Defect Amounts. The diminution of value of the Assets attributable to any Defect (the “Defect Amount”) shall be determined as follows: (i) if Purchaser and Sellers agree on the Defect Amount, that amount shall be the Defect Amount; (ii) if a Title Defect is a Lien which is liquidated in amount, then the Defect Amount shall be the amount necessary to be paid to remove the Title Defect from Sellers’ interest in the affected Assets; (iii) if a Title Defect represents a negative discrepancy between (A) the actual Net Revenue Interest for any Well and (B) the “Net Revenue Interest” percentage stated on Exhibit A-2, Part 1 for such Well, then the Defect Amount shall be equal to (1) the product of the Allocated Value of such Well multiplied by (2) a fraction, the numerator of which is (x) the remainder of (i) the “Revenue Interest” percentage stated on Exhibit A-2, Part 1 for such Well minus (ii) the actual Net Revenue Interest of such Well, and the denominator of which is (y) the “Net Revenue Interest” percentage stated on Exhibit A-2, Part 1 for such Well; provided that if the Title Defect does not affect the “ Revenue Interest” percentage stated on Exhibit A-2, Part 1 for such Well throughout its entire productive life, the Defect Amount determined under this Section 3.2(c)(iii) shall be reduced to take into account the applicable time period only; (iv) if the Title Defect represents an obligation, encumbrance, burden or charge upon or other defect in title to the affected Oil and Gas Property of a type not described in Section 3.2(c)(i), (ii) or (iii) above, the Defect Amount shall be determined by taking into account the Allocated Value of the Oil and Gas Property so affected, the portion of Sellers’ interest in the Oil and Gas 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 Oil and Gas Property, the values placed upon the Title Defect by Purchaser and Seller and such other factors as are necessary to make a proper evaluation and determination of such value; (v) if a Title Defect as to a particular tract or parcel of any Lease (or portion thereof) included in any Undeveloped Acreage represents Sellers holding Defensible Title to a number of Net Revenue Interest Acres as to the tract(s) or parcel(s) constituting Undeveloped Acreage that is less than the number set forth in the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s), then the Title Defect Amount shall be the product of (A) the Net Revenue Interest Acre Price, multiplied by (B) the remainder of (1) the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s) minus (2) the actual Net Revenue Interest Acres for such tract or parcel after giving effect to such Defect; (vi) if a Defect is an Environmental Defect, the Defect Amount shall be equal to the estimated costs, expenses and damages (excluding damages for death or physical injury to any Person relating to or arising out of such Defect or damages constituting Retained Liabilities) (as of the Closing Date) to remediate the Assets subject to such Environmental Defect to bring such Environmental Defect into compliance with applicable Environmental Laws or any Lease, Right of Way or Contract, it being intended that such compliance would be accomplished in the most cost-effective manner reasonably available, consistent with and in compliance with all applicable Environmental Laws and the terms of any such applicable Lease, Right of Way or Contract, taking into account that non-permanent remedies (including without limitation, mechanisms to contain or stabilize Hazardous Substances, including monitoring site conditions, natural attenuation, risk-based corrective action, institutional controls, or other appropriate restrictions on the industrial use of the property, caps, dikes, encapsulation, lechate collection systems, and the like) may satisfy the Texas Railroad Commission or other applicable Governmental Authority; (vii) if a Title Defect is reasonably susceptible of being cured, the Defect Amount determined under subsections (iii) or (iv) above shall in no event be greater than the amount that can reasonably be shown to be the reasonable and cost-effective response to cure such Defect; and (viii) the Defect Amount with respect to a Defect shall be determined without duplication of any costs or losses included in another Defect Amount hereunder, or for which Purchaser otherwise receives credit in the calculation of the Adjusted Purchase Price. Notwithstanding anything to the contrary in this Agreement, the aggregate adjustment to the Unadjusted Purchase Price for all Defect Amounts attributable to Title Defects upon any given Oil and Gas Property shall not exceed the Allocated Value of such Oil and Gas Property (in each case after giving effect to any applicable adjustments due to prior Title Defects).
Appears in 2 contracts
Sources: Purchase and Sale Agreement, Purchase and Sale Agreement (W&t Offshore Inc)
Defect Amounts. The With respect to a particular Defect, the diminution of in value of the Assets Oil and Gas Property attributable to any such Defect (the “Defect Amount”) shall be determined as followsin accordance with the following methodology, terms, and conditions:
(i) if Purchaser KLRE and Sellers Tema agree in writing on the Defect Amount, then that amount shall be the Defect Amount;
(ii) if a Title Defect is an Encumbrance (other than a Lien which Permitted Encumbrance) that is undisputed and liquidated in amount, then the Defect Amount shall be the amount necessary to be paid to remove the such Title Defect from Sellers’ Tema’s and the Company’s interest in the affected AssetsOil and Gas Property;
(iii) if a Title Defect as to any Well or Future Well represents a negative discrepancy between (A) the actual Net Revenue Interest of Tema or the Company for any such Well or Future Well (with respect to the Subject Formation set forth for such Well or Future Well) and (B) the “Net Revenue Interest” percentage stated on Exhibit A-2, Part 1 F-2 for such Well or Exhibit F-3 for such Future Well, as applicable (with respect to the Subject Formation set forth for such Well or Future Well), then the Defect Amount for such Title Defect shall be equal to the product of (1) the product of the Allocated Value of the affected Subject Formation of such Well or Future Well multiplied by (2) a fraction, the numerator of which is (x) the remainder of (iI) the “Net Revenue Interest” percentage stated on Exhibit A-2, Part 1 F-2 for such Well or Exhibit F-3 for such Future Well, as applicable minus (iiII) the actual Net Revenue Interest of Tema or the Company for such Well or Future Well, and the denominator of which is (y) the “Net Revenue Interest” percentage stated on Exhibit A-2, Part 1 F-2 for such Well or Exhibit F-3 for such Future Well, as applicable; provided that if the Title Defect does not affect the “ “Net Revenue Interest” percentage stated on Exhibit A-2, Part 1 F-2 for such Well or Exhibit F-3 for such Future Well throughout its entire productive life, the Defect Amount determined under this Section 3.2(c)(iii2.5(d)(iii) shall be reduced to take into account the applicable time period only;
(iv) if a Title Defect as to any Undeveloped Lease represents a negative discrepancy between (A) the actual Net Revenue Interest of Tema or the Company for such Undeveloped Lease (with respect to the Subject Formation set forth for such Undeveloped Lease) and (B) the “Net Revenue Interest” percentage stated on Exhibit F-1 for such Undeveloped Lease (with respect to the Subject Formation set forth for such Undeveloped Lease), then the Defect Amount for such Title Defect shall be equal to the product of (1) the number of Net Mineral Acres subject to such Title Defect, multiplied by (2) the Net Mineral Acre Price of such Undeveloped Lease multiplied by (3) a fraction, the numerator of which is (x) the remainder of (I) the “Net Revenue Interest” stated in Exhibit F-1 for such Undeveloped Lease minus (II) the actual Net Revenue Interest of Tema or the Company for such Undeveloped Lease, and the denominator of which is (y) the “Net Revenue Interest” stated in Exhibit F-1 for such Undeveloped Lease; provided that if the Title Defect does not affect the “Net Revenue Interest” percentage stated on Exhibit F-1 for such Undeveloped Lease throughout its entire productive life, the Defect Amount determined under this Section 2.5(d)(iv) shall be reduced to take into account the applicable time period only;
(v) if a Title Defect constitutes a reduction in the number of Net Mineral Acres as to any Undeveloped Lease (or portion thereof) (with respect to the Subject Formation set forth for such Undeveloped Lease), then the Defect Amount for such Title Defect shall be equal to the product of (1) the Net Mineral Acre Price thereof, multiplied by (2) the remainder of (x) the number of Net Mineral Acres purported to be included in such Undeveloped Lease as set forth on Exhibit F-1 minus (y) the actual number of Net Mineral Acres included in such Undeveloped Lease after giving effect to such Defect;
(vi) if a Title Defect represents an obligation, encumbrance, burden or charge upon or other defect in title to the affected Oil and Gas Property of a type not described in Section 3.2(c)(i2.5(d)(i) through (v), (ii) or (iii) above, the Defect Amount therefor shall be determined by taking into account the Allocated Value of the affected Subject Formation of the Oil and Gas Property so affected, the portion of Sellers’ interest Tema’s or the Company’s Undivided Interest in the Oil and Gas Property affected by the Title Defect, the legal effect of the Title Defect, the potential present value economic effect of the Title Defect over the life of the affected Oil and Gas Property, the values placed upon the Title Defect by Purchaser KLRE and Seller Tema, the estimated capital and operational costs and expenses (or reduction or increases thereof) attributable thereto and the Company Working Interest therein, and such other factors as are necessary to make a proper an evaluation and determination of such value;
(v) if a Title Defect as to a particular tract or parcel of any Lease (or portion thereof) included in any Undeveloped Acreage represents Sellers holding Defensible Title to a number of Net Revenue Interest Acres as to the tract(s) or parcel(s) constituting Undeveloped Acreage that is less than the number set forth in the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s), then the Title Defect Amount shall be the product of (A) the Net Revenue Interest Acre Price, multiplied by (B) the remainder of (1) the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s) minus (2) the actual Net Revenue Interest Acres for such tract or parcel after giving effect to such Defect;
(vivii) if a Defect is an Environmental Defect, the Defect Amount shall be equal to the estimated costs, expenses and damages (excluding damages for death or physical injury to any Person relating to or arising out of such Defect or damages constituting Retained Liabilities) (as present value of the Closing Date) costs and expenses to remediate Remediate the Assets Contributed Asset subject to such Environmental Defect to bring such Environmental Defect into compliance in the lowest-cost effective manner available, consistent with applicable Environmental Laws or any Lease, Right of Way or Contract, it being intended that such compliance would be accomplished in the most cost-effective manner reasonably available, consistent with and in compliance with all applicable Environmental Laws and the terms of any such applicable Lease, Right of Way or Contract, taking into account that non-permanent remedies (including without limitation, mechanisms to contain or stabilize Hazardous Substances, including monitoring site conditions, natural attenuation, risk-based corrective action, institutional controls, or other appropriate restrictions on the industrial use of the property, caps, dikes, encapsulation, lechate leachate collection systems, and the like) may satisfy the Texas Railroad Commission or other applicable Governmental Authority;
(vii) if a Title Defect is reasonably susceptible of being cured, the Defect Amount determined under subsections (iii) or (iv) above shall in no event be greater than the amount that can reasonably be shown to be the reasonable and most cost-effective response manner, consistent with the continued safe and prudent long-term operation of the affected Contributed Asset reasonably available and, where applicable, to cure such Defect; andthe satisfaction of the applicable Governmental Entity;
(viii) the Defect Amount with respect to a Defect shall be determined without duplication of any costs or losses included in another Defect Amount hereunder, or for which Purchaser otherwise receives credit in the calculation of the Adjusted Purchase Price. Notwithstanding notwithstanding anything to the contrary in this Agreement, the aggregate adjustment to the Unadjusted Purchase Price Consideration for all Title Defect Amounts attributable to Title Defects upon any given as to an individual Oil and Gas Property shall not exceed the Allocated Value of such Oil and Gas Property Property; provided, however, that the foregoing limitations shall in no event apply to Defect Amounts with respect to Environmental Defect; and
(ix) the amount of any adjustment to the Unadjusted Consideration shall be determined without duplication of any costs or losses included in each case after giving effect any other adjustments for Defects hereunder or for which KLRE otherwise receives a downward adjustment to any applicable adjustments due to prior Title Defects)the Unadjusted Consideration.
Appears in 1 contract
Sources: Business Combination Agreement (KLR Energy Acquisition Corp.)
Defect Amounts. The diminution of value of the Assets attributable to any valid Defect that actually burdens, encumbers or affects a Lease or Well (the “Defect Amount”) shall be determined as follows:
(i) if Purchaser and Sellers Sellers’ Representative agree on the Defect Amount, that amount shall be the Defect Amount;
(ii) if a Title Defect is a Lien which that is liquidated in amount, then the Defect Amount shall be the amount necessary to be paid to remove the Title Defect from Sellers’ Company Group’s interest in the affected AssetsLease or Well;
(iii) if a Title Defect as to the applicable Subject Formation affecting any Well or Lease represents a negative discrepancy between (A) the actual Net Revenue Interest for any the applicable Subject Formation as to such Well or Lease and (B) the “Net Revenue Interest” Interest percentage stated on Exhibit A-2A-2 for such Subject Formation for such Well or Schedule 2.8 for such Subject Formation for such Lease, Part 1 as applicable, and in such case there is a proportionate decrease in the actual Working Interest with respect to the applicable Subject Formation as to such Well, from the Working Interest stated on Exhibit A-2 for such Subject Formation for such Well, then the Defect Amount shall be equal to the product of (1) the product of the Allocated Value of such Well or Lease, as applicable multiplied by (2) a fraction, the numerator of which is (x) the remainder of (iI) the “Net Revenue Interest” percentage stated on Exhibit A-2, Part 1 A-2 as to the applicable Subject Formation for such Well or Schedule 2.8 as to the applicable Subject Formation for such Lease, as applicable, minus (iiII) the actual Net Revenue Interest of as to the applicable Subject Formation as to such WellWell or Lease, as applicable, and the denominator of which is (y) the “Net Revenue Interest” percentage stated on Exhibit A-2, Part 1 A-2 for such WellSubject Formation for such Well or Schedule 2.8 for such Subject Formation for such Lease, as applicable; provided that if the Title Defect does not affect the “ “Net Revenue Interest” percentage stated on Exhibit A-2, Part 1 A-2 for such Subject Formation for such Well or Schedule 2.8 for such Subject Formation for such Lease, as applicable, throughout its entire productive life, the Defect Amount determined under this Section 3.2(c)(iii3.2(d)(iii) shall be reduced to take into account the applicable time period only;
(iv) if the Title Defect represents a negative discrepancy between (A) Company Group’s aggregate ownership of Net Acres as to a Subject Formation for any Lease and (B) the amount of Net Acres as to such Subject Formation for such Lease in Schedule 2.8, and there is no discrepancy between the Net Revenue Interest of Company Group in such Subject Formation as to such Lease and the Net Revenue Interest set forth for such Subject Formation as to such Lease in Schedule 2.8, then the Defect Amount shall be the product of the Allocated Value of such Subject Formation as to such Lease multiplied by a fraction, the numerator of which is the difference between the number of Net Acres owned by Company Group in such Subject Formation as to Lease and the number of Net Acres set forth for such Subject Formation as to such Lease in Schedule 2.8, and the denominator of which is the Net Acres set forth for such Subject Formation as to such Lease in Schedule 2.8;
(v) if the Title Defect represents an obligation, encumbrance, burden burden, or charge upon or other defect in title to the affected Oil and Gas Property applicable Subject Formation as to a Lease or Well of a type not described in Section 3.2(c)(i3.2(d)(i) through Section 3.2(d)(iii), (ii) or (iii) above, the Defect Amount shall be determined by taking into account the Allocated Value of the Oil and Gas Property Lease or Well so affected, the portion of Sellers’ Company Group’s interest in the Oil and Gas Property applicable Subject Formation as to such Lease or Well affected by the Title Defect, the legal effect of the Title Defect, the potential present value economic effect of the Title Defect over the life of the affected Oil and Gas Propertyapplicable Subject Formation as to such Lease or Well, the values placed upon the Title Defect by Purchaser and Seller Sellers’ Representative, the estimated capital and operational costs and expenses (or reduction or increases thereof) attributable to Company Group’s Working Interest, and such other factors as are necessary to make a proper an evaluation and determination of such value;
(v) if a Title Defect as to a particular tract or parcel of any Lease (or portion thereof) included in any Undeveloped Acreage represents Sellers holding Defensible Title to a number of Net Revenue Interest Acres as to the tract(s) or parcel(s) constituting Undeveloped Acreage that is less than the number set forth in the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s), then the Title Defect Amount shall be the product of (A) the Net Revenue Interest Acre Price, multiplied by (B) the remainder of (1) the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s) minus (2) the actual Net Revenue Interest Acres for such tract or parcel after giving effect to such Defect;
(vi) if a Defect is an Environmental Defect, the Defect Amount shall be equal to the estimated costs, costs and expenses and damages (excluding damages for death chargeable to the Company Group’s Working Interest or physical injury to any Person relating to or arising out of such Defect or damages constituting Retained Liabilities) other interest (as of the Closing Date) to remediate Remediate the Assets Asset subject to such Environmental Defect (or group of Assets subject to bring the same Environmental Defect) using the Lowest Cost Response; provided, however, such Defect Amount shall expressly exclude (A) the costs, fees and expenses for matters that are ordinary costs of doing business regardless of the presence of an Environmental Defect (e.g., those costs that would ordinarily be incurred in the day-to-day operations of the Assets or in connection with permit renewal/amendment activities), (B) the overhead costs of Purchaser or its Affiliates, and (C) any Remediation costs, fees or expenses charged or chargeable to any other Working Interest owner or co-tenant or joint owner of the underlying Assets burdened by such Environmental Defect into compliance with applicable Environmental Laws or any Lease, Right of Way or Contract, it being intended that such compliance would be accomplished in the most cost-effective manner reasonably available, consistent with and in compliance with all applicable Environmental Laws and the terms of any such applicable Lease, Right of Way or Contract, taking into account that non-permanent remedies (including without limitation, mechanisms to contain or stabilize Hazardous Substances, including monitoring site conditions, natural attenuation, risk-based corrective action, institutional controls, or other appropriate restrictions on the industrial use of the property, caps, dikes, encapsulation, lechate collection systems, and the like) may satisfy the Texas Railroad Commission or other applicable Governmental AuthorityDefect;
(vii) if a Title Defect is reasonably susceptible of being cured, the Defect Amount determined under subsections (iii) or (iv) above shall in no event be greater than the amount that can reasonably be shown to be the reasonable and cost-effective response to cure such Defect; and
(viii) the Defect Amount with respect to a Defect shall be determined without duplication of any costs or losses included in another Defect Amount hereunder, or for which Purchaser otherwise receives credit in the calculation of the Adjusted Purchase Price. Notwithstanding ; and
(viii) notwithstanding anything to the contrary in this Agreement, the aggregate adjustment to the Unadjusted Purchase Price for all Defect Amounts attributable to Title Defects upon any given Oil and Gas Property with respect to each Asset shall not exceed the Allocated Value of such Oil and Gas Property Asset (in each case after giving effect to any applicable adjustments due to prior Title Defects).
Appears in 1 contract
Sources: Securities Purchase Agreement (Matador Resources Co)
Defect Amounts. The diminution of value of the Assets Mineral Interests or ▇▇▇▇▇ attributable to any valid Title Defect (the “Defect Amount”) shall be determined as follows:
(i) if Purchaser Purchasers and Sellers agree on the Defect AmountAmount as to a Mineral Interest or Well, that amount shall be the Defect Amount;
(ii) if a Title Defect is a Lien subject to Section 3.2(c)(viii), which is liquidated in amount, then the Defect Amount with respect to such Mineral Interest or Well shall be the amount necessary to be paid to remove the Title Defect from Sellers’ interest in the affected AssetsMineral Interest or Well;
(iii) subject to Section 3.2(c)(viii), if a Title Defect as to any Well represents a negative discrepancy between (A) the actual Net Revenue Interest for any such Well and (B) the “Net Revenue Interest” percentage stated on Exhibit A-2, Part 1 A-2 for such Well, then the Defect Amount for such Well shall be equal to (1) the product of the Allocated Value of such Well Well, multiplied by (2) the a fraction, the numerator of which is (x) the remainder of (iI) the “Net Revenue Interest” percentage Interest stated on in Exhibit A-2, Part 1 A-2 for such Well minus (iiII) the actual Net Revenue Interest of for such Well, Well after giving effect to such Title Defect and the denominator of which is (y) the Net Revenue Interest stated in Exhibit A-2 for such Well; provided, that if the Title Defect does not affect the “Net Revenue Interest” percentage stated on Exhibit A-2, Part 1 for such Well; provided that if the Title Defect does not affect the “ Revenue Interest” percentage stated on Exhibit A-2, Part 1 A-2 for such Well throughout its entire productive life, the Defect Amount determined under this Section 3.2(c)(iiisubpart (iii) shall be reduced to take into account the applicable time period only;
(iv) subject to Section 3.2(c)(viii), if a Title Defect constitutes a reduction in the number of NRIAs as to any Mineral Interest (or portion thereof), then the Defect Amount for such Mineral Interest shall be equal to the product of (1) the NRIA Price allocated to such Mineral Interest multiplied by (2) the remainder of (x) the number of NRIAs purported to be included in such Mineral Interest as set forth on Exhibit A-1, minus (y) the actual number of NRIAs included in such Mineral Interest after giving effect to such Title Defect;
(v) subject to Section 3.2(c)(viii), if a Title Defect as to any Mineral Interest represents a negative discrepancy between (A) the actual Net Revenue Interest for any such Mineral Interest and (B) the “Net Revenue Interest” percentage stated on Exhibit A-1 for such Mineral Interest, then the Defect Amount for such Mineral Interest shall be equal to (1) the product of the Allocated Value of such Mineral Interest, multiplied by (2) the a fraction, the numerator of which is (x) the remainder of (I) the Net Revenue Interest stated in Exhibit A-1 for such Mineral Interest minus (II) the actual Net Revenue Interest for such Mineral Interest after giving effect to such Title Defect and the denominator of which is (y) the Net Revenue Interest stated in Exhibit A-1 for such Mineral Interest;
(vi) subject to Section 3.2(c)(viii), if the Title Defect represents an obligation, encumbrance, burden or charge upon or other defect in title to the affected Oil and Gas Property Mineral Interest or Well of a type not described in Section 3.2(c)(i) through Section 3.2(c)(iv), (ii) or (iii) above, the Defect Amount for such Mineral Interest or such Well shall be determined by taking into account the Allocated Value of the Oil and Gas Property Mineral Interest or Well so affected, the portion of Sellers’ the applicable member of the Subject Company Group’s interest in the Oil and Gas Property Mineral Interest or Well affected by the Title Defect, the legal effect of the Title Defect, the potential present value economic effect of the Title Defect over the life of the affected Oil and Gas PropertyMineral Interest or Well, the values placed upon the Title Defect by Purchaser Purchasers and Seller Sellers, and such other factors as are necessary to make a proper an evaluation and determination of such value;
(v) if a Title Defect as to a particular tract or parcel of any Lease (or portion thereof) included in any Undeveloped Acreage represents Sellers holding Defensible Title to a number of Net Revenue Interest Acres as to the tract(s) or parcel(s) constituting Undeveloped Acreage that is less than the number set forth in the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s), then the Title Defect Amount shall be the product of (A) the Net Revenue Interest Acre Price, multiplied by (B) the remainder of (1) the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s) minus (2) the actual Net Revenue Interest Acres for such tract or parcel after giving effect to such Defect;
(vi) if a Defect is an Environmental Defect, the Defect Amount shall be equal to the estimated costs, expenses and damages (excluding damages for death or physical injury to any Person relating to or arising out of such Defect or damages constituting Retained Liabilities) (as of the Closing Date) to remediate the Assets subject to such Environmental Defect to bring such Environmental Defect into compliance with applicable Environmental Laws or any Lease, Right of Way or Contract, it being intended that such compliance would be accomplished in the most cost-effective manner reasonably available, consistent with and in compliance with all applicable Environmental Laws and the terms of any such applicable Lease, Right of Way or Contract, taking into account that non-permanent remedies (including without limitation, mechanisms to contain or stabilize Hazardous Substances, including monitoring site conditions, natural attenuation, risk-based corrective action, institutional controls, or other appropriate restrictions on the industrial use of the property, caps, dikes, encapsulation, lechate collection systems, and the like) may satisfy the Texas Railroad Commission or other applicable Governmental Authority;
(vii) if a Title Defect is reasonably susceptible of being cured, the Defect Amount determined under subsections (iii) or (iv) above shall in no event be greater than the amount that can reasonably be shown to be the reasonable and cost-effective response to cure such Defect; and
(viii) the Defect Amount with respect to a Title Defect shall be determined without duplication of any costs or losses included in another Defect Amount hereunder, or for which Purchaser Purchasers otherwise receives receive credit in the calculation of the Adjusted Purchase Price. Notwithstanding ; and
(viii) notwithstanding anything to the contrary in this Agreement, the aggregate adjustment to the Unadjusted Purchase Price for all Defect Amounts attributable to all Title Defects upon any given Oil and Gas Property with respect to each Mineral Interest or each Well shall not exceed the Allocated Value of such Oil and Gas Property Mineral Interest or such Well (in each case after giving effect to any applicable adjustments due to prior Title Defects).
Appears in 1 contract
Sources: Securities Purchase Agreement (Kimbell Royalty Partners, LP)
Defect Amounts. The diminution of value of the Assets attributable to any valid Defect that actually burdens, encumbers, or affects an Oil and Gas Property (the “Defect Amount”) shall be determined as follows:
(i) if Purchaser and Sellers Seller agree on the Defect Amount, that amount shall be the Defect Amount;
(ii) if a Title Defect is a Lien which that is liquidated in amount, then the Defect Amount shall be the amount necessary to be paid to remove the Title Defect from Sellers’ Seller’s interest in the affected AssetsOil and Gas Property;
(iii) if a Title Defect as to any Undeveloped Lease represents a negative discrepancy between (A) the actual Net Revenue Interest for any such Undeveloped Leases and (B) the “Net Revenue Interest” percentage stated on Exhibit A-1 for such Undeveloped Lease and if such negative discrepancy is accompanied by a corresponding, proportionate decrease to the Working Interests in such Subject Formation as to such Undeveloped Lease (or the affected portions thereof), then the Defect Amount shall be equal to (1) the product of the Net Mineral Acre Price thereof, multiplied by (2) the number of Net Fee Mineral Acres of such Undeveloped Lease subject to such Title Defect multiplied by (3) a fraction, the numerator of which is (x) the remainder of (I) the Net Revenue Interest stated in Exhibit A-1 for such Undeveloped Lease minus (II) the actual Net Revenue Interest for such Undeveloped Lease after giving effect to such Title Defect and the denominator of which is (y) the Net Revenue Interest stated in Exhibit A-1 for such Undeveloped Lease; provided that if the Title Defect does not affect the “Net Revenue Interest” percentage stated on Exhibit A-1 for such Undeveloped Lease throughout its entire productive life, the Defect Amount determined under this Section 3.2(d)(iii) shall be reduced to take into account the applicable time period only;
(iv) if a Title Defect as to the Subject Formation affecting any Well represents a negative discrepancy between (A) the actual Net Revenue Interest for the Subject Formation as to such Well and (B) the “Net Revenue Interest” percentage stated on Exhibit A-2▇- ▇ for such Well and if such negative discrepancy is accompanied by a corresponding, Part 1 for proportionate decrease to the Working Interests in such Subject Formation as to such Well, then the Defect Amount shall be equal to the product of (1) the product of the Allocated Value of such Well multiplied by (2) a fraction, the numerator of which is (x) the remainder of (i) the “Revenue Interest” percentage stated on Exhibit A-2, Part 1 for such Well minus (ii) the actual Net Revenue Interest of such Well, and the denominator of which is (yI) the “Net Revenue Interest” percentage stated on Exhibit A-2, Part 1 for such Well; provided that if the Title Defect does not affect the “ Revenue Interest” percentage stated on Exhibit A-2, Part 1 A-3 for such Well throughout its entire productive life, the Defect Amount determined under this Section 3.2(c)(iii) shall be reduced to take into account the applicable time period only;
(iv) if the Title Defect represents an obligation, encumbrance, burden or charge upon or other defect in title to the affected Oil and Gas Property of a type not described in Section 3.2(c)(i), (ii) or (iii) above, the Defect Amount shall be determined by taking into account the Allocated Value of the Oil and Gas Property so affected, the portion of Sellers’ interest in the Oil and Gas 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 Oil and Gas Property, the values placed upon the Title Defect by Purchaser and Seller and such other factors as are necessary to make a proper evaluation and determination of such value;
(v) if a Title Defect as to a particular tract or parcel of any Lease (or portion thereof) included in any Undeveloped Acreage represents Sellers holding Defensible Title to a number of Net Revenue Interest Acres as to the tract(s) or parcel(s) constituting Undeveloped Acreage that is less than the number set forth in the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s), then the Title Defect Amount shall be the product of (A) the Net Revenue Interest Acre Price, multiplied by (B) the remainder of (1) the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s) minus (2II) the actual Net Revenue Interest Acres for such tract or parcel after giving effect as to the Subject Formation as to such Defect;
(vi) if a Defect is an Environmental Defect, the Defect Amount shall be equal to the estimated costs, expenses and damages (excluding damages for death or physical injury to any Person relating to or arising out of such Defect or damages constituting Retained Liabilities) (as of the Closing Date) to remediate the Assets subject to such Environmental Defect to bring such Environmental Defect into compliance with applicable Environmental Laws or any Lease, Right of Way or Contract, it being intended that such compliance would be accomplished in the most cost-effective manner reasonably available, consistent with and in compliance with all applicable Environmental Laws and the terms of any such applicable Lease, Right of Way or Contract, taking into account that non-permanent remedies (including without limitation, mechanisms to contain or stabilize Hazardous Substances, including monitoring site conditions, natural attenuation, risk-based corrective action, institutional controls, or other appropriate restrictions on the industrial use of the property, caps, dikes, encapsulation, lechate collection systemsWell, and the like) may satisfy the Texas Railroad Commission or other applicable Governmental Authority;
(vii) if a Title Defect is reasonably susceptible denominator of being cured, the Defect Amount determined under subsections (iii) or (iv) above shall in no event be greater than the amount that can reasonably be shown to be the reasonable and cost-effective response to cure such Defect; and
(viii) the Defect Amount with respect to a Defect shall be determined without duplication of any costs or losses included in another Defect Amount hereunder, or for which Purchaser otherwise receives credit in the calculation of the Adjusted Purchase Price. Notwithstanding anything to the contrary in this Agreement, the aggregate adjustment to the Unadjusted Purchase Price for all Defect Amounts attributable to Title Defects upon any given Oil and Gas Property shall not exceed the Allocated Value of such Oil and Gas Property (in each case after giving effect to any applicable adjustments due to prior Title Defects).is
Appears in 1 contract
Sources: Purchase and Sale Agreement
Defect Amounts. The diminution of value of the Assets attributable to any valid Defect that actually burdens, encumbers, or affects an Oil and Gas Property (the “Defect Amount”) shall be determined as follows:
(i) if Purchaser and Sellers Seller agree on the Defect Amount, that amount shall be the Defect Amount;
(ii) if a Title Defect is a Lien which that is liquidated in amount, then the Defect Amount shall be the amount necessary to be paid to remove the Title Defect from Sellers’ the Company Group’s interest in the affected Assetsthe Lease, Unit or Well;
(iii) if a Title Defect affecting any Lease, Unit or Well represents a negative discrepancy between (A) the actual Net Revenue Interest for any such Lease, Unit or Well and (BA) the “Net Revenue Interest” percentage stated on Exhibit A-2▇-▇, Part 1 ▇▇▇▇▇▇▇ ▇-▇ or Exhibit A-3, as applicable, for such Lease, Unit or Well and in such case there is a proportionate decrease in the actual Working Interest with respect to such Lease, Unit or Well from the Working Interest stated on Exhibit ▇-▇, ▇▇▇▇▇▇▇ ▇-▇ or Exhibit A-3, as applicable, for such Lease, Unit or Well, then the Defect Amount shall be equal to the product of (1) the product of the Allocated Value of such Lease, Unit or Well multiplied by (21) a fraction, the numerator of which is (x) the remainder of (iI) the “Net Revenue Interest” percentage stated on Exhibit A-2▇-▇, Part 1 ▇▇▇▇▇▇▇ ▇-▇ or Exhibit A-3, as applicable, for such Lease, Unit or Well minus (iiII) the actual Net Revenue Interest of as to such Lease, Unit or Well, and the denominator of which is (y) the “Net Revenue Interest” percentage stated on Exhibit A-2▇-▇, Part 1 ▇▇▇▇▇▇▇ ▇-▇ or Exhibit A-3, as applicable, for such Lease, Unit or Well; provided that if the Title Defect does not affect the “ “Net Revenue Interest” percentage stated on Exhibit A-2▇-▇, Part 1 ▇▇▇▇▇▇▇ ▇-▇ or Exhibit A-3, as applicable, for such Lease, Unit or Well throughout its entire productive life, the Defect Amount determined under this Section 3.2(c)(iii3.2(d)(iii) shall be reduced to take into account the applicable time period only;
(iv) if the Title Defect represents an obligation, encumbrance, burden or charge upon or other defect in title to the affected Oil and Gas Property of a type not described in Section 3.2(c)(i), (ii) or (iii) above, the Defect Amount shall be determined by taking into account the Allocated Value of the Oil and Gas Property so affected, the portion of Sellers’ interest in the Oil and Gas 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 Oil and Gas Property, the values placed upon the Title Defect by Purchaser and Seller and such other factors as are necessary to make a proper evaluation and determination of such value;
(v) if a Title Defect as to a particular tract or parcel of any Lease (or portion thereof) included in any Undeveloped Acreage represents Sellers holding Defensible Title to a number of Net Revenue Interest Acres as to the tract(s) or parcel(s) constituting Undeveloped Acreage that is less than the number set forth in the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s), then the Title Defect Amount shall be the product of (A) the Net Revenue Interest Acre Price, multiplied by (B) the remainder of (1) the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s) minus (2) the actual Net Revenue Interest Acres for such tract or parcel after giving effect to such Defect;
(vi) if a Defect is an Environmental Defect, the Defect Amount shall be equal to the estimated costs, expenses and damages (excluding damages for death or physical injury to any Person relating to or arising out of such Defect or damages constituting Retained Liabilities) (as of the Closing Date) to remediate the Assets subject to such Environmental Defect to bring such Environmental Defect into compliance with applicable Environmental Laws or any Lease, Right of Way or Contract, it being intended that such compliance would be accomplished in the most cost-effective manner reasonably available, consistent with and in compliance with all applicable Environmental Laws and the terms of any such applicable Lease, Right of Way or Contract, taking into account that non-permanent remedies (including without limitation, mechanisms to contain or stabilize Hazardous Substances, including monitoring site conditions, natural attenuation, risk-based corrective action, institutional controls, or other appropriate restrictions on the industrial use of the property, caps, dikes, encapsulation, lechate collection systems, and the like) may satisfy the Texas Railroad Commission or other applicable Governmental Authority;
(vii) if a Title Defect is reasonably susceptible of being cured, the Defect Amount determined under subsections (iii) or (iv) above shall in no event be greater than the amount that can reasonably be shown to be the reasonable and cost-effective response to cure such Defect; and
(viii) the Defect Amount with respect to a Defect shall be determined without duplication of any costs or losses included in another Defect Amount hereunder, or for which Purchaser otherwise receives credit in the calculation of the Adjusted Purchase Price. Notwithstanding anything to the contrary in this Agreement, the aggregate adjustment to the Unadjusted Purchase Price for all Defect Amounts attributable to Title Defects upon any given Oil and Gas Property shall not exceed the Allocated Value of such Oil and Gas Property (in each case after giving effect to any applicable adjustments due to prior Title Defects).
Appears in 1 contract
Defect Amounts. The diminution of value of the Assets an Asset attributable to any valid Defect (the “Defect Amount”) as to the applicable Asset affected by such Defect shall be determined as follows:
(i1) if Purchaser and Sellers Seller agree on the Defect AmountAmount as to an Asset, that amount shall be the Defect Amount;
(ii2) if a Title Defect is a Lien which that is undisputed and liquidated in amount, then the Defect Amount with respect to the applicable Lease, Well or Future Location shall be the amount necessary to be paid to remove the Title Defect from Sellers’ Seller’s interest in the affected AssetsLease, Well or Future Location;
(iii3) if a Title Defect as to the Subject Formation affecting any Lease, Well or Future Location represents a negative discrepancy between (A) the actual Net Revenue Interest for any the Subject Formation as to such Lease, Well or Future Location and (B) the “Net Revenue Interest” percentage stated on Exhibit A-2A-1, Part 1 Exhibit A-2 or Exhibit A-5, as applicable, for such WellSubject Formation as to such Lease, Well or Future Location, then the Defect Amount shall be equal to the product of (1) the product of the Allocated Value of such Subject Formation as to such Lease, Well or Future Location multiplied by (2) a fraction, the numerator of which is (x) the remainder of (ia) the “Net Revenue Interest” percentage stated on Exhibit A-2A-1, Part 1 Exhibit A-2 or Exhibit A-5, as applicable, for such Subject Formation as to such Lease, Well or Future Location minus (iib) the actual Net Revenue Interest of as to the Subject Formation as to such WellLease, Well or Future Location, and the denominator of which is (y) the “Net Revenue Interest” percentage stated on Exhibit A-2A-1, Part 1 Exhibit A-2 or Exhibit A-5, as applicable, for the Subject Formation as to such WellLease, Well or Future Location; provided that if the Title Defect does not affect the “ “Net Revenue Interest” percentage stated on Exhibit A-2A-1, Part 1 Exhibit A-2 or Exhibit A-5, as applicable, for the Subject Formation as to such Lease, Well or Future Location throughout its entire productive life, the Defect Amount determined under this Section 3.2(c)(iii3.2(d)(iii) shall be reduced to take into account the applicable time period only;
(iv4) if a Title Defect as to the Subject Formation affecting any Lease represents a negative discrepancy between (A) the actual number of Net Acres for the Subject Formation as to such Lease and (B) the number of Net Acres stated on Exhibit A-1 for such Subject Formation as to such Lease, then the Defect Amount shall be equal to the product of (1) the Allocated Value of such Subject Formation as to such Lease multiplied by (2) a fraction, the numerator of which is (x) the remainder of (a) the number of Net Acres stated on Exhibit A-1 for such Subject Formation as to such Lease minus (b) the actual number of Net Acres as to the Subject Formation as to such Lease, and the denominator of which is (y) the number of Net Acres stated on Exhibit A-1 for the Subject Formation as to such Lease; provided that if the Title Defect does not affect the number of Net Acres stated on Exhibit A-1 for the Subject Formation as to such Lease throughout its entire productive life, the Defect Amount determined under this Section 3.2(d)(iv) shall be reduced to take into account the applicable time period only;
(5) if the Title Defect represents an obligation, encumbrance, burden or charge upon or other defect in title to the affected Oil and Gas Property Subject Formation as to a Lease, Well or Future Location of a type not described in Section 3.2(c)(i3.2(d)(i) through Section 3.2(d)(iv), (ii) or (iii) above, the Defect Amount shall be determined by taking into account the Allocated Value of the Oil and Gas Property Lease, Well or Future Location so affected, the portion of Sellers’ Seller’s interest in the Oil and Gas Property Subject Formation as to such Lease, Well or Future Location affected by the Title Defect, the legal effect of the Title Defect, the potential present value economic effect of the Title Defect over the life of the affected Oil and Gas PropertySubject Formation as to such Lease, Well or Future Location, the values placed upon the Title Defect by Purchaser and Seller Seller, the estimated capital and operational costs and expenses (or reduction or increases thereof) attributable to Seller’s Working Interest, and such other factors as are necessary to make a proper an evaluation and determination of such value;
(v) if a Title Defect as to a particular tract or parcel of any Lease (or portion thereof) included in any Undeveloped Acreage represents Sellers holding Defensible Title to a number of Net Revenue Interest Acres as to the tract(s) or parcel(s) constituting Undeveloped Acreage that is less than the number set forth in the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s), then the Title Defect Amount shall be the product of (A) the Net Revenue Interest Acre Price, multiplied by (B) the remainder of (1) the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s) minus (2) the actual Net Revenue Interest Acres for such tract or parcel after giving effect to such Defect;
(vi6) if a Defect is an Environmental Defect, the Defect Amount shall be equal to the estimated costs, expenses and damages (excluding damages for death or physical injury cost to any Person relating to or arising out of such Defect or damages constituting Retained Liabilities) (as of Remediate the Closing Date) to remediate the Assets Asset subject to such Environmental Defect to bring such Environmental Defect into compliance with applicable Environmental Laws or any Lease, Right of Way or Contract, it being intended that such compliance would be accomplished in the most costlowest-effective cost manner reasonably available, consistent with and in compliance with all applicable Environmental Laws and the terms of any such applicable Lease, Right of Way or Contract, taking into account that non-permanent remedies (including without limitation, mechanisms to contain or stabilize Hazardous Substances, including monitoring site conditions, natural attenuation, risk-based corrective action, institutional controls, or other appropriate restrictions on the industrial use of the property, caps, dikes, encapsulation, lechate leachate collection systems, and the like) may satisfy be the Texas Railroad Commission or other lowest-cost manner reasonably available, if such responses are appropriate and allowed under Environmental Laws, and, where applicable, to the satisfaction of the applicable Governmental AuthorityAuthorities; provided, however, such Defect Amount shall expressly exclude (A) the costs, fees and expenses of Purchaser’s and/or its Affiliate’s employees or attorneys, (B) costs, fees and expenses for matters that are ordinary costs of doing business regardless of the presence of an Environmental Defect (e.g., those costs that would ordinarily be incurred in the day-to-day operations of the Assets or in connection with permit renewal/amendment activities), and (C) overhead costs of Purchaser or its Affiliates, and (D) any Remediation costs, fees or expenses charged or chargeable solely to any other Working Interest owner or co-tenant or joint owner of the underlying Assets burdened by such Environmental Defect;
(vii) if a Title Defect is reasonably susceptible of being cured, the Defect Amount determined under subsections (iii) or (iv) above shall in no event be greater than the amount that can reasonably be shown to be the reasonable and cost-effective response to cure such Defect; and
(viii7) the Defect Amount with respect to a Defect shall be determined without duplication of any costs or losses included in another Defect Amount hereunder, or for which Purchaser otherwise receives credit in the calculation of the Adjusted Purchase Price. Notwithstanding ; and
(8) notwithstanding anything to the contrary in this Agreement, the aggregate adjustment to the Unadjusted Purchase Price for all Defect Amounts attributable to Title Defects upon any given Oil and Gas Property with respect to each Lease, Well or Future Location shall not exceed the Allocated Value of such Oil and Gas Property the same (in each case after giving effect to any applicable adjustments due to prior Title Defects).
Appears in 1 contract
Sources: Purchase and Sale Agreement (Riley Exploration Permian, Inc.)
Defect Amounts. The diminution of value of the Assets attributable to any valid Defect (the “Defect Amount”) as to the applicable Asset affected by such Defect shall be determined as follows:
(i) if Purchaser and Sellers Seller agree on the Defect Amount, that amount shall be the Defect Amount;
(ii) if a Title Defect is a Lien which that is liquidated in amount, then the Defect Amount with respect to the applicable Well or DSU shall be the amount necessary to be paid to remove the Title Defect from Sellers’ Seller’s interest in the affected AssetsWell or DSU;
(iii) if a Title Defect as to the Subject Formation affecting any Well or DSU represents a negative discrepancy between (A) the actual Net Revenue Interest for any the Subject Formation as to such Well or DSU and (B) the “Net Revenue Interest” percentage stated on Exhibit A-2Schedule 2.8, Part 1 for such WellSubject Formation as to such Well or DSU, and the Working Interest attributable to the Asset(s) affected by such Title Defect has been proportionately reduced, then the Defect Amount shall be equal to the product of (1) the product of the Allocated Value of such Subject Formation as to such Well or DSU multiplied by (2) a fraction, the numerator of which is (x) the remainder of (ia) the “Net Revenue Interest” percentage stated on Exhibit A-2Schedule 2.8 as applicable, Part 1 for such Subject Formation as to such Well or DSU minus (iib) the actual Net Revenue Interest of as to the Subject Formation as to such WellWell or DSU, and the denominator of which is (y) the “Net Revenue Interest” percentage stated on Exhibit A-2Schedule 2.8 as applicable, Part 1 for the Subject Formation as to such WellWell or DSU; provided that if the Title Defect does not affect the “ “Net Revenue Interest” percentage stated on Exhibit A-2, Part 1 in Schedule 2.8 as applicable for the Subject Formation as to such Well or DSU throughout its entire productive life, the Defect Amount determined under this Section 3.2(c)(iii3.2(d)(iii) shall be reduced to take into account the applicable time period only;
(iv) if the Title Defect represents an obligation, encumbrance, burden or charge upon or other defect in title to the affected Oil and Gas Property Subject Formation as to a Well or DSU of a type not described in Section 3.2(c)(i3.2(d)(i) through Section 3.2(d)(ii), (ii) or (iii) above, the Defect Amount shall be determined by taking into account the Allocated Value of the Oil and Gas Property Well or DSU so affected, the portion of Sellers’ Seller’s interest in the Oil and Gas Property Subject Formation as to such Well or DSU affected by the Title Defect, the legal effect of the Title Defect, the potential present value economic effect of the Title Defect over the life of the affected Oil and Gas PropertySubject Formation as to such Well or DSU, the values placed upon the Title Defect by Purchaser and Seller Seller, the estimated capital and operational costs and expenses (or reduction or increases thereof) attributable to Seller’s Working Interest, and such other reasonable factors as are necessary to make a proper evaluation and determination of such value;
(v) if a Title Defect as to a particular tract or parcel of any Lease (or portion thereof) included in any Undeveloped Acreage represents Sellers holding Defensible Title to a number of Net Revenue Interest Acres as to the tract(s) or parcel(s) constituting Undeveloped Acreage that is less than the number set forth in the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s), then the Title Defect Amount shall be the product of (A) the Net Revenue Interest Acre Price, multiplied by (B) the remainder of (1) the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s) minus (2) the actual Net Revenue Interest Acres for such tract or parcel after giving effect to such Defect;
(vi) if a Defect is an Environmental Defect, the Defect Amount shall be equal to the estimated costs, expenses and damages (excluding damages for death or physical injury cost to any Person relating to or arising out of such Defect or damages constituting Retained Liabilities) (as of Remediate the Closing Date) to remediate the Assets Asset subject to such Environmental Defect to bring such Environmental Defect into compliance with applicable Environmental Laws or any Lease, Right of Way or Contract, it being intended that such compliance would be accomplished in the most costlowest-effective cost manner reasonably available, consistent with and in compliance with all applicable Environmental Laws and the terms of any such applicable Lease, Right of Way or Contract, taking into account that non-permanent remedies (including without limitation, mechanisms to contain or stabilize Hazardous Substances, including monitoring site conditions, natural attenuation, risk-based corrective action, institutional controls, or other appropriate restrictions on the industrial use of the property, caps, dikes, encapsulation, lechate leachate collection systems, and the like) may satisfy be the Texas Railroad Commission lowest-cost manner reasonably available (provided that such non-permanent remedies fully cure or remove the Defect and are appropriate and allowed under applicable Environmental Laws and by Governmental Authorities with jurisdiction); provided, however, that such Defect Amount shall expressly exclude (A) the costs, fees and expenses of Purchaser’s and/or its Affiliate’s employees or attorneys, (B) costs, fees and expenses for matters that are ordinary costs of doing business regardless of the presence of an Environmental Defect (e.g., those costs that would ordinarily be incurred in the day-to-day operations of the Assets or in connection with permit renewal/amendment activities), (C) overhead costs of Purchaser or its Affiliates, and (d) any Remediation costs, fees or expenses charged or chargeable to any other applicable Governmental AuthorityWorking Interest owner or co-tenant or joint owner of the underlying Assets burdened by such Environmental Defect;
(vii) if a Title Defect is reasonably susceptible of being cured, the Defect Amount determined under subsections (iii) or (iv) above shall in no event be greater than the amount that can reasonably be shown to be the reasonable and cost-effective response to cure such Defect; and
(viiivi) the Defect Amount with respect to a Defect shall be determined without duplication of any costs or losses included in another Defect Amount hereunder, or for which Purchaser otherwise receives credit in the calculation of the Adjusted Purchase Price. Notwithstanding ; and
(vii) notwithstanding anything to the contrary in this Agreement, the aggregate adjustment to the Unadjusted Purchase Price for all Defect Amounts attributable to Title Defects upon any given Oil and Gas Property with respect to each Well or DSU shall not exceed the Allocated Value of such Oil and Gas Property the same (in each case after giving effect to any applicable adjustments due to prior Title Defects).
Appears in 1 contract
Defect Amounts. The diminution of value of the Assets an Asset attributable to any valid Defect (the “Defect Amount”) as to the applicable Asset affected by such Defect shall be determined as follows:
(i) if Purchaser and Sellers Seller agree in writing on the Defect Amount, then that amount shall be the Defect Amount;
(ii) if a Title Defect is a Lien which that is liquidated in amount, then the Defect Amount with respect to the applicable Well or DSU shall be the amount necessary to be paid to remove the Title Defect from Sellers’ Seller’s interest in the affected AssetsWell or DSU;
(iii) if a Title Defect as to the Subject Formation affecting any Well or DSU represents a negative discrepancy between (A) the actual Net Revenue Interest for any the Subject Formation as to such Well or DSU and (B) the “Net Revenue Interest” percentage stated on Exhibit A-2A-2 or Exhibit A-3, Part 1 as applicable, for the Subject Formation as to such WellWell or DSU, then the Defect Amount shall be equal to the product of (1) the product of the Allocated Value of the Subject Formation as to such Well or DSU multiplied by (2) a fraction, the numerator of which is (x) the remainder of (ia) the “Net Revenue Interest” percentage stated on Exhibit A-2A-2 or Exhibit A-3, Part 1 as applicable, for the Subject Formation as to such Well or DSU minus (iib) the actual Net Revenue Interest of as to the Subject Formation as to such WellWell or DSU, and the denominator of which is (y) the “Net Revenue Interest” percentage stated on Exhibit A-2A-2 or Exhibit A-3, Part 1 as applicable, for the Subject Formation as to such WellWell or DSU; provided that if the Title Defect does not affect the “ “Net Revenue Interest” percentage stated on Exhibit A-2A-2 or Exhibit A-3, Part 1 as applicable, for the Subject Formation as to such Well or DSU throughout its entire productive life, the Defect Amount determined under this Section 3.2(c)(iii3.2(d)(iii) shall be reduced to take into account the applicable time period only;
(iv) if the Title Defect as to the Subject Formation affecting any DSU represents a negative discrepancy between (A) the actual Net Mineral Acres for the Subject Formation as to such DSU and (B) the Net Mineral Acres for such DSU stated on Exhibit A-3, then the Defect Amount shall be equal to the product obtained by multiplying the absolute value of such difference between such Net Mineral Acre amounts by the per-acre value based on the aggregate Allocated Values of the Hydrocarbon leases in such DSU;
(v) if the Title Defect represents an obligation, encumbrance, burden or charge upon or other defect in title to the affected Oil and Gas Property Subject Formation as to a Well or DSU of a type not described in Section 3.2(c)(i3.2(d)(i) through Section 3.2(d)(iv), (ii) or (iii) above, the Defect Amount shall be determined by taking into account the Allocated Value of the Oil and Gas Property Well or DSU so affected, the portion of Sellers’ Seller’s interest in the Oil and Gas Property Subject Formation as to such Well or DSU affected by the Title Defect, the legal effect of the Title Defect, the potential present value economic effect of the Title Defect over the life of the affected Oil and Gas PropertySubject Formation as to such Well or DSU, the values placed upon the Title Defect by Purchaser Purchaser, the estimated capital and Seller operational costs and expenses (or reduction or increases thereof) attributable to Seller’s Working Interest, and such other reasonable factors as are necessary to make a proper evaluation and determination of such value;
(v) if a Title Defect as to a particular tract or parcel of any Lease (or portion thereof) included in any Undeveloped Acreage represents Sellers holding Defensible Title to a number of Net Revenue Interest Acres as to the tract(s) or parcel(s) constituting Undeveloped Acreage that is less than the number set forth in the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s), then the Title Defect Amount shall be the product of (A) the Net Revenue Interest Acre Price, multiplied by (B) the remainder of (1) the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s) minus (2) the actual Net Revenue Interest Acres for such tract or parcel after giving effect to such Defect;
(vi) if a Defect is an Environmental Defect, the Defect Amount shall be equal to the estimated costs, expenses and damages (excluding damages for death or physical injury cost to any Person relating to or arising out of such Defect or damages constituting Retained Liabilities) (as of Remediate the Closing Date) to remediate the Assets Asset subject to such Environmental Defect to bring such Environmental Defect into compliance with applicable Environmental Laws or any Lease, Right of Way or Contract, it being intended that such compliance would be accomplished in the most costlowest-effective cost manner reasonably available, consistent with and in compliance with all applicable Environmental Laws and the terms of any such applicable Lease, Right of Way or Contract, taking into account that non-permanent remedies (including without limitation, mechanisms to contain or stabilize Hazardous Substances, including monitoring site conditions, natural attenuation, risk-based corrective action, institutional controls, or other appropriate restrictions on the industrial use of the property, caps, dikes, encapsulation, lechate leachate collection systems, and the like), if such responses are appropriate and allowed under Environmental Laws, may be the lowest-cost manner reasonably available; provided, however, such Defect Amount shall expressly exclude (A) may satisfy the Texas Railroad Commission costs, fees and expenses of Purchaser’s and/or its Affiliate’s employees or Purchaser’s project managers or attorneys, (B) costs, fees and expenses for matters that are ordinary costs of doing business regardless of the presence of an Environmental Defect (e.g., those costs that would ordinarily be incurred in the day-to-day operations of the Assets or in connection with permit renewal or amendment (but not modification) activities), (C) overhead costs of Purchaser or its Affiliates, and (D) any Remediation costs, fees or expenses charged or chargeable solely to any other applicable Governmental AuthorityWorking Interest owner or co-tenant or joint owner of the underlying Assets burdened by such Environmental Defect;
(vii) if a Title Defect is reasonably susceptible of being cured, the Defect Amount determined under subsections (iii) or (iv) above shall in no event be greater than the amount that can reasonably be shown to be the reasonable and cost-effective response to cure such Defect; and
(viii) the Defect Amount with respect to a Defect shall be determined without duplication of any costs or losses included in another Defect Amount hereunder, or for which Purchaser otherwise receives credit in the calculation of the Adjusted Purchase Price. Notwithstanding ; and
(viii) notwithstanding anything to the contrary in this Agreement, with respect only to Title Defects, the aggregate adjustment to the Unadjusted Purchase Price for all Defect Amounts attributable to all Title Defects upon any given Oil and Gas Property affecting a single Asset shall not exceed the Allocated Value of such Oil and Gas Property the same (in each case after giving effect to any applicable adjustments due to prior Title Defects), except with respect to those Title Defects contemplated by Section 3.2(d)(ii).
Appears in 1 contract
Defect Amounts. The diminution of value of the Assets attributable to any valid Defect that actually burdens, encumbers or affects a Lease or Well (the “Defect Amount”) shall be determined as follows:
(i) if Purchaser and Sellers Sellers’ Representative agree on the Defect Amount, that amount shall be the Defect Amount;
(ii) if a Title Defect is a Lien which that is liquidated in amount, then the Defect Amount shall be the amount necessary to be paid to remove the Title Defect from Sellers’ Company Group’s interest in the affected AssetsLease or Well;
(iii) if a Title Defect as to the applicable Subject Formation affecting any Well or Lease represents a negative discrepancy between (A) the actual Net Revenue Interest for any the applicable Subject Formation as to such Well or Lease and (B) the “Net Revenue Interest” Interest percentage stated on Exhibit A-2A-2 for such Subject Formation for such Well or Schedule 2.8 for such Subject Formation for such Lease, Part 1 as applicable, and in such case there is a proportionate decrease in the actual Working Interest with respect to the applicable Subject Formation as to such Well, from the Working Interest stated on Exhibit A-2 for such Subject Formation for such Well, then the Defect Amount shall be equal to the product of (1) the product of the Allocated Value of such Well or Lease, as applicable multiplied by (2) a fraction, the numerator of which is (x) the remainder of (iI) the “Net Revenue Interest” percentage stated on Exhibit A-2, Part 1 A-2 as to the applicable Subject Formation for such Well or Schedule 2.8 as to the applicable Subject Formation for such Lease, as applicable, minus (iiII) the actual Net Revenue Interest of as to the applicable Subject Formation as to such WellWell or Lease, as applicable, and the denominator of which is (y) the “Net Revenue Interest” percentage stated on Exhibit A-2, Part 1 A-2 for such WellSubject Formation for such Well or Schedule 2.8 for such Subject Formation for such Lease, as applicable; provided that if the Title Defect does not affect the “ “Net Revenue Interest” percentage stated on Exhibit A-2, Part 1 A-2 for such Subject Formation for such Well or Schedule 2.8 for such Subject Formation for such Lease, as applicable, throughout its entire productive life, the Defect Amount determined under this Section 3.2(c)(iiiSection 3.2(d)(iii) shall be reduced to take into account the applicable time period only;
(iv) if the Title Defect represents a negative discrepancy between (A) Company Group’s aggregate ownership of Net Acres as to a Subject Formation for any Lease and (B) the amount of Net Acres as to such Subject Formation for such Lease in Schedule 2.8, and there is no discrepancy between the Net Revenue Interest of Company Group in such Subject Formation as to such Lease and the Net Revenue Interest set forth for such Subject Formation as to such Lease in Schedule 2.8, then the Defect Amount shall be the product of the Allocated Value of such Subject Formation as to such Lease multiplied by a fraction, the numerator of which is the difference between the number of Net Acres owned by Company Group in such Subject Formation as to Lease and the number of Net Acres set forth for such Subject Formation as to such Lease in Schedule 2.8, and the denominator of which is the Net Acres set forth for such Subject Formation as to such Lease in Schedule 2.8;
(v) if the Title Defect represents an obligation, encumbrance, burden or charge upon or other defect in title to the affected Oil and Gas Property applicable Subject Formation as to a Lease or Well of a type not described in Section 3.2(c)(iSection 3.2(d)(i) through Section 3.2(d)(iii), (ii) or (iii) above, the Defect Amount shall be determined by taking into account the Allocated Value of the Oil and Gas Property Lease or Well so affected, the portion of Sellers’ Company Group’s interest in the Oil and Gas Property applicable Subject Formation as to such Lease or Well affected by the Title Defect, the legal effect of the Title Defect, the potential present value economic effect of the Title Defect over the life of the affected Oil and Gas Propertyapplicable Subject Formation as to such Lease or Well, the values placed upon the Title Defect by Purchaser and Seller Sellers’ Representative, the estimated capital and operational costs and expenses (or reduction or increases thereof) attributable to Company Group’s Working Interest, and such other factors as are necessary to make a proper an evaluation and determination of such value;
(v) if a Title Defect as to a particular tract or parcel of any Lease (or portion thereof) included in any Undeveloped Acreage represents Sellers holding Defensible Title to a number of Net Revenue Interest Acres as to the tract(s) or parcel(s) constituting Undeveloped Acreage that is less than the number set forth in the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s), then the Title Defect Amount shall be the product of (A) the Net Revenue Interest Acre Price, multiplied by (B) the remainder of (1) the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s) minus (2) the actual Net Revenue Interest Acres for such tract or parcel after giving effect to such Defect;
(vi) if a Defect is an Environmental Defect, the Defect Amount shall be equal to the estimated costs, costs and expenses and damages (excluding damages for death chargeable to the Company Group’s Working Interest or physical injury to any Person relating to or arising out of such Defect or damages constituting Retained Liabilities) other interest (as of the Closing Date) to remediate Remediate the Assets Asset subject to such Environmental Defect (or group of Assets subject to bring the same Environmental Defect) using the Lowest Cost Response; provided, however, such Defect Amount shall expressly exclude (A) the costs, fees and expenses for matters that are ordinary costs of doing business regardless of the presence of an Environmental Defect (e.g., those costs that would ordinarily be incurred in the day-to-day operations of the Assets or in connection with permit renewal/amendment activities), (B) the overhead costs of Purchaser or its Affiliates, and (C) any Remediation costs, fees or expenses charged or chargeable to any other Working Interest owner or co-tenant or joint owner of the underlying Assets burdened by such Environmental Defect into compliance with applicable Environmental Laws or any Lease, Right of Way or Contract, it being intended that such compliance would be accomplished in the most cost-effective manner reasonably available, consistent with and in compliance with all applicable Environmental Laws and the terms of any such applicable Lease, Right of Way or Contract, taking into account that non-permanent remedies (including without limitation, mechanisms to contain or stabilize Hazardous Substances, including monitoring site conditions, natural attenuation, risk-based corrective action, institutional controls, or other appropriate restrictions on the industrial use of the property, caps, dikes, encapsulation, lechate collection systems, and the like) may satisfy the Texas Railroad Commission or other applicable Governmental AuthorityDefect;
(vii) if a Title Defect is reasonably susceptible of being cured, the Defect Amount determined under subsections (iii) or (iv) above shall in no event be greater than the amount that can reasonably be shown to be the reasonable and cost-effective response to cure such Defect; and
(viii) the Defect Amount with respect to a Defect shall be determined without duplication of any costs or losses included in another Defect Amount hereunder, or for which Purchaser otherwise receives credit in the calculation of the Adjusted Purchase Price. Notwithstanding ; and
(viii) notwithstanding anything to the contrary in this Agreement, the aggregate adjustment to the Unadjusted Purchase Price for all Defect Amounts attributable to Title Defects upon any given Oil and Gas Property with respect to each Asset shall not exceed the Allocated Value of such Oil and Gas Property Asset (in each case after giving effect to any applicable adjustments due to prior Title Defects).
Appears in 1 contract
Sources: Securities Purchase Agreement (Matador Resources Co)
Defect Amounts. The diminution of value of the Assets attributable to any valid Defect that actually burdens, encumbers, or affects an Oil and Gas Property (the “Defect Amount”) shall be determined as follows:
(i) if Purchaser and Sellers Seller agree on the Defect Amount, that amount shall be the Defect Amount;
(ii) if a Title Defect is a Lien which that is liquidated in amount, then the Defect Amount shall be the amount necessary to be paid to remove the Title Defect from Sellers’ Seller’s interest in the affected AssetsOil and Gas Property;
(iii) if a Title Defect as to any Undeveloped Lease represents a negative discrepancy between (A) the actual Net Revenue Interest for any such Undeveloped Leases and (B) the “Net Revenue Interest” percentage stated on Exhibit A-1 for such Undeveloped Lease and if such negative discrepancy is accompanied by a corresponding, proportionate decrease to the Working Interests in such Subject Formation as to such Undeveloped Lease (or the affected portions thereof), then the Defect Amount shall be equal to (1) the product of the Net Mineral Acre Price thereof, multiplied by (2) the number of Net Fee Mineral Acres of such Undeveloped Lease subject to such Title Defect multiplied by (3) a fraction, the numerator of which is (x) the remainder of (I) the Net Revenue Interest stated in Exhibit A-1 for such Undeveloped Lease minus (II) the actual Net Revenue Interest for such Undeveloped Lease after giving effect to such Title Defect and the denominator of which is (y) the Net Revenue Interest stated in Exhibit A-1 for such Undeveloped Lease; provided that if the Title Defect does not affect the “Net Revenue Interest” percentage stated on Exhibit A-1 for such Undeveloped Lease throughout its entire productive life, the Defect Amount determined under this Section 3.2(d)(iii) shall be reduced to take into account the applicable time period only;
(iv) if a Title Defect as to the Subject Formation affecting any Well represents a negative discrepancy between (A) the actual Net Revenue Interest for the Subject Formation as to such Well and (B) the “Net Revenue Interest” percentage stated on Exhibit A-2A-3 for such Well and if such negative discrepancy is accompanied by a corresponding, Part 1 for proportionate decrease to the Working Interests in such Subject Formation as to such Well, then the Defect Amount shall be equal to the product of (1) the product of the Allocated Value of such Well multiplied by (2) a fraction, the numerator of which is (x) the remainder of (iI) the “Net Revenue Interest” percentage stated on Exhibit A-2, Part 1 A-3 for such Well minus (iiII) the actual Net Revenue Interest of as to the Subject Formation as to such Well, and the denominator of which is (y) the “Net Revenue Interest” percentage as to the Subject Formation stated on Exhibit A-2, Part 1 for A-3 as to such Well; provided that if the Title Defect does not affect the “ “Net Revenue Interest” percentage as to the Subject Formation stated on Exhibit A-2, Part 1 A-3 for such Well throughout its entire productive life, the Defect Amount determined under this Section 3.2(c)(iii3.2(d)(iv) shall be reduced to take into account the applicable time period only;
(ivv) if a Title Defect as to any Fee Mineral Interest represents a negative discrepancy between (A) the actual Net Revenue Interest for any such Fee Mineral Interests and (B) the “Net Revenue Interest” percentage stated on Exhibit A-2 for such Fee Mineral Interest, then the Defect Amount shall be equal to (1) the product of the Net Mineral Acre Price thereof, multiplied by (2) the number of Net Fee Mineral Acres of such Fee Mineral Interest subject to such Title Defect multiplied by (3) a fraction, the numerator of which is (x) the remainder of (I) the Net Revenue Interest stated in Exhibit A-2 for such Fee Mineral Interest minus (II) the actual Net Revenue Interest for such Fee Mineral Interest after giving effect to such Title Defect and the denominator of which is (y) the Net Revenue Interest stated in Exhibit A-2 for such Fee Mineral Interest; provided that if the Title Defect does not affect the “Net Revenue Interest” percentage stated on Exhibit A-2 for such Fee Mineral Interest throughout its entire productive life, the Defect Amount determined under this Section 3.2(d)(v) shall be reduced to take into account the applicable time period only;
(vi) if a Title Defect represents a reduction in the number of Net Leasehold Mineral Acres as to any Undeveloped Lease (or portion thereof) and the Net Revenue Interest in such Undeveloped Lease after giving effect to such Title Defect is equal to zero (0), then the Defect Amount for such Title Defect shall be equal to the product of (1) the Net Mineral Acre Price allocated to such Undeveloped Lease multiplied by (2) the remainder of (x) the number of Net Leasehold Mineral Acres purported to be included in such Undeveloped Lease as set forth on Exhibit A-1 minus (y) the actual number of Net Leasehold Mineral Acres included in such Undeveloped Lease after giving effect to such Title Defect;
(vii) if a Title Defect represents a reduction in the number of Net Fee Mineral Acres as to any Fee Mineral Interest (or portion thereof) and the Net Revenue Interest in such Fee Mineral Interest after giving effect to such Title Defect is equal to zero (0), then the Defect Amount for such Title Defect shall be equal to the product of (1) the Net Mineral Acre Price allocated to such Fee Mineral Interest multiplied by (2) the remainder of (x) the number of Net Fee Mineral Acres purported to be included in such Fee Mineral Interest as set forth on Exhibit A-2 minus (y) the actual number of Net Fee Mineral Acres included in such Fee Mineral Interest after giving effect to such Title Defect;
(viii) if the Title Defect represents an obligation, encumbrance, burden burden, or charge upon or other defect in title to the affected Subject Formation as to Oil and Gas Property of a type not described in Section 3.2(c)(i3.2(d)(i) through Section 3.2(d)(vii), (ii) or (iii) above, the Defect Amount shall be determined by taking into account the Allocated Value of the Oil and Gas Property so affected, the portion of Sellers’ Seller’s interest in the Subject Formation as to such Oil and Gas Property affected by the Title Defect, the legal effect of the Title Defect, the potential present value economic effect of the Title Defect over the life of the affected Subject Formation as to such Oil and Gas Property, the values placed upon the Title Defect by Purchaser and Seller Seller, the estimated capital and operational costs and expenses (or reduction or increases thereof) attributable to Seller’s Working Interest, and such other factors as are necessary to make a proper an evaluation and determination of such value;
(v) if a Title Defect as to a particular tract or parcel of any Lease (or portion thereof) included in any Undeveloped Acreage represents Sellers holding Defensible Title to a number of Net Revenue Interest Acres as to the tract(s) or parcel(s) constituting Undeveloped Acreage that is less than the number set forth in the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s), then the Title Defect Amount shall be the product of (A) the Net Revenue Interest Acre Price, multiplied by (B) the remainder of (1) the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s) minus (2) the actual Net Revenue Interest Acres for such tract or parcel after giving effect to such Defect;
(viix) if a Defect is an Environmental Defect, the Defect Amount shall be equal to the sum of (a) estimated costs, expenses and damages (excluding damages for death or physical injury to any Person relating to or arising out of such Defect or damages constituting Retained Liabilities) (present value as of the Closing DateDate (using a discount factor of ten percent (10%) of the costs and expenses to remediate Remediate the Assets subject to such Environmental Defect to bring such Environmental Defect into compliance with applicable Environmental Laws or any Lease, Right of Way or Contract, it being intended that such compliance would be accomplished in the most cost-effective manner reasonably available, consistent with and in compliance with all applicable Environmental Laws and the terms of any such applicable Lease, Right of Way or Contract, taking into account that non-permanent remedies (including without limitation, mechanisms to contain or stabilize Hazardous Substances, including monitoring site conditions, natural attenuation, risk-based corrective action, institutional controls, or other appropriate restrictions on the industrial use of the property, caps, dikes, encapsulation, lechate leachate collection systems, and the like) may satisfy be the Texas Railroad Commission or other most cost-effective manner reasonably available and, where applicable, to the satisfaction of the applicable Governmental AuthorityAuthorities, plus (b) any actual fines, penalties, damages, or obligations imposed by any Governmental Authority with respect to such Environmental Defect; provided, however, such Defect Amount shall expressly exclude (A) the costs, fees and expenses of Purchaser’s and/or its Affiliate’s employees or attorneys, (B) costs, fees and expenses for matters that are ordinary costs of doing business regardless of the presence of an Environmental Defect (e.g., those costs that would ordinarily be incurred in the day-to-day operations of the Assets or in connection with Permit renewal/amendment activities), and (C) overhead costs of Purchaser or its Affiliates;
(viix) if a Title Defect is reasonably susceptible of to being cured, the Defect Amount determined under subsections (iii) or (iv) above with respect to any Defect shall in no event be greater than the amount that can reasonably be shown to be the reasonable and costreasonably estimated present value (discounted at a rate of ten percent (10%)) of lowest-effective cost response to cure such Defect; and;
(viiixi) the Defect Amount with respect to a Defect shall be determined without duplication of any costs or losses included in another Defect Amount hereunder, or for which Purchaser otherwise receives credit in the calculation of the Adjusted Purchase Price. Notwithstanding ; provided that, nothing herein shall prevent Purchaser from asserting the same Defect against more than one Oil and Gas Property if such Defect affects more than one Oil and Gas Property; and
(xii) notwithstanding anything to the contrary in this Agreement, the aggregate adjustment to the Unadjusted Purchase Price for all Defect Amounts attributable to Title Defects upon any given Oil and Gas Property with respect to each Asset shall not not, except in the case of Environmental Defects, as necessary, exceed the Allocated Value of such Oil and Gas Property Asset (in each case after giving effect to any applicable adjustments due to prior Title Defects).
Appears in 1 contract
Sources: Purchase and Sale Agreement (Diamondback Energy, Inc.)
Defect Amounts. The diminution of value of the Assets an Asset attributable to any valid Defect (the “Defect Amount”) as to the applicable Well or Future Location, affected by such Defect shall be determined as follows:
53 (i) if Purchaser and Sellers Sellers’ Representative agree on the Defect Amount, Amount as to such Asset that amount shall be the Defect Amount;
; (ii) if a Title Defect is a Lien which that is liquidated in amount, then the Defect Amount with respect to the applicable Asset shall be the amount necessary to be paid to remove the Title Defect from Sellers’ Company Group’s interest from the Well or Future Location, and any limitations as to Allocated Value set forth in this Agreement shall not limit the affected Assets;
Defect Amount for such Lien; (iii) if a Title Defect as to the Subject Formation affecting any Well or Future Location represents a negative discrepancy between (A) the actual Net Revenue Interest for any the Subject Formation as to such Well or Future Location, as applicable, and (B) the “Net Revenue Interest” percentage stated on Exhibit A-2A-2 or Part B of Schedule 2.8, Part 1 as applicable, for such WellSubject Formation as to such Well or Future Location, as applicable, then the Defect Amount shall be equal to the product of (1) the product of the Allocated Value of such Subject Formation as to such Well or Future Location, as applicable, multiplied by (2) a fraction, the numerator of which is (x) the remainder of (i) a. the “Net Revenue Interest” percentage stated on Exhibit A-2A-2 or Part B of Schedule 2.8, Part 1 as applicable, for such Subject Formation as to such Well or Lease, as applicable, minus (ii3) the actual Net Revenue Interest of as to the Subject Formation as to such WellWell or Future Location, as applicable, and the denominator of which is (y) the “Net Revenue Interest” percentage stated on Exhibit A-2A-2 or Part B of Schedule 2.8, Part 1 as applicable, for the Subject Formation as to such WellWell or Future Location, as applicable; provided that if the Title Defect does not affect the “ “Net Revenue Interest” percentage stated on Exhibit A-2A-2 or Part B of Schedule 2.8, Part 1 as applicable, for the Subject Formation as to such Well or Future Location, as applicable, throughout its entire productive life, the Defect Amount determined under this Section 3.2(c)(iii3.2(d)(iii) shall be reduced to take into account the applicable time period only;
; (iv) if the Title Defect represents an obligation, encumbrance, burden or charge upon or other defect in title to the affected Oil and Gas Property Subject Formation as to an Asset of a type not described in Section 3.2(c)(i3.2(d)(i), (ii) or (iii) abovethrough Section 3.2(d)(ii), the Defect Amount shall be determined by taking into account the Allocated Value of the Oil and Gas Property Asset so affected, the portion of Sellers’ Company Group’s interest in the Oil and Gas Property Subject Formation as to such Asset affected by the Title Defect, with respect to any Future Location, the portion of the Subject Formation affected by such Title Defect and potential inability to drill and complete a well within the applicable Subject Formation as to such Future Location as a result of any such Title Defect, the legal effect of the Title Defect, the potential present value economic effect of the Title Defect over the life of the affected Oil and Gas PropertySubject Formation as to such Asset, the values placed upon the Title Defect by Purchaser and Seller Sellers, the estimated capital and operational costs and expenses (or reduction or increases thereof) attributable to Company Group’s Working Interest, and such other factors as are necessary to make a proper an evaluation and determination of such value;
; (v) if a Title Defect as to a particular tract or parcel of any Lease (or portion thereof) included in any Undeveloped Acreage represents Sellers holding Defensible Title to a number of Net Revenue Interest Acres as to the tract(s) or parcel(s) constituting Undeveloped Acreage that is less than the number set forth in the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s), then the Title Defect Amount shall be the product of (A) the Net Revenue Interest Acre Price, multiplied by (B) the remainder of (1) the “Net Revenue Interest Acres” column of Exhibit A-2, Part 2 for such tract(s) or parcel(s) minus (2) the actual Net Revenue Interest Acres for such tract or parcel after giving effect to such Defect;
(vi) if a Defect is an Environmental Defect, the Defect Amount shall be equal to the estimated costs, costs and expenses and damages (excluding damages for death or physical injury to any Person relating to or arising out of such Defect or damages constituting Retained Liabilities) (as of the Closing Date) to remediate Remediate the Assets Asset subject to such Environmental Defect to bring such Environmental Defect into compliance with applicable Environmental Laws or any Lease, Right of Way or Contract, it being intended that such compliance would be accomplished in the most costlowest-effective cost manner reasonably available, consistent with and in compliance with all applicable Environmental Laws and the terms of any such applicable Lease, Right of Way or ContractLaws, taking into account that non-permanent remedies (including without limitation, mechanisms to contain or stabilize Hazardous Substances, including monitoring site conditions, natural attenuation, risk-based corrective action, institutional controls, or other appropriate restrictions on the industrial use of the property, caps, dikes, encapsulation, lechate collection systems, and the like) may satisfy the Texas Railroad Commission or other applicable Governmental Authority;
(vii) if a Title Defect is reasonably susceptible of being cured, the Defect Amount determined under subsections (iii) or (iv) above shall in no event be greater than the amount that can reasonably be shown to be the reasonable and cost-effective response to cure such Defect; and
(viii) the Defect Amount with respect to a Defect shall be determined without duplication of any costs or losses included in another Defect Amount hereunder, or for which Purchaser otherwise receives credit in the calculation of the Adjusted Purchase Price. Notwithstanding anything to the contrary in this Agreement, the aggregate adjustment to the Unadjusted Purchase Price for all Defect Amounts attributable to Title Defects upon any given Oil and Gas Property shall not exceed the Allocated Value of such Oil and Gas Property (in each case after giving effect to any applicable adjustments due to prior Title Defects).on
Appears in 1 contract
Sources: Securities Purchase Agreement (Riley Exploration Permian, Inc.)