Common use of Title Defect Amount Clause in Contracts

Title Defect Amount. If the Company elects not to cure any such Title Defect or the Company or the Unitholder Representative is unable to cure any such Title Defect prior to the Closing Date as provided above, then the amount of each such Title Defect (the “Title Defect Amount”) shall be determined as follows: (i) if Parent and the Company agree in writing on the Title Defect Amount, then that amount shall be the Title Defect Amount; (ii) subject to Section 4.1(g)(iv), if the Title Defect is a Lien that is undisputed and liquidated in amount, then the Title Defect Amount shall be the amount necessary to remove such Lien; (iii) if the Title Defect is a deed of trust, mortgage or similar instrument resulting in an encumbrance that is not subordinated to the lessee’s interest in the applicable mineral estate in an amount of Five Hundred Thousand and No /100 dollars ($500,000.00)or greater, then the Title Defect Amount shall be no more than the amount necessary to remove such encumbrance; (iv) if the Title Defect represents a negative discrepancy between (A) the actual Net Acres or Mineral Fee Net Acres, as applicable, for the applicable Target Zone for a Lease or Fee Mineral and (B) the Net Acres or Mineral Fee Net Acres, as applicable, for the applicable Target Zone for such Lease or Fee Mineral as set forth on Annex A-1 or Annex A-3, as applicable, then the Title Defect Amount shall be the product of (x) the Allocated Value of such Lease or Fee Mineral multiplied by (y) a fraction (1) the numerator of which is the absolute value of the amount of such discrepancy and (2) the denominator of which is the Net Acres or Mineral Fee Net Acres, as applicable, for the applicable Target Zone for such Lease or Fee Mineral as set forth in on Annex A-1 or Annex A-3, as applicable; (v) if the Title Defect represents a negative discrepancy between (A) the actual Net Revenue Interest for a Well (as to the currently producing formation), a Lease (as to the applicable Target Zone), or a Well-In-Progress (as to the applicable Target Zone), and (B) the Net Revenue Interest set forth on Annex A-1 for such Lease, Annex A-2 for such Well, or Annex A-6 for such Well-In-Progress, as applicable, (the “Scheduled NRI”), then the Title Defect Amount shall be the product of (x) the Allocated Value of such Lease, Well or Well-In-Progress, as applicable, multiplied by (y) a fraction (1) the numerator of which is the absolute value of the amount of such discrepancy and (2) the denominator of which is the Scheduled NRI for such Lease, Well or Well-In-Progress, as applicable; (vi) if the Title Defect is a Prescription Defect, then the Title Defect Amount shall be the product of (x) the Allocated Value of such Lease multiplied by (y) a fraction (1) the numerator of which is the length of time until such Lease will expire due to prescription or other Law and (2) the denominator of which is the remaining primary term under such Lease; (vii) if the Title Defect represents an obligation, encumbrance upon or other defect in title of a type not described above, the Title Defect Amount shall be determined by taking into account the Allocated Value of the affected Title Defect Property, the portion of the Title Defect 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 Title Defect Property, as applicable, and such other reasonable factors as are necessary to make a proper evaluation; (viii) notwithstanding anything to the contrary in this Article IV, the sum of all Title Defect Amounts with respect to any particular Title Defect Property shall not exceed the Allocated Value of such Title Defect Property; and (ix) the Title Defect Amount with respect to a Title Defect shall be determined without duplication of any costs or Losses included in another Title Defect Amount hereunder.

Title Defect Amount. If the Company elects any Title Defect is not cured or removed prior to cure any Closing and Buyer does not waive such Title Defect or the Company or the Unitholder Representative is unable to cure any such Title Defect prior to the Closing Date as provided aboveDefect, then the Purchase Price payable at Closing by Buyer shall be reduced pursuant to Article 11(a)(iv) by an amount of each such Title Defect equal to the following (hereinafter referred to as the “Title Defect Amount”) shall be determined as follows:): (i) if Parent Buyer and the Company Seller agree in writing on the Title Defect Amountamount, then that amount shall be the Title Defect Amount; (ii) subject to Section 4.1(g)(iv), if the Title Defect is a Lien that is undisputed and liquidated in amount, then the Title Defect Amount shall be the amount necessary to remove such Lien; (iii) if the Title Defect is a deed of trust, mortgage or similar instrument resulting in an encumbrance that is not subordinated to the lessee’s interest in the applicable mineral estate in an amount of Five Hundred Thousand and No /100 dollars ($500,000.00)or greater, then the Title Defect Amount shall be no more than the amount necessary to remove such encumbrance; (iv) if the Title Defect represents a negative discrepancy between decrease in (A) the actual Net Acres or Mineral Fee Net Acresnet revenue interest for any Well, as applicable, for the applicable Target Zone for a Lease or Fee Mineral and below (B) the Net Acres or Mineral Fee Net Acres, as applicable, for the applicable Target Zone net revenue interest set forth in Exhibit B for such Lease or Fee Mineral as set forth on Annex A-1 or Annex A-3, as applicableWell, then the Title Defect Amount shall be the product of (xy) the Allocated Value of such Lease or Fee Mineral Well multiplied by (yz) a fraction (1) fraction, the numerator of which is the absolute value of net revenue interest shown on Exhibit B minus the amount of actual net revenue interest for such discrepancy Well and (2) the denominator of which is the Net Acres or Mineral Fee Net Acres, as applicable, for the applicable Target Zone net revenue interest for such Lease or Fee Mineral as Well set forth in on Annex A-1 or Annex A-3, as applicableExhibit B; (viii) if the Title Defect represents Seller owning a negative discrepancy between (A) the actual Net Revenue Interest for working interest in a Well (as or Property which is larger than the Working Interest shown on Exhibit B, but only to the currently producing formation), extent there is not a Lease (as to proportionate increase in the applicable Target Zone), or a Well-In-Progress (as to the applicable Target Zone), and (B) the Net Revenue Interest set forth on Annex A-1 net revenue interest for such Lease, Annex A-2 for such Well, Well or Annex A-6 for such Well-In-Progress, as applicable, (the “Scheduled NRI”)Property, then the Title Defect Amount shall be the product of (xy) the Allocated Value of such Lease, Well or Well-In-Progress, as applicable, Property multiplied by (yz) a fraction (1) fraction, the numerator of which is the absolute value of the amount of such discrepancy working interest increase and (2) the denominator of which is the Scheduled NRI working interest shown for such Lease, Well or Property on Exhibit B. (iv) if the Title Defect represents a suspended interest or non-consent/deemed non-consent election by Seller in a Well-In-Progress, other than those disclosed on Schedule 5(f), which causes Seller to not receive any revenue from such Well, the Title Defect Amount shall be the Allocated Value for such Well. (v) if the Title Defect results from a lack of information provided by Seller to prove Seller’s ownership of any or all of the Wxxxx, as applicable;shown on Exhibit B, then (a) if Buyer is able to calculate a working interest and/or net revenue interest from the limited title documentation provided by Seller for such Well, the Title Defect amount shall be the Allocated Value for such Well multiplied by the difference between the working interest and/or net revenue interest shown on Exhibit B for such Well and the working interest and/or net revenue interest for such Well calculated by Buyer, or (b) if Buyer is unable to calculate a working interest and/or net revenue interest from the limited title documentation provided by Seller for such Well, the Title Defect amount shall be the Allocated Value for such Well. (vi) if the Title Defect consists of a lien, encumbrance or other charge that is a Prescription Defectundisputed and liquidated in amount, then the Title Defect Amount shall be the product of (x) undisputed and liquidated amount necessary to be paid to remove the Allocated Value of such Lease multiplied by (y) a fraction (1) the numerator of which is the length of time until such Lease will expire due to prescription or other Law and (2) the denominator of which is the remaining primary term under such Lease;Title Defect; and (vii) if the Title Defect represents an obligation, encumbrance upon or other defect in title is of a type not described above in subsections (i) through (v) above, then, in each case, the Title Defect Amount shall be determined by taking into account the Allocated Value of the affected Title Defect PropertyProperty so affected, the portion of Seller’s interest in the Title Defect 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, the values placed upon the Title Defect Property, as applicable, by Buyer and Seller and such other reasonable factors as are necessary to make a proper evaluation; (viii) notwithstanding anything . In the event Seller and Buyer cannot agree on Title Defect Amount pursuant to the contrary in this Article IVforegoing, the sum then (A) Buyer’s good faith estimate of all Title Defect Amounts with respect to any particular Title Defect Property shall not exceed the Allocated Value of such Title Defect Property; and (ix) the Title Defect Amount with respect (pursuant to a Title Defect the foregoing) shall be determined without duplication used for determining whether the conditions to Closing have been met (and the amount, if any, of any costs or Losses included associated adjustment to be used for purposes of Closing) and (B) after Closing, the disputed amounts shall be finally resolved by a dispute resolution process using a single impartial arbitrator, with at least ten (10) years’ experience in another oil and gas title issues, to be selected by mutual agreement of the Seller and Buyer, or, in the event Buyer and the Seller cannot agree on an arbitrator, such arbitrator shall be selected by the Houston office of the American Arbitration Association. The arbitrator’s decision as to the Title Defect Amount hereundershall be final and not appealable. Buyer and Seller shall each bear its own attorneys’ fees and costs in such arbitration and the fees of such arbitrator shall be split equally between Buyer and Seller. Such arbitration shall be conducted in Houston, Texas. Once appointed, the arbitrator shall not have any ex parte communications with any of the affected parties.

Title Defect Amount. If the Company Seller elects not to cure any such Title Defect or the Company or the Unitholder Representative is unable to cure any such Title Defect prior to the Closing Date Cure Deadline as provided above, then the amount of each such Title Defect (the “Title Defect Amount”) shall be determined as follows: (i) if Parent Buyer and the Company Seller agree in writing on the Title Defect Amount, then that amount shall be the Title Defect Amount; (ii) subject to Section 4.1(g)(iv), if the Title Defect is a Lien that is undisputed and liquidated in amount, then the Title Defect Amount shall be the amount necessary to remove such Lien; (iii) if the Title Defect is a deed of trust, mortgage or similar instrument resulting in an encumbrance that is not subordinated to the lessee’s interest in the applicable mineral estate in an amount of Five Hundred Thousand and No /100 dollars ($500,000.00)or greater, then the Title Defect Amount shall be no more than the amount necessary to remove such encumbrance; (iv) if the Title Defect represents a negative discrepancy between (A) the actual Net Acres or Mineral Fee Net Acres, as applicable, for the applicable Target Zone for a Lease or Fee Mineral Development Property and (B) the Net Acres or Mineral Fee Net Acres, as applicable, for the applicable Target Zone for such Lease or Fee Mineral Development Property as set forth on Annex A-1 or Annex A-3, as applicable, then the Title Defect Amount shall be the product of (x) the Allocated Value of such Lease or Fee Mineral Development Property multiplied by (y) a fraction (1) the numerator of which is the absolute value of the amount of such discrepancy and (2) the denominator of which is the Net Acres or Mineral Fee Net Acres, as applicable, for the applicable Target Zone for such Lease or Fee Mineral Development Property as set forth in on Annex A-1 or Annex A-3, as applicable; provided that, (I) if a Title Defect results in a discrepancy as to some, but not all of the Target Zone for a Development Property, the Title Defect Amount for such Title Defect shall be determined by taking into account the partiality of such Title Defect and (II) if the Net Acre discrepancy pertains to a Development Property that is located partially within and partially outside of the boundaries of one or more Units for a Well or Unit Well Location, the fraction described in clause (y) above will be calculated based solely upon the Net Acre discrepancy for the portion of the Development Property located outside of the boundary of such Unit(s); and provided further that, if a Title Defect does not affect the applicable Development Property throughout its entire life, such Title Defect Amount determined pursuant to this Section 3.1(f)(iii) shall be reduced to take into account the applicable time period only; (viv) if the Title Defect represents a negative discrepancy between (A) the actual Net Revenue Interest for a Well (as to the currently producing formation), ) or a Lease Unit Well Location (as to the applicable Target Zone), or a Well-In-Progress (as to the applicable Target Zone), and (B) the Net Revenue Interest set forth on Annex A-1 for such Lease, Annex A-2 for such Well, Well or on Annex A-6 for such Well-In-ProgressUnit Well Location, as applicable, (the “Scheduled NRI”), then the Title Defect Amount shall be the product of (x) the Allocated Value of such Lease, Well or Well-In-ProgressUnit Well Location, as applicable, multiplied by (y) a fraction (1) the numerator of which is the absolute value of the amount of such discrepancy and (2) the denominator of which is the Scheduled NRI for such Lease, Well or Well-In-ProgressUnit Well Location, as applicable; (vi) ; provided that if the Title Defect is a Prescription Defectdoes not affect the applicable Well or Unit Well Location, then as applicable, throughout its entire productive life, the Title Defect Amount determined pursuant to this Section 3.1(f)(iv) shall be reduced to take into account the product of (x) the Allocated Value of such Lease multiplied by (y) a fraction (1) the numerator of which is the length of applicable time until such Lease will expire due to prescription or other Law and (2) the denominator of which is the remaining primary term under such Leaseperiod only; (viiv) if the Title Defect represents an obligation, encumbrance upon or other defect in title of a type not described above, the Title Defect Amount shall be determined by taking into account the Allocated Value of the affected Title Defect Well, Unit Well Location or Development Property, as applicable, the portion of the Title Defect Property Well, Unit Well Location or Development Property, as applicable, (or any associated Oil & Gas Interests, including the depths) 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 Title Defect affected Well, Unit Well Location or Development Property, as applicable, and such other reasonable factors as are necessary to make a proper evaluation; (viiivi) notwithstanding anything to the contrary in this Article IV3, the sum of all Title Defect Amounts with respect to any particular Title Defect Well, Unit Well Location or Development Property shall not exceed the Allocated Value of such Title Defect Well, Unit Well Location or Development Property; and (ixvii) the Title Defect Amount with respect to a Title Defect shall be determined without duplication of any costs or Losses included in another Title Defect Amount hereunder, or for which Buyer otherwise receives credit in the calculation of the Purchase Price; provided, however, that if a Title Defect affecting any Development Property for which an Allocated Value is set forth on Annex A-1 or Annex A-3, as applicable, also affects any Well or Unit Well Location for which an Allocated Value is set forth on Annex A-2 or Annex A-6, as applicable, (A) any Title Defect adjustment be determined separately with respect to the each individual Title Defect Property affected by the Title Defect and (B) any Title Defect adjustment with respect to a Development Property shall be limited only to the portion of the Leases or Fee Minerals that are located outside of the boundaries of the Unit of a Well or a Unit Well Location, and correspondingly, the Title Defect adjustment for any Lease or Fee Mineral will not include any portion of the Lease or Fee Mineral located within the boundaries of or contributing to the Unit of a Well or a Unit Well Location.