Initial Public Offering (IPO): Pre-Effective Amendment to Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1/A Amendment No. 1 to Form S-1 85 368K
2: EX-1.1 Form of Underwriting Agreement 32 118K
3: EX-5.1 Opinion of Kelly, Hart & Hallman, P.C. 2 10K
4: EX-8.1 Opinion of Butler Binion, L.L.P. 2 12K
5: EX-8.2 Opinion of Morris, Laing, Evans, Brock & Kennedy 3 13K
6: EX-10.1 Form of 80% Net Overriding Royalty Conveyance-Ks 30 106K
7: EX-10.2 Form of 80% Net Overriding Royalty Conveyance-Ok 30 106K
8: EX-10.3 Form of 80% Net Overriding Royalty Conveyance-Wy 30 105K
9: EX-15.1 Awareness Letter of Arthur Andersen LLP 1 8K
10: EX-23.1 Consent of Arthur Andersen LLP 1 8K
11: EX-23.5 Consent of Miller and Lents 1 8K
12: EX-27.1 Financial Data Schedule 2 8K
EXHIBIT 1.1
Hugoton Royalty Trust
Trust Units
----------
Underwriting Agreement
____________________, 1999
Hugoton Royalty Trust
Trust Units
---------
Underwriting Agreement
----------------------
______________, 1999
Goldman, Sachs & Co.,
Lehman Brothers Inc.
A.G. Edwards & Sons, Inc.
Bear, Stearns & Co.
Dain Rauscher Wessels
a division of Dain Rauscher Incorporated
Donaldson, Lufkin & Jenrette Securities Corporation,
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street
New York, New York 10004
Dear Sirs:
Cross Timbers Oil Company, a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
15,000,000 units of beneficial interest ("Trust Units") in Hugoton Royalty
Trust, a grantor trust formed under the laws of the State of Texas (the
"Trust"), and, at the election of the Underwriters, up to 2,250,000 additional
Trust Units. The aggregate of 15,000,000 Trust Units to be sold by the Company
is herein called the "Firm Units" and the aggregate of 2,250,000 additional
Trust Units to be sold by the Company at the election of the Underwriters is
herein called the "Optional Units." The Firm Units and the Optional Units which
the Underwriters elect to purchase pursuant to Section 2 hereof are referred to
herein collectively as the "Units."
1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(i) A joint registration statement of the Trust (on Form S-1) and the
Company (on Form S-3) (File No. 333-68441) (the "Initial Registration
Statement") in respect of the Units has been filed with the Securities and
Exchange Commission (the "Commission"); the Initial Registration Statement and
any post-effective amendment thereto, each in the form heretofore delivered to
you, and, excluding exhibits thereto but including all documents incorporated by
reference in the prospectus contained therein, to you for each of the other
Underwriters, have been declared effective by the Commission in such form; other
than a registration statement, if any,
increasing the size of the offering (a "Rule 462(b) Registration Statement"),
filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the
"Act"), which became effective upon filing, no other document with respect to
the Initial Registration Statement or document incorporated by reference therein
has heretofore been filed with the Commission; and no stop order suspending the
effectiveness of the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated or threatened by
the Commission (any preliminary prospectus included in the Initial Registration
Statement or filed with the Commission pursuant to Rule 424(a) of the rules and
regulations of the Commission under the Act, is hereinafter called a
"Preliminary Prospectus;" the various parts of the Initial Registration
Statement and the Rule 462(b) Registration Statement, if any, including all
exhibits thereto and including (i) the information contained in the form of
final prospectus filed with the Commission pursuant to Rule 424(b) under the Act
in accordance with Section 5(a) hereof and deemed by virtue of Rule 430A under
the Act to be part of the Initial Registration Statement at the time it was
declared effective and (ii) the documents incorporated by reference in the
prospectus contained in the Initial Registration Statement at the time such part
of the Initial Registration Statement became effective, each as amended at the
time such part of the Initial Registration Statement became effective or such
part of the Rule 462(b) Registration Statement, if any, became or hereafter
becomes effective, are hereinafter collectively called the "Registration
Statement;" such final prospectus, in the form first filed pursuant to Rule
424(b) under the Act, is hereinafter called the "Prospectus;" and any reference
herein to any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein pursuant to Item
12 of Form S-3 under the Act, as of the date of such Preliminary Prospectus or
Prospectus, as the case may be; any reference to any amendment or supplement to
any Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include any documents filed after the date of such Preliminary Prospectus or
Prospectus, as the case may be, under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and incorporated by reference in such Preliminary
Prospectus or Prospectus, as the case may be; and any reference to any amendment
to the Registration Statement shall be deemed to refer to and include any annual
report of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange
Act after the effective date of the Initial Registration Statement that is
incorporated by reference in the Registration Statement);
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus,
at the time of filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder, and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through Goldman, Sachs & Co. expressly for use therein;
(iii) The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the case may
be, conformed in all material
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respects to the requirements of the Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder, and none of such
documents contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement thereto, when
such documents become effective or are filed with the Commission, as the case
may be, will conform in all material respects to the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company by
an Underwriter through Goldman, Sachs & Co. expressly for use therein;
(iv) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the Act
and the rules and regulations of the Commission thereunder and do not and will
not, as of the applicable effective date as to the Registration Statement and
any amendment thereto and as of the applicable filing date as to the Prospectus
and any amendment or supplement thereto, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
this representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in writing to
the Company by an Underwriter through Goldman, Sachs & Co. expressly for use
therein;
(v) The Trust has not sustained since the date of its formation any
material loss or interference with respect to the Underlying Properties (as
defined in the Prospectus) from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there has
not been (a) any change in the number of outstanding Trust Units or (b) any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, financial position, or
results of operations of the Trust, or management of the Underlying Properties,
otherwise than as set forth or contemplated in the Prospectus;
(vi) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements incorporated by
reference in the Prospectus any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Prospectus; and,
since the respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any change in the long-term
debt of the Company or any of its subsidiaries or any material adverse
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change, or any development involving a prospective material adverse change, in
or affecting the general affairs, management, financial position, stockholders'
equity or results of operations of the Company and its subsidiaries, otherwise
than as set forth or contemplated in the Prospectus;
(vii) (a) The Company has good and defensible title to the
Underlying Properties, free and clear of all liens, encumbrances and defects,
except (A) royalties, overriding royalties and other burdens under oil and gas
leases, (B) easements, restrictions, rights-of-way and other matters that
commonly affect property, (C) liens securing taxes and other governmental
charges, or claims of materialmen, mechanics and similar persons, not yet due
and payable, (D) liens and encumbrances under operating agreements, farmout
agreements, unitization, pooling and commutation agreements, declarations and
orders, and gas sales contracts, securing payment of amounts not yet due and
payable and of a scope and nature customary in the oil and gas industry and (E)
liens, encumbrances and defects that do not in the aggregate materially affect
the value of the Underlying Properties or materially interfere with the use made
or proposed to be made of such Underlying Properties by the Company; (b) the
working interests in oil, gas and mineral leases or mineral interests which
constitute a portion of the Underlying Properties held by the Company reflect in
all material respects the right of the Company to explore or receive production
from such Underlying Properties, and the care taken by the Company and its
subsidiaries with respect to acquiring or otherwise procuring such leases or
mineral interests was generally consistent with standard industry practices for
acquiring or procuring leases and interests therein to explore such for
hydrocarbons; and (c) the Trust has good and defensible title to the Net Profits
Interests (as defined in the Prospectus), free and clear of all liens,
encumbrances and defects, except liens securing taxes and other governmental
charges and liens, encumbrances and defects that do not in the aggregate
materially affect the value of the Net Profits Interests;
(viii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own its properties and conduct
its business as described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties
or conducts any business so as to require such qualification, or is subject to
no material liability or disability by reason of the failure to be so qualified
in any such jurisdiction, and each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation;
(ix) (a) The Trust has been duly formed and is validly existing as a
grantor trust under the laws of the State of Texas, with full trust power and
authority to own its properties as described in the Prospectus; (b) the Royalty
Trust Indenture, dated as of December 1, 1998, between the Company, as Grantor,
and NationsBank, N.A., a banking association organized under the laws of the
United States with its principal place of business in Dallas, Texas (the
"Trustee"), as trustee, (such Royalty Trust Indenture being herein referred to
as the "Indenture"), has been authorized, executed and delivered by the Company
and the Trustee; (c) the Indenture is a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except
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as the enforceability thereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors generally, and
(B) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law); (d) the Net Overriding Royalty
Conveyance (Oklahoma) dated as of December 1, 1998 by the Company in favor of
the Trustee, as trustee in trust, the Net Overriding Royalty Conveyance (Kansas)
dated as of December 1, 1998 by the Company in favor of the Trustee, as trustee
in trust, and the Net Overriding Royalty Conveyance (Wyoming) dated as of
December 1, 1998 by the Company in favor of the Trustee, as trustee in trust,
(collectively, the "Conveyances"), will be duly authorized, executed and
delivered by the Company and will be valid and binding obligations of the
Company enforceable against the Company, except as the enforceability of each
may be limited by (A) bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, and (B) general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law); (e) at the Closing, the Company will have made
all necessary filings in the jurisdictions referred to in the Conveyances or,
with respect to Net Profits Interests burdening Federal or Indian lands, under
Federal law, including without limitation the filing of the Conveyances for
recordation in the appropriate records pursuant to local recordation laws or,
with respect to Net Profits Interests burdening Federal and Indian lands,
pursuant to applicable Federal law; (f) the Indenture conforms and the
Conveyances will conform in all material respects to the descriptions thereof in
the Prospectus; (g) at the Closing, the Company will have assigned and
contributed to the Trust the Net Profits Interests as described in the
Prospectus and (h) holders of the certificates representing the Trust Units are
entitled to the benefits of the Indenture;
(x) There are 40,000,000 Trust Units authorized and issued under
the Indenture; the Trust Units to be sold by the Company to the Underwriters
hereunder have been duly and validly authorized and issued without the
requirement for payment of any further consideration and conform to the
description of the Trust Units contained in the Prospectus; and, except as set
forth in the Prospectus;
(xi) The Company has, and immediately prior to each Time of Delivery
(as defined in Section 4 hereof) the Company will have, good and valid title to
the Trust Units to be sold by the Company hereunder, free and clear of all
liens, encumbrances, equities or claims, and the Company has full corporate
power and authority to sell, assign, transfer and deliver such Trust Units
hereunder; and, upon the delivery of such Trust Units and payment therefor
pursuant hereto, good and valid title to such Trust Units, free and clear of
all liens, encumbrances, equities or claims, will pass to the several
Underwriters;
(xii) All consents, approvals, authorizations and orders necessary
for the transfer of the Net Profits Interests to the Trust as described in the
Prospectus have been obtained and such transfer has not had the effect of
creating any lien, claim, encumbrance or equity of any kind in favor of any
person with respect to any of the Net Profits Interests (including any
preferential right of purchase, or, with respect to any properties in which
Grantor has acted as operator, any right to remove the Grantor as operator)
except (i) to the extent such rights have been validly waived in
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writing or (ii) to the extent such liens, claims, encumbrances or equities,
which, if asserted or exercised, would not have a material adverse effect on the
value of the Trust Units;
(xiii) The formation of the Trust by the execution and delivery of
the Indenture and the transfer of the Net Profits Interests by the Company to
the Trust by the execution and delivery of the Conveyances, the sale of the
Trust Units to be sold by the Company hereunder, the compliance by the Company
and the Trust with all of the provisions of this Agreement, the Indenture and
the Conveyances and the consummation of the transactions herein contemplated
will not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, the Indenture or any other
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries or the Trust is a
party or by which the Company or any of its subsidiaries or the Trust is bound
or to which any of the property or assets of the Company or any of its
subsidiaries or the Net Profit Interests is subject, nor will such action result
in any violation of the provisions of the Certificate of Incorporation or Bylaws
of the Company, the Indenture, or any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over the Company
or any of its subsidiaries or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any such court or
governmental agency or body is required for the sale of the Trust Units or the
consummation by the Company of the transactions contemplated by this Agreement,
except the registration under the Act of the Trust Units and such consents,
approvals, authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the purchase and
distribution of the Trust Units by the Underwriters;
(xiv) Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation or Bylaws or in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan agreement,
lease or any other agreement or instrument to which it is a party or by which it
or any of its properties may be bound;
(xv) The statements set forth in the Prospectus under the caption
"Description of the Trust Units," insofar as they purport to constitute a
summary of the terms of the Trust Units, and the statements under the captions
"Federal Income Tax Consequences," and "State Tax Considerations" and
"Underwriting," fairly and accurately describe the provisions of the laws and
documents referred to therein in all material respects;
(xvi) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any of its
subsidiaries or the Trust is a party or of which any property of the Company or
any of its subsidiaries or the Net Profits Interests is the subject which, if
determined adversely to the Company or any of its subsidiaries or the Trust or
the Net Profits Interests, would individually or in the aggregate have a
material adverse effect on the Net Profits Interests or the current or future
consolidated financial position, owners' equity or results of operations of the
Company and its subsidiaries or the Trust; and, to the best of the Company's
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knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(xvii) Arthur Andersen L.L.P., who have certified certain financial
statements of the Trust and the Underlying Properties included in the Prospectus
and certain financial statements of the Company and its subsidiaries
incorporated by reference therein, are independent public accountants as
required by the Act and the rules and regulations of the Commission thereunder;
(xviii) Neither the Company nor the Trust is or, after giving effect
to the offering and sale of Trust Units, will be an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
(xix) Neither the Company nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes;
(xx) The Company has reviewed its operations and that of its
subsidiaries and is in the process of reviewing the relevant operations of third
parties with which the Company or any of its subsidiaries has a material
relationship to evaluate the extent to which the business or operations of the
Company or any of its subsidiaries will be affected by the Year 2000 Problem.
As a result of such review, the Company has no reason to believe, and does not
believe, that the Year 2000 Problem will have a material adverse effect on the
general affairs, management, the current or future consolidated financial
position, business prospects, stockholders' equity or results of operations of
the Company and its subsidiaries or result in any material loss or interference
with the Company's business or operations. The "Year 2000 Problem" as used
herein means any significant risk that computer hardware or software used in the
receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of mechanical or
electrical systems of any kind will not, in the case of dates or time periods
occurring after December 31, 1999, function at least as effectively as in the
case of dates or time periods occurring prior to January 1, 2000;
(xxi) The information supplied by the Company to its independent
petroleum engineering consultants for purposes of preparing the reserve reports
used to calculate estimates of reserves of the Trust and the Underlying
Properties included in the Registration Statement, including, without
limitation, production, costs of operation and development, current prices for
production, agreements relating to current and future operations and sales of
production, was true and correct in all material respects on the date supplied
and was prepared in accordance with customary industry practices; Miller and
Lents, Ltd., independent consulting petroleum engineers, who prepared estimates
of the extent and value of proved oil and natural gas reserves of the Underlying
Properties, are independent with respect to the Company and the Trust;
(xxii) At the First Time of Delivery (as defined in Section 4),
except for liens and encumbrances described in clauses (A), (B), (C) and (D) of
Section 1(vii)(a) hereof, (a) any and all
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liens or encumbrances on the Underlying Properties will be subordinated to the
Net Profits Interests, and (b) all future liens or encumbrances on the
Underlying Properties shall be subordinate and inferior to the Net Profits
Interests;
(xxiii) The Company has not taken and will not take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of Trust Units or any security of the Company to facilitate the
sale or resale of the Trust Units; and
(xxiv) No consent, approval, authorization or filing is required
under any law, rule or regulation of the States of Texas, Kansas, Oklahoma or
Wyoming, or of the United States of America in order to permit the Trustee to
act as Trustee of the Trust.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company at a purchase price of
$______ per Trust Unit, the number of Firm Units set forth opposite the name of
such Underwriter in Schedule I hereto and (b) in the event and to the extent
that the Underwriters shall exercise the election to purchase Optional Units as
provided below, the Company agrees to sell to each of the Underwriters, and each
of the Underwriters agrees, severally and not jointly, to purchase from the
Company, at the purchase price per Trust Unit set forth in clause (a) of this
Section 2, that portion of the number of Optional Units as to which such
election shall have been exercised (to be adjusted by you so as to eliminate
fractional Trust Units) determined by multiplying such number of Optional Units
by a fraction the numerator of which is the maximum number of Optional Units
which such Underwriter is entitled to purchase as set forth opposite the name of
such Underwriter in Schedule I hereto and the denominator of which is the
maximum number of Optional Units which all of the Underwriters are entitled to
purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to 2,250,000 Optional Units, at the purchase price per Trust
Unit set forth in the paragraph above, for the sole purpose of covering over-
allotments in the sale of the Firm Units. Any such election to purchase
Optional Units shall be made in proportion to the maximum number of Optional
Units to be sold by the Company. Any such election to purchase Optional Units
may be exercised only by written notice from you to the Company, given within a
period of 30 calendar days after the date of this Agreement and setting forth
the aggregate number of Optional Units to be purchased and the date on which
such Optional Units are to be delivered, as determined by you but in no event
earlier than the First Time of Delivery (as defined in Section 4 hereof) or,
unless you and the Company otherwise agree in writing, earlier than two or later
than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Units, the
several Underwriters propose to offer the Firm Units for sale upon the terms and
conditions set forth in the Prospectus.
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4. (a) The Trust Units to be purchased by each Underwriter hereunder, in
definitive form and in such denominations and registered in such names as
Goldman, Sachs & Co. may request upon at least forty-eight hours' prior notice
to the Company shall be delivered by or on behalf of the Company to Goldman,
Sachs & Co. through the facilities of The Depository Trust Company for the
account of such Underwriter, against payment on behalf of such Underwriter of
the purchase price therefor by wire transfer of federal (same-day) funds to the
account specified by the Company, to Goldman, Sachs & Co. at least forty-eight
hours in advance. The Company will cause the certificates representing the
Trust Units to be made available for checking and packaging at least twenty-four
hours prior to the Time of Delivery (as defined below) with respect thereto at
the office of The Depository Trust Company or its designated custodian (the
"Designated Office"). The time and date of such delivery and payment shall be,
with respect to the Firm Units, 9:30 a.m., New York City time, on
_______________, 1999 or such other time and date as Goldman, Sachs & Co. and
the Company may agree upon in writing, and, with respect to the Optional Units,
9:30 a.m., New York City time, on the date specified by Goldman, Sachs & Co. in
the written notice given by Goldman, Sachs & Co. of the Underwriters' election
to purchase such Optional Units, or such other time and date as Goldman, Sachs &
Co. and the Company may agree upon in writing. Such time and date for delivery
of the Firm Units is herein called the "First Time of Delivery," such time and
date for delivery of the Optional Units, if not the First Time of Delivery, is
herein called the "Second Time of Delivery," and each such time and date of
delivery is herein called a "Time of Delivery."
(b) The documents to be delivered at each Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross receipt
for the Trust Units and any additional documents requested by the Underwriters
pursuant to Section 7 hereof, will be delivered at the offices of
[________________] (the "Closing Location"), and certificates representing the
Trust Units will be delivered at the Designated Office, all at such Time of
Delivery. A meeting will be held at the Closing Location at _____p.m., New York
City time, on the New York Business Day next preceding such Time of Delivery, at
which meeting the final drafts of the documents to be delivered pursuant to the
preceding sentence will be available for review by the parties hereto. For the
purposes of this Section 4, "New York Business Day" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in New York are generally authorized or obligated by law or
executive order to close.
5. (a) The Company agrees with each of the Underwriters:
(i) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus which
shall be disapproved by you promptly after reasonable notice thereof; to advise
you, promptly after it receives notice thereof, of the time when any amendment
to the Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and to
furnish you copies thereof; to advise you, promptly after it receives notice
thereof, of the
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issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus, of the
suspension of the qualification of the Trust Units for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or Prospectus or for additional information; and,
in the event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus or suspending any
such qualification, promptly to use its best efforts to obtain the withdrawal of
such order;
(ii) Promptly from time to time to take such action as you may
reasonably request to qualify the Trust Units for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions in the United States for as long as may be necessary to complete
the distribution of the Trust Units, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation, to become
subject to taxation or to file a general consent to service of process in any
jurisdiction;
(iii) Prior to 10:00 a.m., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time to time,
to furnish the Underwriters with copies of the Prospectus in New York City in
such quantities as you may reasonably request, and, if the delivery of a
prospectus is required at any time prior to the expiration of nine months after
the time of issue of the Prospectus in connection with the offering or sale of
the Trust Units and if at such time any events shall have occurred as a result
of which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the Act or
the Exchange Act, to notify you and to promptly amend or supplement the
Prospectus or to file such document and to furnish without charge to each
Underwriter and to any dealer in securities as many copies as you may from time
to time reasonably request of the amended Prospectus or the supplement to the
Prospectus which will correct such statement or omission or effect such
compliance, and in case any Underwriter is required to deliver a prospectus in
connection with sales of any of the Trust Units at any time nine months or more
after the time of issue of the Prospectus, upon your request but at the expense
of such Underwriter, to prepare and deliver to such Underwriter as many copies
as you may request of an amended or supplemented Prospectus complying with
Section 10(a)(3) of the Act;
(iv) During the period beginning on the date hereof and continuing to
and including the date that is 180 days after the date of the Prospectus, not to
offer, sell, contract to sell, or transfer or distribute to stockholders
(including any declaration of a distribution to stockholders of record as of
any date prior to such date), or otherwise dispose of, except as provided
hereunder, any Trust Units or other securities of the Trust, or other securities
that are derived from the
-10-
Underlying Properties that are substantially similar to the Trust Units,
including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Trust Units or any
such substantially similar securities (other than pursuant to the grant or
exercise under employee benefit plans and awards of the Company of options to
acquire Trust Units existing on the date of this agreement, provided that the
optionee agrees in writing to be bound by the restrictions set forth in this
clause (e)), without your prior written consent;
(v) To use the net proceeds received by it from the sale of the
Trust Units pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds;"
(vi) To use its best efforts to list the Trust Units on the New York
Stock Exchange (the "Exchange");
(vii) To file with the Commission any information on Form 10-Q or
Form 10-K as may be required by Rule 463 under the Act; and
(viii) If the Company elects to rely upon Rule 462(b), the Company
shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on the date of
this Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or give
irrevocable instructions for the payment of such fee pursuant to Rule 111(b)
under the Act.
(b) The Trustee, on behalf of the Trust, agrees with each of the
Underwriters:
(i) To cause the Trust to file promptly all reports and any
definitive proxy or information statements required to be filed by the Trust
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering or sale of
the Trust Units;
(ii) To cause the Trust to make generally available to holders of
Trust Units as soon as practicable, but in any event not later than eighteen
months after the effective date of the Registration Statement (as defined in
Rule 158(c) under the Act), an earnings statement of the Trust (which need not
be audited) complying with Section 11(a) of the Act and the rules and
regulations of the Commission thereunder (including, at the option of the
Trustee, Rule 158);
(iii) To cause the Trust to furnish to Trust Unitholders as soon
as practicable after the end of each fiscal year an annual report (including
financial statements of the Trust certified by independent public accountants)
and, as soon as practicable after the end of each of the first three quarters
of each fiscal year (beginning with the fiscal quarter ending after the
effective date of the Registration Statement), to make available to its Trust
Unitholders summary financial information of the Trust for such quarter in
reasonable detail, all as required by the Indenture; and
-11-
(iv) During a period of five years from the effective date of the
Registration Statement, to cause the Trust to furnish to you copies of all
reports or other communications (financial or other) of the Trust furnished to
Trust Unitholders, and to deliver to you as soon as they are available, copies
of any reports and financial statements of the Trust furnished to or filed with
the Commission or any national securities exchange on which any class of
securities of the Trust is listed.
6. The Company and the Trustee covenant and agree with one another and
with the several Underwriters that (a) the Company will pay or cause to be paid
the following: (i) the fees, disbursements and expenses of the Company's counsel
and accountants and Trustee's counsel in connection with the formation of the
Trust and the registration of the Trust Units under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum,
closing documents and any other documents in connection with the offering,
purchase, sale and delivery of the Trust Units; (iii) all expenses in connection
with the qualification of the Trust Units for offering and sale under state
securities laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky survey; (iv) all fees and
expenses in connection with the original listing of the Trust Units on the New
York Stock Exchange and the filing fees incident to securing any required review
by the National Association of Securities Dealers, Inc. of the terms of the sale
of the Trust Units; (v) the cost of preparing certificates representing Trust
Units; and (vi) all other costs and expenses incident to the performance of its
obligations hereunder that are not otherwise specifically provided for in this
Section and (b) the Trustee will cause the Trust to pay (i) the cost and charges
of any transfer agent or registrar and (ii) the annual listing fees of the New
York Stock Exchange. It is understood, however, that except as provided in this
Section, and Sections 8 and 11 hereof, the Underwriters will pay all of their
own costs and expenses, including the fees of their counsel, stock transfer
taxes on resale of any of the Trust Units by them, and any advertising expenses
connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Trust Units
to be delivered at each Time of Delivery, shall be subject, in their discretion,
to the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant to
Rule 424(b) within the applicable time period prescribed for such filing by the
rules and regulations under the Act and in accordance with Section 5(a) hereof;
if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have become effective by 10:00 p.m. Washington,
D.C. time on the date of this Agreement; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have
-12-
been initiated or threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been complied with to your
reasonable satisfaction;
(b) Andrews & Kurth L.L.P., counsel for the Underwriters, shall have
furnished to you such opinion or opinions (a draft of such opinion is attached
as Annex II(a) hereto), dated such Time of Delivery, with respect to the matters
covered in paragraphs (i), (ii), (viii), (xii), and the matters set forth in the
last paragraph of subsection (c) below, as well as other related matters as you
may reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;
(c) Kelly, Hart & Hallman, a professional corporation, counsel for the
Company, shall have furnished to you their written opinion (a draft of such
opinion is attached as Annex II(b) hereto), dated such Time of Delivery, in form
and substance reasonably satisfactory to you, to the effect that:
(i) The Company was incorporated, exists and is in good standing
under the laws of the State of Delaware, with corporate power and authority to
own its properties and conduct its business as described in the Prospectus;
(ii) The Company is qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of the States of
Texas, Kansas, Oklahoma and Wyoming and such other states set forth on an
exhibit to such opinion, and such counsel has no knowledge that the nature of
the properties of the Company or the conduct of its business requires
qualification in other jurisdictions, except jurisdictions in which the Company
is subject to no material liability or disability by reason of its failure to be
so qualified;
(iii) Each subsidiary of the Company was incorporated, exists and
is in good standing under the laws of its jurisdiction of incorporation; all of
the issued shares of capital stock of each such subsidiary have been validly
authorized and issued, are fully paid and non-assessable, are owned of record by
the Company directly or through subsidiaries, and such counsel has no knowledge
of any adverse claim (within the meaning of Article 8 of the Uniform Commercial
Code) thereto;
(iv) The Trust has been duly formed and is validly existing as a
grantor trust under the laws of the State of Texas; there are 40,000,000 Trust
Units authorized and issued under the Indenture; and all of the outstanding
Trust Units have been duly authorized, are fully paid without the requirement of
any further consideration, and, assuming due execution by the Trustee of the
certificates representing the Trust Units, are validly issued and entitle the
Trust Unitholder thereof to the benefits of the Indenture;
(v) Each of the Indenture and the Conveyances has been duly
authorized, executed and delivered by the Company as grantor and, assuming the
due authorization, execution and delivery thereof by the Trustee, are valid and
binding obligations of the Company, enforceable
-13-
against the Company in accordance with their terms (except as regards the
application of bankruptcy, insolvency, moratorium or other similar laws
governing creditors' rights generally and the availability of the remedy of
specific performance and the enforceability of provisions providing for
indemnification for violations of federal securities laws);
(vi) The Company is the record owner of the Trust Units to be sold
by the Company to the Underwriters hereunder, and the Company has corporate
power and authority to sell and deliver to the Underwriters certificates
representing such Trust Units; such counsel has no knowledge that immediately
prior to the Time of Delivery, the Company did not have good and valid title to
such Trust Units sold at the Time of Delivery, free and clear of all adverse
claims (within the meaning of Article 8 of the Uniform Commercial Code); and
title to such Trust Units, free and clear of such adverse claims, has been
transferred to each of the several Underwriters who purchased and took delivery
of certificates representing such Trust Units in good faith and without notice
of any adverse claim within the meaning of Article 8 of the Uniform Commercial
Code;
(vii) Such counsel has no knowledge, other than as set forth in
the Prospectus, of any pending or overtly threatened legal or governmental
proceedings to which the Company or any of its subsidiaries or the Trust is or
may be a party or of which any property of the Company or any of its
subsidiaries or the Trust is or may be subject which, if determined adversely to
the Company or any of its subsidiaries or the Trust would, individually or in
the aggregate, have a material adverse effect on (A) the consolidated financial
position, equity or results of operations of the Company and its subsidiaries,
(B) the financial condition of the trust corpus of the Trust or (C) the revenues
and direct operating expenses of the Underlying Properties;
(viii) This Agreement has been duly authorized, executed and delivered
by the Company;
(ix) The issue and sale of the Trust Units being delivered at the
Time of Delivery by the Company and the compliance by the Company with all of
its obligations under this Agreement and the Indenture will not (A) conflict
with or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, the Indenture or, except with respect to any
preferential purchase rights under applicable joint operating agreements, any
other indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Company or any of its subsidiaries
or the Trust is a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company or any of its
subsidiaries or the Trust is subject, (B) violate any provisions of the
Certificate of Incorporation or Bylaws of the Company or (C) violate any
statute, rule or regulation known to such counsel or any order known to such
counsel of any court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or the Trust or any of their properties;
(x) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body that is
required for the issue and sale of the Trust Units, except the registration
under the Act of the Trust Units, and such consents, approvals,
-14-
authorizations, registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and distribution of
the Trust Units by the Underwriters;
(xi) Such counsel has no knowledge that the Company or any of its
subsidiaries is in violation of its Certificate of Incorporation or By-laws or
in default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement, or lease or agreement or other instrument known to such
counsel to which it is a party or by which it or any of its properties may be
bound;
(xii) The statements set forth in the Prospectus under the caption
"Description of Trust Units," insofar as they constitute matters of law,
summaries of legal matters, documents or legal conclusions, have been reviewed
by such counsel and are correct in all material respects;
(xiii) Neither the Company nor the Trust is an "investment company,"
as such term is defined in the Investment Company Act; and
(xiv) The Registration Statement and the Prospectus and any further
amendments and supplements thereto made by the Company prior to the Time of
Delivery (other than the financial statements, notes thereto and related
schedules therein, and the information that is extracted from the reports of
Miller and Lents, Ltd. pertaining to oil and gas reserves that is included
therein, as to which such counsel expresses no opinion) comply as to form in all
material respects with the requirements of the Act and the rules and regulations
thereunder;
In addition to the opinions set forth above, such opinion shall also
include a statement to the effect that although such counsel does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement, the Prospectus or the documents
incorporated by reference in the Prospectus or any further amendment or
supplement thereto, except for those referred to in the opinion in subsection
(xii) above, nothing has come to the attention of such counsel that has caused
them to believe that, (A) as of its effective date, the Registration Statement,
or any further amendment thereto prior to such Time of Delivery (other than the
financial statements, notes thereto and related schedules therein, and the
information that is extracted from the reports of Miller and Lents, Ltd.
pertaining to oil and gas reserves that is included therein, as to which such
counsel need express no opinion) contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (B) as of its date, the
Prospectus or any further amendment or supplement thereto prior to such Time of
Delivery (other than the financial statements, notes thereto and related
schedules therein, and the information that
-15-
is extracted from the reports of Miller and Lents, Ltd. pertaining to oil and
gas reserves that is included therein, as to which such counsel need express no
opinion) contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or (C) as of such Time
of Delivery, either the Registration Statement or the Prospectus or any further
amendment or supplement thereto prior to such Time of Delivery (other than the
financial statements, notes thereto and related schedules therein, and the
information that is extracted from the reports of Miller and Lents, Ltd.
pertaining to oil and gas reserves that is included therein, as to which such
counsel need express no opinion) contains an untrue statement of a material fact
or omits to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
such counsel does not know of any amendment to the Registration Statement
required to be filed or of any contracts or other documents of a character
required to be filed as an exhibit to the Registration Statement or required to
be incorporated by reference into the Prospectus or required to be described in
the Registration Statement or the Prospectus which are not filed or incorporated
by reference or described as required;
(d) Frank McDonald, general counsel to the Company, shall have furnished
to you his written opinion in substantially the form attached hereto as Annex
II(c), dated such time of Delivery, in form and substance reasonably
satisfactory to you, to the effect that:
(i) The documents incorporated by reference in the Prospectus or
any further amendment or supplement thereto made by the Company prior to the
Time of Delivery (other than the financial statements, notes thereto and related
schedules therein, and the information that is extracted from the reports of
Miller and Lents, Ltd. pertaining to oil and gas reserves that is included
therein, as to which such counsel expresses no opinion), when they were filed
with the Commission complied as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder; and
(ii) As of the time they were filed with the Commission, such
documents incorporated by reference in the Prospectus (other than the financial
statements, notes thereto and related schedules therein, and the information
that is extracted from the reports of Miller and Lents, Ltd. pertaining to oil
and gas reserves that is included therein, as to which such counsel need express
no opinion) did not contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(e) Butler and Binion L.L.P., a limited liability partnership, special tax
counsel to the Company, shall have furnished to you their written opinion, dated
such Time of Delivery, in form and substance reasonably satisfactory to you, to
the effect that the statements set forth under the caption "Federal Income Tax
Consequences" in the Prospectus, insofar as such statements set forth legal
conclusions and summaries of legal matters, are correct in all material
respects, subject to the qualifications stated therein;
(f) Morris, Laing, Evans, Brock and Kennedy, chartered, special counsel to
the Company for the State of Kansas, shall have furnished to you their written
opinion with respect to certain tax matters in substantially the form attached
hereto as Annex II(d), dated such Time of Delivery, in form and substance
reasonably satisfactory to you, to the effect that:
-16-
(i) the activities of the Trust and the Trustee as permitted under
the Indenture and the Conveyances will not subject either the Trust or the
Trustee to income taxation by the State of Kansas;
(ii) an owner of a Trust Unit who is not a Kansas resident will not
be subject to Kansas income tax and will not be required to file a Kansas income
tax return, provided that such Trust Unit and such Trust Unit owner's indirect
interest in the Net Profits Interests (through ownership of such Trust Unit) are
not employed by the Trust Unit owner in a trade, business, profession or
occupation carried on in Kansas, and further provided that the Trust Unit owner
is not otherwise subject to Kansas income tax; and
(iii) nonresidents of Kansas will not be subject to Kansas income
tax on gains from sales of Trust Units, subject to the same provisos set forth
in opinion (ii), immediately above;
(g) Each of Monnet, Hayes, Bullis, Thompson & Edwards L.L.P., Brown, Drew,
Massey & Sullivan L.L.P. and Morris, Laing, Evans, Brock and Kennedy, chartered,
special counsel to the Company for the states of Oklahoma, Wyoming and Kansas,
respectively, shall have furnished to you their written opinions in
substantially the form attached hereto as Annex II(e), dated such Time of
Delivery, in form and substance reasonably satisfactory to you, to the effect
that:
(i) a court of competent jurisdiction of the state of such counsel
should give effect to the choice of law provisions of the Conveyance and the
Indenture;
(ii) the Conveyance (i) has been properly filed of record and
recorded in the appropriate real property records in the state of such counsel,
(ii) is adequate and sufficient to legally convey to the Trustee the Net Profits
Interests in the state of such counsel, and (iii) constitutes, in the state of
such counsel, a perfected Conveyance and effective notice of the Net Profits
Interests in the Underlying Properties located in the state of such counsel,
which is and will be valid and binding against third parties subsequently
acquiring interests in the Underlying Properties and is and will be superior to
all future liens and encumbrances on the Underlying Properties (except for such
liens and encumbrances for taxes and assessments not yet due and payable, and
liens and encumbrances under operating agreements, unitization and pooling
agreements, and gas sales contracts, securing payments of amounts not yet due
and payable);
(iii) no actions other than those described above are necessary to
convey the Net Profits Interests in the state of such counsel and to publish
notice thereof;
(iv) the Net Profits Interests constitute property interests under
the laws of the state of such counsel, and the Conveyance and the related Net
Profits Interests should not constitute executory contracts as such term is used
in the federal bankruptcy code;
(v) neither the Trust nor the Trustee is required to qualify to
transact business or appoint an agent for service of process in the state of
such counsel as a result of the ownership,
-17-
operation or activities of the Trust or the Trustee with respect to the Trust,
and the activities of the Trustee pursuant to the Indenture will not require the
appointment of an ancillary trustee in the state of such counsel;
(vi) neither a Trust Unit, nor the interest of a holder of a Trust
Unit, constitutes an interest in real property under the laws of the state of
such counsel, and a non-resident holder of a Trust Unit will not be subject to
inheritance or gift taxation, intestate succession, elective shares of community
property or require the filing of ancillary probate proceedings in such State
solely by reason of ownership of Trust Units;
(vii) a beneficial owner of a Trust Unit will not be subject to
personal liability under state and local laws in the state of such counsel by
virtue of said ownership, including liability regulating the discharge of
materials into the environment or otherwise relating to the protection of the
environment;
(viii) the execution, delivery and performance by the Trustee of
the Indenture will not violate or conflict with any law, administrative ruling
or regulation of the state of such counsel;
(ix) no consent, approval, authorization or filing is required under
any law, rule or regulation of the state of such counsel (i) to permit the
Trustee to act as trustee with respect to the oil and gas properties located in
such state or (ii) in connection with the execution and delivery of the
Conveyance, or necessary to the validity, legality or enforceability of the
Conveyance; and
(x) the income from the Net Profits Interests received by the Trust
will not be subject to taxation at the Trust level by the state of such counsel
or any political subdivision thereof. [A Trust Unitholder will not be subject to
taxation by the state of such counsel or any political subdivision thereof with
respect to income from the Net Profits Interests or ownership of Trust Units.]
[A Trust Unitholder will be subject to taxation by the state of such counsel [or
the applicable political subdivision] with respect to income from the Net
Profits Interests or ownership of Trust Units and is required to report such
income to the state of such counsel [or the applicable political subdivision]
only if the amount of such income [during a fiscal year] exceeds
$____________________________;
(h) Thompson & Knight , A Professional Corporation, counsel for the
Trustee, shall have furnished to you their written opinion, dated such Time of
Delivery, in form and substance reasonably satisfactory to you, with respect to
the matters set forth in clauses (i), (ii) and (iii) of Section 7(i) hereof and
to the effect that this Agreement has been duly executed and delivered by the
Trustee. Such opinion may be limited for all purposes to the laws of the State
of Texas and United States federal law;
(i) The Trustee shall have furnished to you a certificate, dated such Time
of Delivery, executed by a duly authorized officer of the Trustee, representing
and warranting to each of the Underwriters that:
-18-
(i) The Trustee is a national banking association authorized and
empowered to act as trustee of the Trust pursuant to the Indenture, and no
consent, approval, authorization or filing is required under any law, rule or
regulation of the State of Texas or of the United States of America in order to
permit the Trustee to act as trustee of the Trust;
(ii) The Indenture has been executed and delivered by the Trustee
and, assuming the due authorization, execution and delivery thereof by the
Company, is a valid and binding obligation of the Trustee, enforceable against
the Trustee in accordance with its terms, except as the enforceability thereof
may be limited (A) by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors rights generally, (B) by general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law), (C) to the extent provisions provide indemnification for
violations of federal securities laws, and (D) by considerations of public
policy; and the Conveyances have been properly executed by the Trustee; and
(iii) There are 40,000,000 Trust Units authorized and outstanding
under the Indenture, all of which have been properly issued in accordance with
the Indenture; certificates representing the Trust Units have been duly executed
by the Trustee; and holders of certificates representing the Trust Units are
entitled to the benefits of the Indenture;
(j) On the date of the Prospectus at a time prior to the execution of this
Agreement, at 9:30 a.m., New York City time, on the effective date of any post-
effective amendment to the Registration Statement filed subsequent to the date
of this Agreement and also at each Time of Delivery, Arthur Andersen L.L.P.
shall have furnished to you a letter or letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you, to the effect set
forth in Annex I hereto;
(k) Neither the Company nor any of its subsidiaries, taken together, the
Trust nor the Underlying Properties shall have sustained since the date of the
last audited financial statements included or incorporated by reference in the
Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus, and (ii) since the respective dates as
of which information is given in the Prospectus there shall not have been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries, taken together, or the imposition of any liabilities on the Trust,
or any change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position, shareholders'
equity or results of operations of the Company and its subsidiaries, or any
change, or any development involving a prospective change, in or affecting
either (A) the general affairs or financial condition of the Trust, or (B) the
management or results of operations of the Underlying Properties otherwise than
as set forth or contemplated in the Prospectus, the effect of which, in any such
case described in clause (i) or (ii), is in the judgment of the Representatives
so material and adverse as to make it impracticable or inadvisable to proceed
-19-
with the public offering or the delivery of the Trust Units being delivered at
such Time of Delivery on the terms and in the manner contemplated in the
Prospectus;
(l) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange; (ii) a suspension or material
limitation in trading in the Trust Units or the Company's securities on the New
York Stock Exchange; (iii) a general moratorium on commercial banking activities
declared by either Federal or New York State authorities; or (iv) the outbreak
or escalation of hostilities involving the United States or the declaration by
the United States of war or national emergency if the effect of any such event
specified in this clause (iv) in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Trust Units being delivered at such Time of Delivery on the terms and in
the manner contemplated in the Prospectus;
(m) The Trust Units at such Time of Delivery shall have been duly listed on
the New York Stock Exchange;
(n) The Company shall have complied with the provisions of Section 5(c)
hereof with respect to the furnishing of Prospectuses on the New York Business
Day next succeeding the date of this Agreement;
(o) The Company shall have furnished or caused to be furnished to you at
such Time of Delivery certificates of officers of the Company, satisfactory to
you as to the accuracy, in all material respects, of the representations and
warranties of the Company herein at and as of such Time of Delivery, as to the
performance, in all material respects, by the Company of all of its respective
obligations hereunder to be performed at or prior to such Time of Delivery, and
as to such other matters as you may reasonably request, and the Company shall
have furnished or caused to be furnished certificates as to the matters set
forth in subsections (a) and (k) of this Section; and
(p) The Company shall have furnished or caused to be furnished to you at
10:00 a.m., New York City time on the effective date of the Registration
Statement and the most-recently filed post-effective amendment to the
Registration Statement and also at such Time of Delivery, letters from Miller
and Lents, Ltd. dated the respective date of delivery in form and substance
satisfactory to you.
8. (a) The Company and the Trust (solely from the assets of the Trust
and without liability or obligation of the Trustee or any Trust Unitholder) will
jointly and severally indemnify and hold harmless each Underwriter against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact
-20-
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that neither the Company nor the Trust shall be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus, or any amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through Goldman, Sachs & Co. expressly for use therein; and provided, further,
that neither the Underwriters nor any other person or entity entitled to seek
indemnification from the Trust under this Section 8(a) shall attempt to enforce
its rights hereunder in any circumstance in which such enforcement would result
in any liability to the Trustee or any Trust Unitholder;
(b) Each Underwriter will indemnify and hold harmless the Company, the
Trust and the Trustee against any losses, claims, damages or liabilities to
which the Company, the Trust or the Trustee may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such
Underwriter through Goldman, Sachs & Co. expressly for use therein; and will
reimburse the Company, the Trust and the Trustee for any legal or other expenses
reasonably incurred by the Company, the Trust or the Trustee in connection with
investigating or defending any such action or claim as such expenses are
incurred;
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (which shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the
-21-
defense thereof other than reasonable costs of investigation. No indemnifying
party shall, without the written consent of the indemnified party, effect the
settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party. No
indemnifying party shall be required to indemnify an indemnified party for any
amount paid or payable by such indemnified party in the settlement of any
action, proceeding or investigation without the written consent of such
indemnifying party, which consent shall not be unreasonably withheld;
(d) If the indemnification provided for in this Section 8 is unavailable to
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company and the Trust on the one hand and the Underwriters on the other
from the offering of the Trust Units. If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company and the Trust
on the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations (including the failure of the indemnified party to give
the notice required under subsection (c) above). The relative benefits received
by the Company on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters in each case as set forth
in the table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, the Trustee (on behalf of the Trust) and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or
-22-
defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Trust Units
underwritten by it and distributed to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint; and
(e) The obligations of the Company and the Trust under this Section 8 shall
be in addition to any liability which the Company and the Trust may otherwise
have and shall extend, upon the same terms and conditions, to each person, if
any, who controls any Underwriter within the meaning of the Act; and the
obligations of the Underwriters under this Section 8 shall be in addition to any
liability which the respective Underwriters may otherwise have and shall extend,
upon the same terms and conditions, to each officer and director of the Company
and the Trustee and to each person, if any, who controls the Company or the
Trustee within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Trust Units which it has agreed to purchase hereunder at a Time of Delivery,
you may in your discretion arrange for you or another party or other parties to
purchase such Trust Units on the terms contained herein. If within thirty-six
hours after such default by any Underwriter you do not arrange for the purchase
of such Trust Units, then the Company shall be entitled to a further period of
thirty-six hours within which to procure another party or other parties
reasonably satisfactory to you to purchase such Trust Units on such terms. In
the event that, within the respective prescribed periods, you notify the Company
that you have so arranged for the purchase of such Trust Units, or the Company,
notifies you that it has so arranged for the purchase of such Trust Units, you
or the Company shall have the right to postpone a Time of Delivery for a period
of not more than seven days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your
reasonable opinion may thereby be made necessary. The term "Underwriter" as
used in this Agreement shall include any person substituted under this Section
with like effect as if such person had originally been a party to this Agreement
with respect to such Trust Units;
(b) If, after giving effect to any arrangements for the purchase of the
Trust Units of a defaulting Underwriter or Underwriters by you and the Company
as provided in subsection (a) above, the aggregate number of Trust Units which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Trust Units to be purchased at such Time of Delivery, then the Company shall
have the right to require each non-defaulting Underwriter to purchase the number
of Trust Units which such Underwriter agreed to purchase hereunder at such Time
of Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Trust Units which such
Underwriter agreed to purchase hereunder) of the
-23-
Trust Units of such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default; and
(c) If, after giving effect to any arrangements for the purchase of the
Trust Units of a defaulting Underwriter or Underwriters by you and the Company
as provided in subsection (a) above, the aggregate number of such Trust Units
which remains unpurchased exceeds one-eleventh of the aggregate number of all
the Trust Units to be purchased at such Time of Delivery, or if the Company
shall not exercise the right described in subsection (b) above to require non-
defaulting Underwriters to purchase Trust Units of a defaulting Underwriter or
Underwriters, then this Agreement (or, with respect to the Second Time of
Delivery, the obligations of the Underwriters to purchase and of the Company to
sell the Optional Units) shall thereupon terminate, without liability on the
part of any non-defaulting Underwriter or the Company or the Trustee, except for
the expenses to be borne by the Company, the Trustee and the Underwriters as
provided in Section 6 hereof and the indemnity and contribution agreements in
Section 8 hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Trust and the several Underwriters, as
set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation (or any statement as to the results thereof) made by or on
behalf of any Underwriter or any controlling person of any Underwriter, or the
Company, the Trust or the Trustee, or any officer or director or controlling
person of the Company or any officer or director or controlling person of the
Trustee, and shall survive delivery of any payment for the Trust Units.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
neither the Company nor the Trust shall then be under any liability to any
Underwriter except as provided in Section 6 and Section 8 hereof; but, if for
any other reason any Trust Units are not delivered by or on behalf of the
Company as provided herein, the Company will reimburse the Underwriters through
you for all out-of-pocket expenses approved in writing by you, including fees
and disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Trust Units not so
delivered, but the Company shall then be under no further liability to any
Underwriter in respect of the Trust Units not so delivered except as provided in
Section 6 and Section 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Goldman, Sachs & Co. on behalf of you as the
representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the
-24-
representatives in care of Goldman, Sachs & Co., at 32 Old Slip, 9th Floor, New
York, New York 10005, Attention: Registration Department; and if to the Company
shall be delivered or sent by mail, telex or facsimile transmission to the
address of the Company set forth in the Registration Statement, Attention:
Secretary; and if to the Trust shall be delivered or sent by mail, telex or
facsimile transmission to 901 Main Street, 17th Floor, Dallas, Texas 75202,
Attention: Ron E. Hooper; provided, however, that any notice to an Underwriter
pursuant to Section 8(d) hereof shall be delivered or sent by mail, telex or
facsimile transmission to such Underwriter at its address set forth in its
Underwriters' Questionnaire or telex constituting such Questionnaire, which
address will be supplied to the Company or the Trustee by you upon request. Any
such statements, requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and the Trust and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company and the
Trustee and each person who controls the Company, the Trustee or any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. The Trustee has executed this Agreement solely in its
capacity as trustee of the Trust and shall have no liability or obligation
hereunder other than the obligation, in such capacity, to cause the Trust to
perform its obligations hereunder. No purchaser of any of the Trust Units from
any Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please sign and
return to us 10 (ten) counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters, the
Company and the Trust. It is understood that your acceptance of this letter on
behalf of each of the Underwriters is pursuant to the authority set forth in a
form of Agreement among Underwriters the form of which shall be submitted to the
Company and the Trustee for examination, upon request, but without warranty on
your part as to the authority of the signers thereof.
Very truly yours,
Cross Timbers Oil Company
-25-
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
-26-
Hugoton Royalty Trust
By: NationsBank, N.A., Trustee
By:
---------------------------------------
Name: Ron E. Hooper
Title: Vice President
Accepted as of the date hereof:
Goldman, Sachs & Co.
Lehman Brothers Inc.
A.G. Edwards & Sons, Inc.
Bear, Stearns & Co.
Dean Rauscher Wessels,
a division of Dean Rauscher Incorporated
Donaldson, Lufkin & Jenrette
Securities Corporation
By:
---------------------------------------
(Goldman, Sachs & Co.)
By Lehman Brothers Inc.
By:
--------------------------------------
Name/Title:
--------------------------
On behalf of each of the Underwriters
-27
SCHEDULE I
[Enlarge/Download Table]
Number of
Optional
Units to be
Total Number of Purchased if
Firm Units Maximum Option
Underwriter to be Purchased Exercised
------------------------------------------------------ --------------- --------------
Goldman, Sachs & Co...................................
Lehman Brothers Inc...................................
Bear, Stearns & Co....................................
Dain Rauscher Wessels.................................
a division of Dain Rauscher Incorporated..........
Donaldson, Lufkin & Jenrette Securities Corporation...
A.G. Edwards & Sons, Inc..............................
Total..............................................
--------------- --------------
=============== ==============
-28-
ANNEX I
ACCOUNTANT'S COMFORT LETTER REQUIREMENTS
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants shall
furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to
the Company and the Trust within the meaning of the Act and the applicable
published rules and regulations thereunder adopted by the SEC;
(ii) In their opinion, the consolidated financial statements of the
Company as of December 31, 1997, the statements of revenue and direct operating
expenses of the Underlying Properties for each of the three years in the period
ended November 30, 1998 and the statement of assets and trust corpus as of
December 4, 1998 audited by them and included or incorporated by reference in
the Prospectus or the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Act and the related
published rules and regulations adopted by the SEC.
(iii) They have made a review in accordance with standards established by
the American Institute of Certified Public Accountants of (A) the unaudited
interim consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Company's quarterly report
on Form 10-Q incorporated by reference into the Prospectus, and on the basis of
specified procedures including inquiries of officials of the Company who have
responsibility for financial and accounting matters regarding whether the
unaudited consolidated financial statements referred to in paragraph (vi)(A)(i)
below are stated on a basis substantially consistent with that of the audited
consolidated financial statements incorporated by reference in the Registration
Statement, comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the related
published rules and regulations, nothing came to their attention that caused
them to believe that the unaudited condensed consolidated financial statements
do not comply as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company for the
five most recent fiscal years incorporated by reference in the Prospectus and
included in Item 6 of the Company's Annual Report on Form 10-K for the most
recent fiscal year agrees with the corresponding amounts (after restatements
where applicable) in the audited consolidated financial statements for such five
fiscal years which were included or incorporated by reference in the Company's
Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under selected
captions with the disclosure requirements of Regulation S-K and on the basis of
limited procedures specified in
-29-
such letter nothing came to their attention as a result of the foregoing
procedures that caused them to believe that this information does not conform in
all material respects with the disclosure requirements of Items 301, 302, 402
and 503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of a reading
of the unaudited financial statements and other information referred to below, a
reading of the latest available interim financial statements of the Company and
its subsidiaries, read the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included in the
Prospectus, inquiries of certain officials of the Company who have
responsibility for financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their attention
that caused them to believe that:
(A) (i) the unaudited consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Company's quarterly report on Form 10-Q incorporated by reference into the
Prospectus, are not stated on a basis substantially consistent with that of
the audited consolidated financial statements incorporated by reference in
the Registration Statement or (ii) any material modifications should be
made to the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Company's quarterly report on Form 10-Q incorporated by
reference into the Prospectus, for them to be in conformity with generally
accepted accounting principles;
(B) any other unaudited income statement data and balance sheet items
included in the Prospectus do not agree with the corresponding items in the
unaudited consolidated financial statements from which such data and items
were derived, and any such unaudited data and items were not determined on
a basis substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included or
incorporated by reference in the Prospectus;
(C) the unaudited financial statements which were not included in the
Prospectus but from which were derived any unaudited condensed financial
statements referred to in Clause (A) and any unaudited income statement
data and balance sheet items included in the Prospectus and referred to in
Clause (B) were not determined on a basis substantially consistent with the
basis for the audited consolidated financial statements included or
incorporated by reference in the Prospectus;
(D) as of a specified date not more than five days prior to the date
of such letter, there have been (i) any increase in the consolidated long-
term debt of the Company and its subsidiaries, or any decreases in
consolidated net current assets or stockholders' equity of the Company and
its subsidiaries, or any changes in any other Company items specified by
the Representatives or (ii) any incurrence of liabilities by the Trust, or
any decreases in assets or trust corpus of the Trust or other items
specified by the Representatives, or any changes in
-30-
any other Trust items specified by the Representatives, in each case as
compared with amounts shown in the latest balance sheet included or
incorporated by reference in the Prospectus, except in each case for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(E) for the period from the date of the latest financial statements
included or incorporated by reference in the Prospectus to the specified
date referred to in clause (E) there were any decreases in consolidated net
revenues or operating profit or the total or per share amounts of
consolidated net income of the Company or the excess of revenues over
direct operating expenses of the Underlying Properties, or changes in other
items specified by the Representatives relating to the results of
operations of the Company and its subsidiaries or the Underlying
Properties, in each case as compared with the comparable period of the
preceding year and with any other period of corresponding length specified
by the Representatives, except in each case for decreases or increases
which the Prospectus discloses have occurred or may occur or which are
described in such letter; and
(vii) In addition to the examination referred to in their reports included
or incorporated by reference in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to in
paragraphs (iii) and (vi) above, they have carried out certain specified
procedures, not constituting an audit in accordance with generally accepted
auditing standards, with respect to certain amounts, percentages and financial
information specified by the Representatives, which are derived from the general
accounting records of the Company and its subsidiaries, which appear in the
Prospectus (excluding documents incorporated by reference) or in Part II of, or
in exhibits and schedules to, the Registration Statement specified by the
Representatives or in documents incorporated by reference specified by the
Representatives, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
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Dates Referenced Herein and Documents Incorporated by Reference
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