Common use of Allocated Value Clause in Contracts

Allocated Value. (a) SM Energy and Buyer have agreed upon an allocation of the unadjusted Purchase Price among each of the ▇▇▇▇▇ and Well Locations, and such allocations are set forth on Schedule 2.5(a) (the “Allocated Values”). SM Energy and Buyer agree that the Allocated Values shall be used in calculating adjustments to the Purchase Price as provided herein. Any adjustments to the Purchase Price, other than the adjustments provided for in Section 2.4, shall be applied on a pro rata basis to the amounts set forth in Schedule 2.5(a), as applicable, for all Assets. After all such adjustments are made, any adjustments to the Purchase Price made pursuant to Section 2.4 shall be applied to the amounts set forth on Schedule 2.5(a), as applicable, for the particular affected Assets. (b) On or before the Closing Date, Buyer and SM Energy will agree upon an allocation of the unadjusted Purchase Price among each of the Assets, in compliance with the principles of Section 1060 of the Code, and the United States Treasury Regulations thereunder. Such allocation shall be in the format of Schedule 2.5(b). SM Energy and Buyer agree (i) that the Allocated Values, as adjusted pursuant to this paragraph, shall be used by SM Energy and Buyer as the basis for reporting asset values and other items for purposes of all federal, state, and local Tax Returns, including Internal Revenue Service Form 8594 and (ii) that neither they nor their Affiliates will take positions inconsistent with Schedule 2.5(b) (as adjusted pursuant to this paragraph) in notices to Governmental Bodies, in audit or other Proceedings with respect to Taxes, in notices to preferential purchase right holders, or in other documents or notices relating to the transactions contemplated by this Agreement without the consent of the other Party. Buyer and SM Energy further agree that, on or immediately after the Closing Date, they will mutually agree as to the further allocation of the values on Schedule 2.5 (a) as to the relative portion of those values attributable to leasehold costs and depreciable equipment.