Defect Adjustments. Upon delivery of a timely Environmental Defect Notice, the Parties shall proceed as follows: (a) With respect to each Environmental Defect asserted by either Party on or before the Defect Notice Date, Laramie or Delta, as applicable, may elect, on or before the date that is two (2) days prior to the Closing Date, to: (1) reach agreement with other Party on the existence of the Environmental Defect and, subject to Section 5.6(b), adjust the Laramie Payment or Delta Payment, as applicable, by the Environmental Defect Value of the Environmental Defect Property (the “Environmental Defect Adjustment”), whereupon Laramie or Delta, as applicable, shall convey the Environmental Defect Property to the Company at Closing and the Company shall thereafter assume all liability for Remediation of the Environmental Defect Property; or (2) challenge the existence and/or scope of the Environmental Defect and/or Environmental Defect Value asserted by the other Party pursuant to Section 5.3. If Laramie or Delta, as applicable, elects under Section 5.6 to challenge the existence of an Environmental Defect and/or Environmental Defect Value or challenges the adequacy of any Remediation by the other Party under Section 5.4, and such dispute has not been resolved as of the Closing, then the Environmental Defect Properties affected by the dispute shall not be conveyed at Closing, the Laramie Payment or Delta Payment shall be reduced by the Allocated Values of such Environmental Defect Properties, and the Dispute will be determined pursuant to Section 5.6. (b) Notwithstanding anything herein provided to the contrary, in no event shall there be any adjustments to the Laramie Payment or Delta Payment, as applicable, or other remedies provided by Laramie or Delta, as applicable, for any Environmental Defect unless the Environmental Defect Values of all Environmental Defects applicable to the Laramie Assets or the Delta Assets, in the aggregate, excluding any Environmental Defects cured by Laramie or Delta, respectively, as applicable, exceed a deductible in an amount equal to $2,500,000 (the “Aggregate Environmental Deductible”). Once the Aggregate Environmental Deductible has been reached as to the Laramie Assets or the Delta Assets, the Company shall be entitled to adjustments to the Laramie Payment or the Delta Payment, as applicable, only with respect to such Environmental Defects in excess of the Aggregate Environmental Deductible.
Appears in 2 contracts
Sources: Contribution Agreement, Contribution Agreement (Delta Petroleum Corp/Co)