SUCH TITLE DEFECT IS THE RESULT OF A DISCOVERY BY PURCHASER THAT SELLER OWNED,
AS OF THE EFFECTIVE TIME, A NET REVENUE INTEREST IN A PROPERTY THAT IS LESS THAN
THE NET REVENUE INTEREST SET FORTH ON EXHIBIT 1.2(B) AND EXHIBIT 1.2(C), THEN
PURCHASER AND SELLER AGREE THAT THE PROPORTION OF REDUCTION TO THE PURCHASE
PRICE SHALL BE EQUAL TO THE PRODUCT OF THE ALLOCATED VALUE OF SUCH PROPERTY AND
THE PERCENTAGE REDUCTION IN SUCH NET REVENUE INTEREST AS A RESULT OF SUCH TITLE
DEFECT;
(II)
ENTER INTO AN AGREEMENT WITH PURCHASER
WHEREBY SELLER WILL AS SOON AS REASONABLY PRACTICABLE AFTER CLOSING, AT THE SOLE
COST AND EXPENSE OF SELLER, PERFORM OR CAUSE TO BE PERFORMED SUCH OPERATIONS AS
MAY BE NECESSARY TO CURE SUCH TITLE DEFECTS TO PURCHASER'S REASONABLE
SATISFACTION;
(III)
RETAIN THE PROPERTY THAT IS SUBJECT TO SUCH
TITLE DEFECT, IN WHICH EVENT THE PURCHASE PRICE SHALL BE REDUCED BY AN AMOUNT
EQUAL TO THE ALLOCATED VALUE OF SUCH PROPERTY; OR
(IV)
IF APPLICABLE, TERMINATE THIS AGREEMENT
PURSUANT TO ARTICLE 10.
In the event that Seller elects to proceed under Section 3.4(d)(i) and Purchaser
and Seller have failed to agree by Closing on the proportionate reduction of the
Allocated Value of the affected Property (which agreement Purchaser and Seller
shall use good faith efforts to reach), Seller shall then elect to proceed with
respect to such Title Defect under any of Sections 3.4(d)(ii), 3.4(d)(iii) or
3.4(d)(iv) or to arbitrate the matter pursuant to Section 3.4(i).
(E)
WITH RESPECT TO EACH UNIT OR WELL AFFECTED BY TITLE BENEFITS
REPORTED UNDER SECTION 3.4(B), THE PURCHASE PRICE SHALL BE INCREASED BY AN
AMOUNT (THE "TITLE BENEFIT AMOUNT") EQUAL TO THE INCREASE IN THE ALLOCATED VALUE
FOR SUCH UNIT OR WELL CAUSED BY
15
SUCH TITLE BENEFITS, AS DETERMINED PURSUANT TO SECTION 3.4(H).
THE CLOSING
PAYMENT SHALL BE INCREASED BY SUCH TITLE BENEFIT AMOUNT.
(F)
SECTION 3.4(D) SHALL, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, BE THE EXCLUSIVE RIGHT AND REMEDY OF PURCHASER WITH RESPECT TO
SELLER'S BREACH OF ITS WARRANTY AND REPRESENTATION IN SECTION 3.1(A).
(G)
THE TITLE DEFECT AMOUNT RESULTING FROM A TITLE DEFECT SHALL BE
DETERMINED AS FOLLOWS:
(I)
IF PURCHASER AND SELLER AGREE ON THE
TITLE DEFECT AMOUNT, THAT AMOUNT SHALL BE THE TITLE DEFECT AMOUNT;
(II)
IF THE TITLE DEFECT IS A LIEN, ENCUMBRANCE
OR OTHER CHARGE WHICH 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 TITLE DEFECT PROPERTY;
(III)
IF THE TITLE DEFECT REPRESENTS A DISCREPANCY
BETWEEN (A) THE NET REVENUE INTEREST FOR ANY TITLE DEFECT PROPERTY AND (B) THE
NET REVENUE INTEREST OR PERCENTAGE STATED ON EXHIBIT 1.2(B) AND EXHIBIT 1.2(C),
THEN THE TITLE DEFECT AMOUNT SHALL BE THE PRODUCT OF THE ALLOCATED VALUE OF SUCH
TITLE DEFECT PROPERTY MULTIPLIED BY A FRACTION, THE NUMERATOR OF WHICH IS THE
NET REVENUE INTEREST OR PERCENTAGE OWNERSHIP DECREASE AND THE DENOMINATOR OF
WHICH IS THE NET REVENUE