Title Defect Amount; Title Benefit Amount; Adjustments. (a) The amount by which the Allocated Value of any Company Lease, Company Unit or Company Well (or Company Leases, Company Units or Company Xxxxx if multiple Company Leases, Company Units or Company Xxxxx are affected) is reduced as a result of the existence of a Title Defect with respect thereto is the “Title Defect Amount”, which shall be determined in accordance with the following methodology, terms and conditions: (i) if Purchaser and Seller agree on the Title Defect Amount, then such amount shall be the Title Defect Amount; (ii) if the Title Defect represents a decrease in (A) the actual Net Revenue Interest for any Company Lease, Company Unit or Company Well below (B) the Net Revenue Interest stated on the Lease Annex for such Company Lease or Company Unit or on the Well Annex for such Company Well (and there is a proportionate decrease in the Working Interest for such Company Lease, Company Unit or Company Well below the Working Interest stated on the Lease Annex or on the Well Annex), then the Title Defect Amount shall be the product of (y) the Allocated Value for such Company Lease, Company Unit or Company Well multiplied by (z) one (1), minus a fraction, the numerator of which is the actual Net Revenue Interest for such Company Lease, Company Unit or Company Well and the denominator of which is the Net Revenue Interest for such Company Lease or Company Unit stated on the Lease Annex or for such Company Well as stated on the Well Annex; (iii) if the Title Defect is based on a Lien upon a Company Lease, Company Unit or Company Well that is undisputed and liquidated in amount, then the amount of such Title Defect shall be lesser of the amount necessary to remove such Lien from the affected Company Lease, Company Unit or Company Well and the Allocated Value of the affected Company Lease, Company Unit or Company Well; (iv) if the Title Defect is based on an obligation, encumbrance, Burden or charge upon or other defect in title to the affected Company Lease, Company Unit or Company Well of a type not described in Sections 6.5(a)(i), (ii) or (iii), then, subject to the other provisions hereof, the Title Defect Amount shall be determined by the Parties in good faith, taking into account all relevant factors, including the following: (A) the Allocated Value of that Company Lease, Company Unit or Company Well; (B) the portion of the affected Company Lease, Company Unit or Company Well affected by such Title Defect; (C) the legal effect of the Title Defect; (D) the potential economic effect of the Title Defect over the life of the affected Company Lease, Company Unit or Company Well; (E) the values placed upon the Title Defect by Purchaser and Seller; and (F) such other reasonable factors as are necessary to make a proper evaluation; (v) the Title Defect Amount with respect to any Company Lease, Company Unit or Company Well shall be determined without duplication of any costs or losses (A) included in another Title Defect Amount hereunder, (B) included in any remedy for a Casualty Loss under Section 5.13, or (C) for which Purchaser otherwise receives credit in the calculation of the adjustments to the Cash Purchase Price; and (vi) notwithstanding anything to the contrary set forth herein, except for the Title Defect Amounts described in clause (iv) of this Section 6.5(a), the aggregate Title Defect Amounts attributable to the effects of all Title Defects upon any Company Lease, Company Unit or Company Well shall not exceed the Allocated Value of such Company Lease, Company Unit or Company Well. (b) The only remedy for Title Benefits is the netting against Title Defect Amounts which is only available for Title Benefit Amounts exceeding the Title Threshold. Each “Title Benefit Amount” shall be determined in accordance with the following methodology, terms and conditions:
Appears in 5 contracts
Samples: Purchase and Sale Agreement (Talos Energy Inc.), Purchase and Sale Agreement (Talos Energy Inc.), Purchase and Sale Agreement (Talos Energy Inc.)
