Common use of Title Defect Amount Clause in Contracts

Title Defect Amount. If any Title Defect is not cured or removed prior to Closing and Buyer does not waive such Title Defect, then the Purchase Price payable at Closing by Buyer shall be reduced pursuant to Article 11(a)(iv) by an amount equal to the following (hereinafter referred to as the “Title Defect Amount”): (i) if Buyer and Seller agree on the amount, then that amount shall be the Title Defect Amount; (ii) if the Title Defect represents a decrease in (A) the actual net revenue interest for any Well, below (B) the net revenue interest set forth in Exhibit B for such Well, then the Title Defect Amount shall be the product of (y) the Allocated Value of such Well multiplied by (z) a fraction, the numerator of which is the net revenue interest shown on Exhibit B minus the actual net revenue interest for such Well and the denominator of which is the net revenue interest for such Well set forth in Exhibit B; (iii) if the Title Defect represents Seller owning a working interest in a Well or Property which is larger than the Working Interest shown on Exhibit B, but only to the extent there is not a proportionate increase in the net revenue interest for such Well or Property, then the Title Defect Amount shall be the product of (y) the Allocated Value of such Well or Property multiplied by (z) a fraction, the numerator of which is the working interest increase and the denominator of which is the working interest shown for such Well or Property on Exhibit B. (iv) if the Title Defect represents a suspended interest or non-consent/deemed non-consent election by Seller in a Well, other than those disclosed on Schedule 5(f), which causes Seller to not receive any revenue from such Well, the Title Defect Amount shall be the Allocated Value for such Well. (v) if the Title Defect results from a lack of information provided by Seller to prove Seller’s ownership of any or all of the W▇▇▇▇, as shown on Exhibit B, then (a) if Buyer is able to calculate a working interest and/or net revenue interest from the limited title documentation provided by Seller for such Well, the Title Defect amount shall be the Allocated Value for such Well multiplied by the difference between the working interest and/or net revenue interest shown on Exhibit B for such Well and the working interest and/or net revenue interest for such Well calculated by Buyer, or (b) if Buyer is unable to calculate a working interest and/or net revenue interest from the limited title documentation provided by Seller for such Well, the Title Defect amount shall be the Allocated Value for such Well. (vi) if the Title Defect consists of a lien, encumbrance or other charge that is undisputed and liquidated in amount, the Title Defect Amount shall be the undisputed and liquidated amount necessary to be paid to remove the Title Defect; and (vii) if the Title Defect is of a type not described above in subsections (i) through (v) above, then, in each case, the Title Defect Amount shall be determined by taking into account the Allocated Value of the Property so affected, the portion of Seller’s interest in the Property affected by the Title Defect, the legal effect of the Title Defect, the potential economic effect of the Title Defect over the life of the affected Property, the values placed upon the Title Defect by Buyer and Seller and such other factors as are necessary to make a proper evaluation. In the event Seller and Buyer cannot agree on Title Defect Amount pursuant to the foregoing, then (A) Buyer’s good faith estimate of the Title Defect Amount (pursuant to the foregoing) shall be used for determining whether the conditions to Closing have been met (and the amount, if any, of any associated adjustment to be used for purposes of Closing) and (B) after Closing, the disputed amounts shall be finally resolved by a dispute resolution process using a single impartial arbitrator, with at least ten (10) years’ experience in oil and gas title issues, to be selected by mutual agreement of the Seller and Buyer, or, in the event Buyer and the Seller cannot agree on an arbitrator, such arbitrator shall be selected by the Houston office of the American Arbitration Association. The arbitrator’s decision as to the Title Defect Amount shall be final and not appealable. Buyer and Seller shall each bear its own attorneys’ fees and costs in such arbitration and the fees of such arbitrator shall be split equally between Buyer and Seller. Such arbitration shall be conducted in Houston, Texas. Once appointed, the arbitrator shall not have any ex parte communications with any of the affected parties.

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

Title Defect Amount. If any The amount of each Title Defect is not cured or removed prior to Closing and Buyer does not waive such Title Defect, then the Purchase Price payable at Closing by Buyer shall be reduced pursuant to Article 11(a)(iv) by an amount equal to the following (hereinafter referred to as the “Title Defect Amount”):) shall be determined as follows: (i) if Buyer ▇▇▇▇▇ and Seller agree in writing on the amountTitle Defect Amount, then that amount shall be the Title Defect Amount; (ii) subject to Section 3.1(g)(vi)(B), if the Title Defect is a Lien that is undisputed and liquidated in amount, then the Title Defect Amount shall be the amount necessary to be paid to remove the Title Defect from the applicable Title Defect Property in question; (iii) if the Title Defect represents a decrease in negative discrepancy between (A) the actual net revenue interest Company’s aggregate ownership of Net Acres for any Well, below Lease and (B) the net revenue interest amount of Net Acres set forth in Exhibit B for such WellLease in Annex A-1, and there is no discrepancy between the aggregate Net Revenue Interest of the Company in such Lease and the Net Revenue Interest set forth for such Lease in Annex A-1, then the Title Defect Amount shall be the product of (yx) the Allocated Value of such Well Lease multiplied by (zy) a fraction, (1) the numerator of which is the net revenue interest shown on Exhibit B minus absolute value of the actual net revenue interest for amount of such Well discrepancy, and (2) the denominator of which is the net revenue interest Net Acres set forth for such Well set forth Lease in Exhibit BAnnex A-1; (iiiiv) if the Title Defect represents Seller owning a working interest negative discrepancy between (A) the Company’s aggregate Net Revenue Interest for any Oil & Gas Interest and (B) the Net Revenue Interest stated in Annex A-1 or Annex A-2, as applicable, for such Oil & Gas Interest, and for which there is a Well or Property which is larger than proportionate decrease in the Company’s aggregate Working Interest shown on Exhibit B, but only to the extent there is not a proportionate increase in the net revenue interest for such Well Oil & Gas Interest from that set forth in Annex A-1 or PropertyAnnex A-2, as applicable, then the Title Defect Amount shall be the product of (yx) the Allocated Value of such Well or Property Oil & Gas Interest multiplied by (zy) a fraction, (1) the numerator of which is the working interest increase absolute value of the amount of such discrepancy and (2) the denominator of which is the working interest shown Net Revenue Interest stated in Annex A-1 or Annex A-2, as applicable, for such Well or Property on Exhibit B. (iv) Oil & Gas Interest; provided, however, that if the Title Defect represents a suspended interest or non-consent/deemed non-consent election by Seller in a Well, other than those disclosed on Schedule 5(f), which causes Seller to does not receive any revenue from such Wellaffect the Oil & Gas Interest throughout its entire productive life, the Title Defect Amount shall be the Allocated Value for such Well.determined pursuant to Section 3.1(g)(v); (v) if the Title Defect results from a lack of information provided by Seller to prove Seller’s ownership of any represents an obligation, encumbrance, burden, or all of the W▇▇▇▇charge upon, as shown on Exhibit B, then (a) if Buyer is able to calculate a working interest and/or net revenue interest from the limited or other defect in title documentation provided by Seller for such Wellto, the Title Defect amount shall be the Allocated Value for such Well multiplied by the difference between the working interest and/or net revenue interest shown on Exhibit B for such Well and the working interest and/or net revenue interest for such Well calculated by Buyer, or (b) if Buyer is unable to calculate a working interest and/or net revenue interest from the limited title documentation provided by Seller for such Well, the Title Defect amount shall be the Allocated Value for such Well. (vi) if the Title Defect consists of a lien, encumbrance or other charge that is undisputed and liquidated in amount, the Title Defect Amount shall be the undisputed and liquidated amount necessary to be paid to remove the Title Defect; and (vii) if the Title Defect is affected Oil & Gas Interest of a type not described above in subsections (iii), (iii) through or (viv) above, then, in each caseof this Section 3.1(g), the Title Defect Amount shall be determined by taking into account the Allocated Value of the Property Lease or Well so affected, the portion of Sellerthe Company’s aggregate interest in the Property Lease or Well affected by the Title Defect, the legal effect of the Title Defect, the potential discounted economic effect of the Title Defect over the productive life of the affected PropertyLease or Well, the values placed upon the Title Defect by Buyer ▇▇▇▇▇ and Seller Seller, the age of the factual matters causing or constituting the alleged Title Defect, the probability that title failure will occur with respect to any Title Defect that represents only a possibility of title failure, and such other factors as are necessary to make a proper evaluation. In the event Seller and Buyer cannot agree on Title Defect Amount pursuant ; and (vi) notwithstanding anything to the foregoing, then contrary in this Article 3: (A) Buyer’s good faith estimate of an individual claim for a Title Defect for which a valid Title Defect Notice is given prior to the Claim Deadline shall only generate an adjustment to the Purchase Price under this Agreement if the Title Defect Amount with respect thereto exceeds One Hundred Seventy-Five Thousand Dollars (pursuant $175,000) (the “Title Threshold Amount”); (B) the aggregate sum of all Title Defect Amounts attributable to any given Oil & Gas Interest shall not exceed the Allocated Value of such Oil & Gas Interest, except with respect to Liens that are liquidated in amount with personal recourse to Company (so long as such recourse is not limited to the foregoingAssets subject to such Lien); (C) the Title Defect Amount with respect to a Title Defect shall be used for determining whether the conditions to Closing have been met (and the amount, if any, determined without any duplication of any associated adjustment costs or Losses included in another Title Defect Amount hereunder or for which Buyer otherwise receives credit in the calculation of the Purchase Price; provided, however that if an individual Title Defect affects multiple Leases or ▇▇▇▇▇ for which an Allocated Value is set forth on Annex A-1 or Annex A-2, as applicable, (A) such Title Defect shall be deemed to be used for purposes of Closing) a single Title Defect, and (B) after Closing, the disputed amounts Title Defect Amount for such Title Defect shall be finally resolved by a dispute resolution process using a single impartial arbitrator, aggregated with at least ten (10) years’ experience in oil and gas title issues, to be selected by mutual agreement of the Seller and Buyer, or, in the event Buyer and the Seller cannot agree on an arbitrator, such arbitrator shall be selected by the Houston office of the American Arbitration Association. The arbitrator’s decision as respect to the Title Defect Properties affected by such Title Defect for the purposes of the application of the Title Threshold Amount; and (D) there shall not be any adjustment to the Purchase Price for any Title Defect under this Agreement unless and until the amount calculated as the sum of (i) the aggregate amount of all individual Title Defect Amounts for Title Defects asserted pursuant to Section 3.1(a) which exceed the Title Threshold Amount plus (ii) the aggregate amount of all individual Environmental Defect Amounts for Environmental Defects asserted pursuant to Section 4.3(a) which have an Environmental Defect Amount in excess of the Environmental Threshold Amount exceeds the Aggregate Deductible Amount, after which time Buyer shall only be final and not appealableentitled to an adjustment to the Purchase Price for such portion of such calculated amount that is in excess of the Aggregate Deductible Amount. Buyer and Seller shall each bear its own attorneys’ fees and costs provided, however, that, notwithstanding anything to the contrary in such arbitration this Agreement, the Title Threshold Amount and the fees Aggregate Deductible Amount will not be applicable to any Title Defect that would also constitute a breach of Section 7.40(a) if such arbitrator shall be split equally between Title Defect were asserted by Buyer and Seller. Such arbitration shall be conducted in Houston, Texas. Once appointed, following the arbitrator shall not have any ex parte communications with any of the affected partiesClosing.