SELLER'S EXPENSE TO REMEDIATE THE ADVERSE ENVIRONMENTAL
CONDITIONS TO BUYER'S REASONABLE SATISFACTION PRIOR TO CLOSING, BUT SELLER SHALL
HAVE NO OBLIGATION TO DO SO, AND PROCEED TO CLOSING WITH NO ADJUSTMENT OF THE
BASE PURCHASE PRICE; (II) PROCEED TO CLOSING AND ADJUST THE BASE PURCHASE PRICE
IN AN AMOUNT EQUAL TO THE APPLICABLE ENVIRONMENTAL DEFECT VALUE; OR (III) DEEM
THE AFFECTED OIL AND GAS PROPERTY AN EXCLUDED ASSET AND REDUCE THE BASE PURCHASE
PRICE BY THE ALLOCATED VALUE OF THE AFFECTED OIL AND GAS PROPERTY ("EXCLUSION
ADJUSTMENT").
(B)
BUYER WAIVES ANY ADVERSE ENVIRONMENTAL
CONDITION FOR WHICH BUYER HAS RECEIVED AN ADJUSTMENT TO THE BASE PURCHASE PRICE
IN ACCORDANCE WITH SECTION 6.4(A).
(C)
IF BUYER DELIVERS A VALID ENVIRONMENTAL DEFECT
NOTICE TO SELLER AND IF THE AGGREGATE OF THE ENVIRONMENTAL DEFECTS CLAIMED IS
LESS THAN THE ENVIRONMENTAL DEFECT THRESHOLD, BUYER WILL BE DEEMED TO HAVE
ACCEPTED THE OIL AND GAS PROPERTIES "WHERE-IS, AS-IS" WITH
19
RESPECT TO ALL ADVERSE ENVIRONMENTAL CONDITIONS IN, ON OR UNDER THE OIL AND GAS
PROPERTIES.
THE ENVIRONMENTAL DEFECT THRESHOLD IS A THRESHOLD AND NOT A
DEDUCTIBLE.
THE ENVIRONMENTAL DEFECT THRESHOLD AND THE TITLE DEFECT THRESHOLD
ARE SEPARATE AND DISTINCT AND OPERATE INDEPENDENTLY.
(D)
IF THE AGGREGATE VALUE OF (I) THE BASE PURCHASE
PRICE ADJUSTMENT FOR ADVERSE ENVIRONMENTAL CONDITIONS PLUS (II) ANY EXCLUSION
ADJUSTMENTS IN LIEU OF REMEDIATING ANY ADVERSE ENVIRONMENTAL CONDITIONS EQUALS
OR EXCEEDS TEN PERCENT (10%) OF THE BASE PURCHASE PRICE, EITHER PARTY MAY
TERMINATE THIS AGREEMENT AND NEITHER PARTY SHALL HAVE ANY FURTHER OBLIGATION TO
CONCLUDE THE TRANSFER OF THE OIL AND GAS PROPERTIES UNDER THIS AGREEMENT.
(E)
THE TERM "REMEDIATE" OR "REMEDIATION" MEANS,
WITH RESPECT TO ANY VALID ADVERSE ENVIRONMENTAL CONDITION, CAUSING THE COMPANY
AT SELLER'S EXPENSE TO UNDERTAKE AND COMPLETE THOSE ACTIONS AND ACTIVITIES
NECESSARY TO ELIMINATE OR CORRECT SUCH ADVERSE ENVIRONMENTAL CONDITION TO THE
DEGREE SUFFICIENT THAT SUCH ADVERSE ENVIRONMENTAL CONDITION NO LONGER
CONSTITUTES AN ADVERSE ENVIRONMENTAL CONDITION AS DEFINED ABOVE.
SELLER SHALL
PROMPTLY NOTIFY BUYER AT SUCH TIME AS IT BELIEVES THAT IT HAS REMEDIATED AN
ADVERSE ENVIRONMENTAL CONDITION.
BUYER SHALL PROMPTLY NOTIFY SELLER WHETHER IT
AGREES SUCH CONDITION IS REMEDIATED.
IF BUYER FAILS TO NOTIFY SELLER OF ITS
DETERMINATION WITH RESPECT TO SUCH REMEDIATION WITHIN TEN (10) BUSINESS DAYS
FOLLOWING SELLER'S NOTICE, SUCH ADVERSE ENVIRONMENTAL CONDITION SHALL BE DEEMED
REMEDIATED.
(F)
IF SELLER AND BUYER ARE UNABLE TO AGREE ON THE
AMOUNT OF THE ENVIRONMENTAL DEFECT VALUE WITHIN TEN (10) BUSINESS DAYS AFTER
SELLER'S RECEIPT OF THE ENVIRONMENTAL DEFECT NOTICE OR THAT AN ADVERSE
ENVIRONMENTAL CONDITION EXISTS, HAS BEEN REMEDIATED OR IS REQUIRED TO BE
REMEDIATED, THEN THE DISPUTE WILL BE SUBMITTED TO A MUTUALLY ACCEPTABLE COMPANY
WITH RECOGNIZED EXPERTISE IN THE OIL AND GAS ENVIRONMENTAL REMEDIATION AND
REGULATION FIELD (THE "ENVIRONMENTAL CONSULTANT") WHOSE DETERMINATION SHALL BE
FINAL AND BINDING UPON THE PARTIES.
SELLER AND BUYER SHALL EACH BEAR THEIR
RESPECTIVE COSTS AND EXPENSES INCURRED IN CONNECTION WITH ANY SUCH DISPUTE, AND
ONE-HALF (1/2) OF THE FEES, COSTS AND EXPENSES CHARGED BY THE ENVIRONMENTAL
CONSULTANT.
EACH PARTY SHALL