EXHIBIT, THEN THE
TITLE DEFECT VALUE IS THE PRODUCT OF THE ALLOCATED VALUE ATTRIBUTED TO THE
AFFECTED FORMATION(S) IN SUCH OIL AND GAS PROPERTY, MULTIPLIED BY A FRACTION,
THE NUMERATOR OF WHICH IS THE DIFFERENCE BETWEEN THE NET REVENUE INTEREST SET
FORTH IN THE APPLICABLE EXHIBIT AND THE ACTUAL NET REVENUE INTEREST, AND THE
DENOMINATOR OF WHICH IS THE NET REVENUE INTEREST STATED IN THE APPLICABLE
EXHIBIT; OR
(II)
IF THE VALID TITLE DEFECT REPRESENTS AN OBLIGATION,
ENCUMBRANCE, BURDEN OR CHARGE UPON THE AFFECTED OIL AND GAS PROPERTY (INCLUDING
ANY INCREASE IN WORKING INTEREST FOR WHICH THERE IS NOT A PROPORTIONATE INCREASE
IN NET REVENUE INTEREST), THE AMOUNT OF THE TITLE DEFECT VALUE IS TO BE
DETERMINED BY TAKING INTO ACCOUNT THE ALLOCATED VALUE OF SUCH OIL AND GAS
PROPERTY, THE PORTION OF 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, AND THE TITLE DEFECT
VALUES PLACED UPON THE TITLE DEFECT BY BUYER AND SELLER.
(III)
NOTWITHSTANDING THE ABOVE, IN NO EVENT SHALL THE TOTAL OF THE
TITLE DEFECT VALUES RELATED TO A PARTICULAR OIL AND GAS PROPERTY EXCEED THE
ALLOCATED VALUE OF SUCH OIL AND GAS PROPERTY.
(C)
IF THE AGGREGATE VALUE OF (I) THE BASE PURCHASE
PRICE ADJUSTMENT FOR TITLE DEFECT VALUES PLUS (II) THE ALLOCATED VALUE OF OIL
AND GAS PROPERTIES WHICH ARE EXCLUDED IN LIEU OF CURE OR ADJUSTMENT EQUALS OR
EXCEEDS TEN PERCENT (10%) OF THE BASE PURCHASE PRICE, THEN BY NOTICE DELIVERED
PRIOR TO THE CLOSING EITHER PARTY MAY TERMINATE THIS AGREEMENT AND NEITHER PARTY
SHALL HAVE ANY FURTHER OBLIGATION TO CONCLUDE THE TRANSACTION CONTEMPLATED BY
THIS AGREEMENT.
5.5
CONSENTS.
SELLER SHALL CAUSE THE COMPANY TO
USE ITS BEST EFFORTS TO OBTAIN ALL REQUIRED CONSENTS.
IF BUYER DISCOVERS OTHER
AFFECTED OIL AND GAS PROPERTIES DURING THE COURSE OF BUYER'S DUE DILIGENCE
ACTIVITIES, BUYER SHALL NOTIFY SELLER IMMEDIATELY AND SELLER SHALL CAUSE THE
COMPANY TO USE ITS BEST EFFORTS TO OBTAIN SUCH CONSENTS PRIOR TO CLOSING.
EXCEPT FOR CONSENTS AND APPROVALS WHICH ARE CUSTOMARILY OBTAINED POST-CLOSING,
IF A NECESSARY CONSENT TO ASSIGN ANY LEASE HAS NOT BEEN OBTAINED AS OF THE
CLOSING, THEN (I) THE PORTION OF THE OIL AND GAS PROPERTIES FOR WHICH SUCH
CONSENT HAS NOT BEEN OBTAINED SHALL BECOME AN EXCLUDED ASSET CONVEYED TO SELLER
OR SELLER'S DESIGNEE AT THE CLOSING, (II) THE ALLOCATED VALUE FOR THAT OIL AND
GAS PROPERTY SHALL NOT BE PAID TO SELLER, AND (III) SELLER SHALL USE BEST
EFFORTS TO OBTAIN SUCH CONSENT AS PROMPTLY AS POSSIBLE FOLLOWING CLOSING.
IF
SUCH CONSENT HAS BEEN OBTAINED AS OF THE DATE ON WHICH THE POST-CLOSING
ADJUSTMENT STATEMENT BECOMES FINAL, SELLER SHALL CONVEY THE AFFECTED OIL AND GAS
16
PROPERTY TO THE COMPANY EFFECTIVE AS OF THE EFFECTIVE TIME AND BUYER SHALL PAY
SELLER THE ALLOCATED VALUE OF THE AFFECTED OIL AND GAS PROPERTY, LESS ANY
PROCEEDS FROM THE AFFECTED OIL AND