OWNING AND
OPERATING OIL AND GAS ASSETS, AND WHICH DO NOT REDUCE SELLER'S NET REVENUE
INTEREST BELOW THAT SHOWN IN EXHIBIT 1.2(B) AND EXHIBIT 1.2(C), OR INCREASE
SELLER'S WORKING INTEREST ABOVE THAT SHOWN IN EXHIBIT 1.2(B) AND EXHIBIT 1.2(C)
WITHOUT A CORRESPONDING INCREASE IN NET REVENUE INTEREST.
Section 3.4
Notice of Title Defects.
(A)
TO ASSERT A CLAIM ARISING OUT OF A BREACH OF SECTION 3.1(A),
PURCHASER MUST DELIVER CLAIM NOTICES TO SELLER (EACH A "TITLE DEFECT NOTICE") ON
OR BEFORE TEN (10) BUSINESS DAYS PRIOR TO THE CLOSING DATE (THE "TITLE CLAIM
DATE"), EXCEPT AS OTHERWISE PROVIDED UNDER SECTIONS 3.5 OR 3.6.
EACH TITLE
DEFECT NOTICE SHALL BE IN WRITING AND SHALL INCLUDE (I) A DESCRIPTION OF THE
ALLEGED TITLE DEFECT(S), (II) THE UNITS OR WELLS AFFECTED BY THE TITLE DEFECT
(EACH A "TITLE DEFECT PROPERTY"), (III) THE ALLOCATED VALUES OF EACH TITLE
DEFECT PROPERTY, (IV) SUPPORTING DOCUMENTS REASONABLY NECESSARY FOR SELLER (AS
WELL AS ANY TITLE ATTORNEY OR EXAMINER HIRED BY SELLER) TO VERIFY THE EXISTENCE
OF THE ALLEGED TITLE DEFECT(S) AND (V) THE AMOUNT BY WHICH PURCHASER REASONABLY
BELIEVES THE ALLOCATED VALUES OF EACH TITLE DEFECT PROPERTY ARE REDUCED BY THE
ALLEGED TITLE DEFECT(S) AND THE COMPUTATIONS AND INFORMATION UPON WHICH
PURCHASER'S BELIEF IS BASED. PURCHASER SHALL BE DEEMED TO HAVE WAIVED ALL
BREACHES OF SECTION 3.1(A) OF WHICH SELLER HAS NOT BEEN GIVEN NOTICE ON OR
BEFORE THE TITLE CLAIM DATE.
(B)
SELLER SHALL HAVE THE RIGHT, BUT NOT THE OBLIGATION, TO DELIVER TO
PURCHASER ON OR BEFORE THE TITLE CLAIM DATE WITH RESPECT TO EACH TITLE BENEFIT A
NOTICE (A "TITLE BENEFIT NOTICE") INCLUDING (I) A DESCRIPTION OF THE TITLE
BENEFIT, (II) THE UNITS OR WELLS AFFECTED, (III) THE ALLOCATED VALUES OF THE
UNITS OR WELLS SUBJECT TO SUCH TITLE BENEFIT AND (IV) THE
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amount by which the Seller reasonably believes the Allocated Value of those
Units or Wells is increased by the Title Benefit, and the computations and
information upon which Seller's belief is based. Seller shall be deemed to have
waived all Title Benefits of which it has not given notice on or before the
Title Claim Date.
(C)
SELLER SHALL HAVE THE RIGHT, BUT NOT THE OBLIGATION, TO ATTEMPT, AT
ITS SOLE COST, TO CURE OR REMOVE AT ANY TIME PRIOR TO CLOSING (THE "CURE
PERIOD") ANY TITLE DEFECTS OF WHICH IT HAS BEEN ADVISED BY PURCHASER.
(D)
REMEDIES FOR TITLE DEFECTS.
In the event that any Title Defect is not waived by Purchaser or cured on or
before Closing, Seller shall, at its sole election, elect to:
(I)
REDUCE THE PURCHASE PRICE BY AN AMOUNT
AGREED UPON ("TITLE DEFECT AMOUNT") PURSUANT TO SECTION 3.4(G) OR 3.4(I) BY
PURCHASER AND SELLER AS BEING THE VALUE OF SUCH TITLE DEFECT, TAKING INTO
CONSIDERATION THE ALLOCATED VALUE OF THE PROPERTY SUBJECT TO SUCH TITLE DEFECT,
THE PORTION OF THE PROPERTY SUBJECT TO SUCH TITLE DEFECT AND THE LEGAL EFFECT OF
SUCH TITLE DEFECT ON THE PROPERTY AFFECTED THEREBY; PROVIDED, HOWEVER, THAT IF