economic detriment is not liquidated but can be estimated with reasonable certainty, then, subject to Base Purchase Price was reduced at the other provisions hereof, the adjustment is the lesser Closing on account of the amount necessary to compensate Buyer for the adverse economic effect on the affected Property or the Allocated Value of the affected Property.
(iv) If the Title Defect is based on owning fewer Net Acres in a Property that is identified on Schedule 5.01(a-2) than those represented on Schedule 5.01(a-2), then the adjustment shall be calculated by multiplying the Allocated Value set forth for such Property on Schedule 5.01(a-2) by a fraction, the numerator of which is the number of Net Acres shown on Schedule 5.01(a-2) for such Property minus the actual number of Net Acres owned within such Property taking into account such Title Defect, and contemporaneously with such payment, Sellers and Buyer will execute and deliver to each other the denominator documents that would have been executed and delivered in connection with the sale of which is such Assets at the number of Net Acres shown on Schedule 5.01(a-2) for such PropertyClosing.
(cF) Subject to Notwithstanding the limitations contained in Section 5.02(a)foregoing, a Property affected by a Title Defect shall be excluded from if the Assets to be purchased by Buyer hereunder and the aggregate Base Purchase Price shall be reduced by an amount equal to the Allocated Value of such Property unless, prior to one reduction (1) day before the Closing Date, either: (i) the Title Defect has been cured by Seller to the reasonable satisfaction of Buyer; (ii) Buyer agrees to waive the relevant Title Defect and purchase the affected Asset(s) notwithstanding such Title Defect; or (iii) if such Title Defect is described in Section 5.02(b), Buyer and Seller agree upon a reduction of the Purchase Price with respect to such Title Defect in accordance with the provisions thereof.
(d) With respect to any Property affected by a Title Defect which is excluded from the Assets pursuant to Section 5.02(c), Seller shall have ninety (90) days after the Closing to cure any such Title Defect, and to the extent that such Title Defect is cured to Buyer’s reasonable satisfaction or waived by Buyer, the Parties shall include in the Second Closing each of the excluded Assets for which the Title Defects have been cured or waived. If any Title Defects have not been cured by Seller or waived by Buyer by the date of the Second Closing, then either Party shall have the right to elect to have the validity of such Title Defect and less the amount of any adjustment for Increased Value not utilized to increase the Base Purchase Price) attributable to the interest of all Sellers which would result from the above provided for procedure (whether determined at Closing or pursuant to the arbitration pursuant to Section 6.1(G) below) does not exceed 2% of the Base Purchase Price, then the Base Purchase Price determined by an Independent Expert shall not be adjusted, and if pursuant to ARTICLE XI.the provisions above set forth, a Property or Properties were to be excluded from the transaction, none of the Properties which would be excluded by such procedure shall be
Appears in 1 contract
Samples: Asset Purchase and Sale Agreement (Delta Petroleum Corp/Co)
Title Defect Adjustments. (a) No action (including no adjustment to the Purchase Price) shall be required under Section 5.02(c5.2(c) below in respect of any individual Title Defect unless the value of such Title Defect equals or exceeds a threshold of (■) $15,000 with respect to a Property. With respect to all Title Defects meeting such threshold, no action (including no adjustment to the Purchase Price) shall be required under Section 5.02(c5.2(c) except and only to the extent that the aggregate value of all such Title Defects and all timely asserted Adverse Environmental Conditions meeting the individual claim threshold set forth in Section 6.02(a6.2(a), net of all Title Benefit OffsetsOffsets (as defined in Section 5.3 below), exceeds a deductible equal to one and (■) of the Purchase Price $2,131,500 as to all both Seller Parties.
(b) Buyer shall give Seller written notice of any Title Defects alleged by Buyer within forty-five at least ten (4510) days after prior to the Execution Closing Date. Such notice (a “Defect Notice”) shall be in writing and shall include: (i) a description of each Title Defect; (ii) the Allocated Value of the Properties affected by each Title Defect; (iii) the amount by which Buyer believes the Allocated Value of each of such Properties has been reduced because of each Title Defect, and (iv) documentation or other evidence reasonably supporting Buyer’s 's assertion of each Title Defect and the reduction in Allocated Value asserted pursuant to the preceding clause (iii) with respect thereto, including the specific computations on which Buyer is relying for such reduction. For the purposes of this Section 5.02(b), Buyer shall be deemed to have waived all Title Defects of which Seller has not been given timely notice and all Title Defects that that, individually or in the aggregate, do not meet the requirements set forth in Section 5.02(a5.2(a). All adjustments to the Purchase Price based on Title Defects will be based on the Allocated Values attributable to the affected Properties. Upon timely delivery of a Defect Notice under this Section 5.02, Buyer and Seller Party will in good faith negotiate the validity of the Title Defect and the amount of any adjustment to the Purchase Price using the following criteria:
(i) If the alleged Title Defect is based on owning a Net Revenue Interest in a Property which is less than the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title in such Property, then a downward adjustment to the Purchase Price shall be calculated by multiplying the Allocated Value set forth on Schedule 5.01(a-1) or Schedule 5.01(a-2) for such Property by a fraction, the numerator of which is an amount equal to the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title to such Property, less the Net Revenue Interest to which the Seller Party is actually entitled taking such Title Defect into account, and the denominator of which is the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title to such Property.
(ii) If the Title Defect is based on a lien upon a Property that is liquidated in amount, then the adjustment is the lesser of the amount necessary to remove such lien from the affected Property or the Allocated Value of the affected Property.
(iii) If the Title Defect is based on an obligation, burden or liability upon a Property for which the Buyer’s economic detriment is not liquidated but can be estimated with reasonable certainty, then, subject to the other provisions hereof, the adjustment is the lesser of the amount necessary to compensate Buyer for the adverse economic effect on the affected Property or the Allocated Value of the affected Property.
(iv) If the Title Defect is based on owning fewer Net Acres in a Property that is identified on Schedule 5.01(a-2) than those represented on Schedule 5.01(a-2), then the adjustment shall be calculated by multiplying the Allocated Value set forth for such Property on Schedule 5.01(a-2) by a fraction, the numerator of which is the number of Net Acres shown on Schedule 5.01(a-2) for such Property minus the actual number of Net Acres owned within such Property taking into account such Title Defect, and the denominator of which is the number of Net Acres shown on Schedule 5.01(a-2) for such Property.
(c) Subject to the limitations contained in Section 5.02(a5.2(a), a Property property affected by a Title Defect shall be excluded from the Assets to be purchased by Buyer hereunder and the Purchase Price shall be reduced by an amount equal to the Allocated Value of such Property property unless, prior to one (1) day before the Closing Date, either: (i) the Title Defect has been cured by Seller to the reasonable satisfaction of Buyercured; (ii) Buyer agrees to waive the relevant Title Defect and purchase the affected Asset(s) notwithstanding such Title Defect; or (iii) if Seller agrees to indemnify Buyer against all losses, costs, expenses and liabilities with respect to such Title Defect is described in Section 5.02(b), Defect; or (iv) Buyer and Seller agree upon a reduction of the Purchase Price with respect to such Title Defect in accordance with the provisions thereofDefect.
(d) With respect to any Property affected by a Title Defect which is excluded from the Assets pursuant to Section 5.02(c), Seller shall have ninety (90) days after the Closing to cure any such Title Defect, and to the extent that such Title Defect is cured to Buyer’s reasonable satisfaction or waived by Buyer, the Parties shall include in the Second Closing each of the excluded Assets for which the Title Defects have been cured or waived. If any Title Defects have not been cured by Seller or waived by Buyer by the date of the Second Closing, then either Party shall have the right to elect to have the validity of such Title Defect and the amount of any adjustment to the Purchase Price determined by an Independent Expert pursuant to ARTICLE XI.
Appears in 1 contract
Samples: Purchase and Sale Agreement (EV Energy Partners, LP)
Title Defect Adjustments. (a) No action (including no adjustment to the Purchase Price) Price for Title Defects shall be required under Section 5.02(c) below in respect of any individual Title Defect made unless and until, as to each Ownership Interest, the value of such Title Defect equals or exceeds a threshold of (■) with respect to a Property. With respect to all Title Defects meeting exceeds $10,000 such threshold, no action (including no adjustment to the Purchase Price) shall be required under Section 5.02(c) except and only further subject to the extent that the aggregate value of all such Title Defects and all timely asserted Adverse Environmental Conditions meeting the individual claim threshold Transaction Deductible provision set forth in Section 6.02(a), net 12.16. Each Ownership Interest set forth on Schedule 1.01(a) shall constitute a separate asset for purposes of all this Article 6 and a Title Benefit Offsets, exceeds Defect that pertains to more than one Ownership Interest shall be considered a deductible equal to one and (■) of the Purchase Price separate Title Defect as to all Seller Partieseach Ownership Interest.
(b) Buyer shall give Seller written notice of any Title Defects alleged by Buyer within forty-five (45) days after the Execution Dateon or before September 15, 1998. Such notice (a “Defect Notice”) shall be in writing and shall include: (i) a description of each the Title Defect; , (ii) the Allocated Value of the Properties Ownership Interest affected by each the Title Defect; , (iii) the amount by which Buyer believes the Allocated Value of each of such Properties Ownership Interest has been reduced because of each such Title DefectDefect and the reasoning therefor, and (iv) documentation supporting documentation, including title opinions, title claims, or other evidence reasonably supporting Buyer’s assertion of each data that evidences the Title Defect and the reduction in Allocated Value asserted pursuant to the preceding clause (iii) with respect thereto, including the specific computations on which Buyer is relying for such reductionDefect. For the purposes of this Section 5.02(b), Buyer shall be deemed to have waived all Title Defects of which Seller has not been given timely notice by Buyer and all Title Defects that do for which a remedy is not meet the requirements set forth in Section 5.02(a). All adjustments to the Purchase Price based on Title Defects will be based on the Allocated Values attributable to the affected Properties. Upon timely delivery of a Defect Notice provided under this Section 5.02, Buyer and Seller Party will in good faith negotiate the validity of the Title Defect and the amount of any adjustment to the Purchase Price using the following criteria:
(i) If the alleged Title Defect is based on owning a Net Revenue Interest in a Property which is less than the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title in such Property, then a downward adjustment to the Purchase Price shall be calculated by multiplying the Allocated Value set forth on Schedule 5.01(a-1) or Schedule 5.01(a-2) for such Property by a fraction, the numerator of which is an amount equal to the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title to such Property, less the Net Revenue Interest to which the Seller Party is actually entitled taking such Title Defect into account, and the denominator of which is the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title to such Property.
(ii) If the Title Defect is based on a lien upon a Property that is liquidated in amount, then the adjustment is the lesser of the amount necessary to remove such lien from the affected Property or the Allocated Value of the affected Property.
(iii) If the Title Defect is based on an obligation, burden or liability upon a Property for which the Buyer’s economic detriment is not liquidated but can be estimated with reasonable certainty, then, subject to the other provisions hereof, the adjustment is the lesser of the amount necessary to compensate Buyer for the adverse economic effect on the affected Property or the Allocated Value of the affected Property.
(iv) If the Title Defect is based on owning fewer Net Acres in a Property that is identified on Schedule 5.01(a-2) than those represented on Schedule 5.01(a-2), then the adjustment shall be calculated by multiplying the Allocated Value set forth for such Property on Schedule 5.01(a-2) by a fraction, the numerator of which is the number of Net Acres shown on Schedule 5.01(a-2) for such Property minus the actual number of Net Acres owned within such Property taking into account such Title Defect, and the denominator of which is the number of Net Acres shown on Schedule 5.01(a-2) for such PropertyArticle 6.
(c) Subject to the limitations contained in Section 5.02(a), a Property (a) above if an Ownership Interest is affected by a Title Defect shall be excluded from the Assets to be purchased by Buyer hereunder and Defect, the Purchase Price shall be reduced by the net reduction in value of the pertinent property caused by the Title Defect (the "Defect Amount") based on the criteria listed in Section 6.01(d) as well as the likelihood that the Title Defect will cause a title failure (considering such matters as the length of time the Title Defect has existed without being subject to an adverse claim, the producing status of the property, the nature of the Defect, whether the potential claimant has executed a division order and/or received proceeds without asserting the title claim, and all of the other factors considered in connection with determining whether a matter is a Permitted Encumbrance) and also taking into account the method for attributing the Allocated Value for the relevant property, the legal and practical effect of the Title Defect or other breach, the probability of adverse impact of the Title Defect or breach of title warranty on the use and enjoyment of the property interest affected, and the predicted duration of the Title Defect or breach of title warranty over the life of the property involved. The amount equal to of any reduction shall not exceed the Allocated Value of such Property unlessthe Ownership Interest in question. A Purchase Price adjustment will not be made if, prior to one (1) day before the Closing DateNovember 15, either1998, at Seller's election: (i) the Title Defect has been cured by Seller to (consistent with the reasonable satisfaction of Buyer; standards contained herein) or (ii) Buyer for Title Defects for which there is a mere risk of title failure, Seller agrees to waive the relevant Title Defect indemnify Buyer against all losses, costs, expenses and purchase the affected Asset(s) notwithstanding such Title Defect; or (iii) if such Title Defect is described in Section 5.02(b), Buyer and Seller agree upon a reduction of the Purchase Price liabilities with respect to such Title Defect in accordance with the provisions up to Allocated Value thereof.
(d) With respect Without limiting Seller's right to any Property affected by dispute the existence of a Title Defect which is excluded from and subject to the Assets pursuant factors listed in Section 6.01(c) that may cause the Defect Amount of a Title Defect to Section 5.02(c), Seller shall have ninety (90) days after be less than the Closing to cure any such maximum potential economic effect of the Title Defect, and the Defect Amount shall take into account the following:
(i) If the Title Defect relates to failure of title to the extent entirety of HSRTW's title to an Ownership Interest, the maximum amount of the Defect Amount shall be the amount set forth as the value for that such Ownership Interest in Schedule 1.01(a).
(ii) If the Title Defect results from a lien, security interest, pledge or collateral assignment upon one or more Ownership Interests (or a portion thereof) which is cured liquidated in amount, then the maximum amount of the Defect Amount shall be the amount necessary to Buyer’s reasonable satisfaction remove such lien, security interest, pledge or waived by Buyercollateral assignment from HSRTW's title to such one or more Ownership Interests (or portion thereof).
(iii) If the Title Defect results from HSRTW having a lesser NRI in an Ownership Interest than the NRI specified therefor in Schedule 1.01(a), the Parties maximum amount of the Defect Amount shall include be equal to the product obtained by multiplying the value for that Ownership Interest in Schedule 1.01(a), by a 32 37 fraction, the numerator of which is the reduced NRI and the denominator of which is the NRI specified for such Ownership Interest in Schedule 1.01(a).
(iv) If the Title Defect results from HSRTW having a greater WI in an Ownership Interest than the WI specified therefor in Schedule 1.01(a), the maximum amount of the Defect Amount shall be equal to the present value discounted at 10% compounded annually) of the increase in Buyer's Projected Costs with respect to such Ownership Interest for the period from and after the Effective Time which is attributable to such increase in the Second Closing each WI.
(v) If the Title Defect results from any matter not described in paragraph (i), (ii), (iii), or (iv) above, then the maximum amount of the excluded Assets for which the Title Defects have been cured or waived. If any Title Defects have not been cured by Seller or waived by Buyer by the date Defect Amount shall be a portion of the Second Closingvalue set forth for that Ownership Interest in Schedule 1.01(a), then either Party shall have said portion to be equal to the right differences between the value of HSRTW's title to elect to have the validity of such Ownership Interest without such Title Defect and with such Title Defect (assuming the amount value without such Title Defect to be the value set forth in Schedule 1.01(a)).
(vi) If a Title Defect is not effective or does not affect HSRTW's title to an Ownership Interest throughout the entire productive life of any adjustment to such Ownership Interest, such fact shall be taken into account in determining the Defect Amount.
(vii) If a Title Defect affects only a portion of an Ownership Interest (as contrasted with an undivided interest in the entirety of such Ownership Interest) and a portion of the Purchase Price has not been allocated specifically to such portion of an Ownership Interest in Schedule 1.01(a), then for purposes of computing the Defect Amount, the Purchase Price allocated to such Ownership Interest shall be further allocated among the portions of such Ownership Interest in a fair and reasonable manner taking into account the values set forth in Schedule 1.01(a).
(viii) A Title Defect shall not result from a clerical, typographical or mathematical error (including the erroneous listing of an Oil and Gas Interest set forth on Schedule 1.01(a) in which HSRTW does not have an ownership interest) in the computation of HSRTW's WI or NRI as set forth in Schedule 1.01(a) and correction thereof would not be applied to the aggregate value of all Title Defects. Should such error be found, Buyer shall be entitled to a reduction in the Purchase Price based on the Allocated Value set forth on Schedule 1.01(a). Such reduction in the Purchase Price shall not be subject to the Transaction Deductible provision set forth in Section 12.16.
(ix) The Defect Amount for a Title Defect resulting from the general partner of Horizon electing to receive a distribution in kind of its share of the Oil and Gas Interests held by Horizon, shall be determined in accordance with Section 6.01(d)(iii) above except that such reduction shall not be subject to either the 33 38 $10,000 amount as set forth in Section 6.01(a) above, or the Transaction Deductible provisions set forth in Section 12.16.
(e) To the extent Seller and Buyer can reach agreement prior to Closing under Section 6.01(c) as to any particular Title Defect, the Purchase Price shall be adjusted under Section 2.02 for such agreed-upon amounts. As to all remaining Title Defects, Seller and Buyer shall attempt in good faith to reach agreement under (c) above by an Independent Expert pursuant November 15, 1998, and as to ARTICLE XI.Title Defects for which the parties can reach agreement, any monies that are owed shall be paid by the owing party to the other party by November 25,
Appears in 1 contract
Samples: Stock Purchase and Sale Agreement (Hs Resources Inc)
Title Defect Adjustments. (a) No action (including no adjustment to Upon receipt of the Purchase Price) shall be required under Section 5.02(c) below in respect of any individual Title Defect unless Notice:
A. Seller shall deliver written counter notice to Buyer within five (5) business days of receipt of the value of such Title Defect equals or exceeds a threshold of (■) with respect to a Property. With respect to all Title Defects meeting such threshold, no action (including no adjustment to the Purchase Price) shall be required under Section 5.02(c) except and only to the extent that the aggregate value of all such Title Defects and all timely asserted Adverse Environmental Conditions meeting the individual claim threshold set forth in Section 6.02(a), net of all Title Benefit Offsets, exceeds a deductible equal to one and (■) of the Purchase Price as to all Seller Parties.
(b) Buyer shall give Seller written notice of any Title Defects alleged by Buyer within forty-five (45) days after the Execution Date. Such notice (a “Defect Notice”) shall be in writing and shall include: Notice which states (i) a description of whether it agrees or disagrees that an asserted Title Defect exists; (ii) whether it agrees or disagrees with the Title Defect Value attributed to each Title Defect; (ii) the Allocated Value of the Properties affected by each Title Defect; and (iii) whether it will either (a) attempt to correct the amount by which Buyer believes the Allocated Value of each of such Properties has been reduced because of each asserted Title Defect, and or (ivb) documentation or other evidence reasonably supporting Buyer’s assertion of each not attempt to correct the Title Defect.
B. If Seller gives counter notice that it disagrees that an asserted Title Defect and exists, or that it disagrees with the reduction in Allocated Title Defect Value asserted pursuant attributed to a Title Defect, the preceding clause (iii) with respect thereto, including the specific computations on which Buyer is relying for such reduction. For the purposes of this Section 5.02(b), Buyer shall be deemed to have waived all Title Defects of which Seller has not been given timely notice and all Title Defects that do not meet the requirements set forth in Section 5.02(a). All adjustments to the Purchase Price based on Title Defects will be based on the Allocated Values attributable to the affected Properties. Upon timely delivery of a Defect Notice under this Section 5.02, Buyer and Seller Party will in good faith negotiate the validity existence of the Title Defect and the amount corresponding Title Defect Value will be determined in accordance with Article 4.4.
C. The failure of Seller to deliver written counter notice to Buyer within five (5) business days of receipt of the Title Defects Notice shall be deemed notice that Seller (i) agrees with all of the Title Defects properly asserted by Buyer in the Title Defect Notice; (ii) agrees with the Title Defect Value attributed to each of the Title Defects as specified in the Title Defect Notice; and (iii) will not attempt to correct any adjustment of the Title Defects.
D. If Seller gives counter notice that it agrees with a Title Defect Value asserted in the Title Defects Notice but that it will not attempt to correct the affected Title Defect, Buyer shall have the right to elect to (i) exclude the affected Asset from the Transaction (which Asset shall thereupon be deemed to be a Retained Asset of Seller) and reduce the Purchase Price using the following criteria:
(i) If the alleged Title Defect is based on owning a Net Revenue Interest in a Property which is less than the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title in such Property, then a downward adjustment to the Purchase Price shall be calculated by multiplying the Allocated Value set forth on Schedule 5.01(a-1) or Schedule 5.01(a-2) for such Property by a fraction, the numerator of which is an amount equal to the Net Revenue Interest percentage necessary for Allocated Value of the Seller Party to have had Good and Defensible Title to such PropertyRetained Asset, less the Net Revenue Interest to which the Seller Party is actually entitled taking such Title Defect into account, and the denominator of which is the Net Revenue Interest percentage necessary for the Seller Party to have had Good and Defensible Title to such Property.
or (ii) If reduce the Purchase Price by an amount equal to the Title Defect is based on a lien upon a Property that is liquidated in amountValue (the “Title Defect Adjustment”). However, if Buyer elects to reduce the Purchase Price by an amount equal to the Title Defect Value, then if, but only if, the adjustment is the lesser Title Defect Value exceeds fifty percent (50%) of the amount necessary to remove such lien from the affected Property or the Allocated Value of the affected Property.
Asset, Seller shall have the right to exclude such affected Asset from the Transaction (iii) If the Title Defect is based on an obligation, burden or liability upon which Asset shall thereupon be deemed a Property for which the Buyer’s economic detriment is not liquidated but can be estimated with reasonable certainty, then, subject to the other provisions hereof, the adjustment is the lesser Retained Asset of the amount necessary to compensate Buyer for the adverse economic effect on the affected Property or the Allocated Value of the affected Property.
(ivSeller) If the Title Defect is based on owning fewer Net Acres in a Property that is identified on Schedule 5.01(a-2) than those represented on Schedule 5.01(a-2), then the adjustment shall be calculated by multiplying the Allocated Value set forth for such Property on Schedule 5.01(a-2) by a fraction, the numerator of which is the number of Net Acres shown on Schedule 5.01(a-2) for such Property minus the actual number of Net Acres owned within such Property taking into account such Title Defect, and the denominator of which is the number of Net Acres shown on Schedule 5.01(a-2) for such Property.
(c) Subject to the limitations contained in Section 5.02(a), a Property affected by a Title Defect shall be excluded from the Assets to be purchased by Buyer hereunder and case the Purchase Price shall will be reduced by an amount equal to the Allocated Value of such Property unless, prior to one (1) day before the Closing Date, either: (i) Retained Asset.
E. If Seller gives counter notice that it agrees with the Title Defect has been cured by Seller Value but elects to correct the reasonable satisfaction of Buyer; (ii) Buyer agrees to waive the relevant Title Defect and purchase the affected Asset(s) notwithstanding such Title Defect; or (iii) if such Title Defect is described in Section 5.02(b), Buyer and Seller agree upon a reduction of the Purchase Price with respect to such Title Defect in accordance with the provisions thereof.
(d) With respect to any Property affected by a Title Defect which is excluded from the Assets pursuant to Section 5.02(c), Seller shall have ninety (90) days after the Closing to cure any such associated Title Defect, and then fails to cure the extent that such Title Defect is cured to Buyer’s reasonable satisfaction or waived by Buyer, the Parties shall include in the Second Closing each of the excluded Assets for which the Title Defects have been cured or waived. If any Title Defects have not been cured by Seller or waived by Buyer by the date of the Second before Closing, then either Party Buyer shall have the right to elect to: (i) exclude the affected Asset from the Transaction (which Asset shall thereupon be deemed to have be a Retained Asset of Seller) and reduce the validity Purchase Price by an amount equal to the Allocated Value of such Asset; or (ii) to allow Seller to cure such Title Defect after Closing.
F. If Buyer elects to allow Seller to cure any Title Defect after Closing, the affected Asset will be excluded from the Closing and the amount Purchase Price payable at Closing shall be reduced by the Allocated Value of such Asset. Seller shall then have one hundred eighty (180) calendar days after Closing to attempt to cure the Title Defect (the “Cure Period”). If Seller cures the Title Defect to Buyer’s reasonable satisfaction within the Cure Period, then Buyer will be obligated to tender to Seller the Allocated Value of the affected Asset (subject to appropriate adjustments to the Allocated Value to reflect: (i) any revenues and expenses attributable to the Asset which is the subject of the Title Defect between the Effective Date and the date the subject Asset is assigned to Buyer; and (ii) the Party which received or paid said revenues and/or expenses) in exchange for the simultaneous delivery of an assignment of the Asset from Seller to Buyer using an assignment form similar to that attached as Exhibit E. If Seller does not cure the Title Defect to Buyer’s reasonable satisfaction within the Cure Period, the Asset shall be a Retained Asset.
G. Notwithstanding the foregoing, no adjustment to the Purchase Price determined by an Independent Expert pursuant will be made unless the aggregate Title Defect Values of all uncured Title Defects exceeding the Individual Title Defect Threshold exceeds Six Hundred Fifteen Thousand Dollars (the “Title Defect Deductible”). In which case, the Purchase Price may be adjusted downward to ARTICLE XIthe extent the cumulative amount of all Title Defect Values that exceed the Individual Title Defect Threshold exceeds the Title Defect Deductible. In order to provide Seller a reasonable opportunity to cure any Title Defects prior to Closing, Buyer shall use reasonable efforts to provide the Title Defect Notice as soon as reasonably possible after becoming aware of or making its determination of the Title Defect. Buyer waives any remedy against Seller for individual Title Defects that do not exceed the Individual Title Defect Threshold and for all Title Defects in the event the Title Defect Deductible has not been met or for which adjustment is made as provided herein.
Appears in 1 contract
Samples: Purchase and Sale Agreement (Synergy Resources Corp)
