OTHER OWNERSHIP INTERESTS OF THE COMPANY.
EXCEPT FOR THE PURCHASE AND SALE OF
THE COMPANY SHARES PURSUANT TO THIS AGREEMENT, THERE ARE NO OUTSTANDING CLAIMS,
OPTIONS OR OTHER RIGHTS OF ANY PERSON TO PURCHASE FROM SELLER, AND NO CONTRACTS
OR COMMITMENTS PROVIDING FOR THE GRANTING OF RIGHTS TO ACQUIRE, ANY OF THE
MEMBERSHIP INTERESTS.
THERE ARE NO CLAIMS PENDING OR, TO THE KNOWLEDGE OF
SELLER AND THE COMPANY, THREATENED, AGAINST THE COMPANY OR SELLER THAT CONCERN
OR AFFECT TITLE TO THE MEMBERSHIP INTERESTS, OR THAT SEEK TO COMPEL THE ISSUANCE
OF ANY SECURITIES OF THE COMPANY.
THERE ARE NO OUTSTANDING OBLIGATIONS IN
CONNECTION WITH THE REDEMPTION BY THE COMPANY OF ANY OF THE PREVIOUSLY ISSUED
AND OUTSTANDING SECURITIES OF THE COMPANY.
(U)
TITLE TO MEMBERSHIP INTERESTS.
WITH THE
EXCEPTION OF THE LIENS THAT WILL BE RELEASED AT CLOSING, SELLER HAS LEGAL,
BENEFICIAL AND RECORD TITLE TO ALL OF THE MEMBERSHIP INTERESTS, FREE AND CLEAR
OF ANY AND ALL LIENS, RESTRICTIONS, OPTIONS, VOTING TRUSTS OR AGREEMENTS,
PROXIES, ENCUMBRANCES, INTERESTS, CLAIMS OR CHARGES OF ANY KIND WHATSOEVER AND
ALL SUCH MEMBERSHIP INTERESTS ARE VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE.
SELLER HAS OR WILL HAVE AT THE CLOSING PHYSICAL CUSTODY OF ANY CERTIFICATES
EVIDENCING ALL OF THE MEMBERSHIP INTERESTS.
AT CLOSING, BUYER WILL ACQUIRE GOOD
AND DEFENSIBLE TITLE TO THE MEMBERSHIP
25
INTERESTS, FREE AND CLEAR OF ANY AND ALL LIENS, RESTRICTIONS, OPTIONS, VOTING
TRUSTS OR AGREEMENTS, PROXIES, ENCUMBRANCES, CLAIMS, INTERESTS OR CHARGES OF ANY
KIND.
(V)
TITLE TO AND CONDITION OF NON-OIL AND GAS
PROPERTIES.
THE COMPANY DOES NOT HAVE, AND HAS NOT EVER HAD, ANY ASSETS OTHER
THAN THE OIL AND GAS PROPERTIES AND THE RECORDS.
THE RECORDS ARE FREE AND CLEAR
OF ALL LIENS, CLAIMS AND OTHER ENCUMBRANCES, HAVE BEEN MAINTAINED IN ACCORDANCE
WITH INDUSTRY STANDARDS AND ARE NOT SUBJECT TO ANY RESTRICTIONS WITH RESPECT TO
THE TRANSFERABILITY THEREOF.
(W)
OIL AND GAS PROPERTIES.
SUBJECT TO THE TITLE REVIEW
PROCESS SET FORTH IN ARTICLE 5, THE COMPANY HAS GOOD AND DEFENSIBLE TITLE TO THE
OIL AND GAS PROPERTIES.
THERE IS NO PENDING CONDEMNATION OR SIMILAR PROCEEDING
AFFECTING THE OIL AND GAS PROPERTIES OR ANY PORTION THEREOF, AND, TO THE
KNOWLEDGE OF SELLER AND THE COMPANY, NO SUCH ACTION IS PRESENTLY THREATENED. ALL
OIL AND GAS LEASES AND AGREEMENTS CONSTITUTING A PART OF THE OIL AND GAS
PROPERTIES ARE VALID AND SUBSISTING, IN FULL FORCE AND EFFECT AND, TO THE
KNOWLEDGE OF SELLER AND THE COMPANY THERE EXISTS NO DEFAULT OR EVENT OR
CIRCUMSTANCES WHICH WITH THE GIVING OF NOTICE OR THE PASSAGE OF TIME OR BOTH
WOULD GIVE RISE TO A DEFAULT UNDER ANY SUCH LEASE OR AGREEMENT WHICH WOULD
MATERIALLY INTERFERE WITH THE OPERATION, VALUE OR USE OF THE COMPANY'S ASSETS OR
PROPERTIES. THE COMPANY HAS PERFORMED IN ALL MATERIAL RESPECTS EACH MATERIAL
TERM, COVENANT AND CONDITION OF EACH OF THE LEASES.
(X)
FINANCIAL STATEMENTS.
THE COMPANY AND SELLERS
HAVE PROVIDED TO BUYER TRUE AND COMPLETE COPIES OF THE UNAUDITED BALANCE SHEETS
OF THE COMPANY AS OF DECEMBER