8,802,500 Common Units ECA MARCELLUS TRUST I UNDERWRITING AGREEMENT
Exhibit 1.1
8,802,500 Common Units
St. Petersburg, Florida
June __, 2010
June __, 2010
Xxxxxxx Xxxxx & Associates, Inc.
Citigroup Global Markets Inc.
As Representatives of the Several Underwriters
listed on Schedule I hereto
Citigroup Global Markets Inc.
As Representatives of the Several Underwriters
listed on Schedule I hereto
c/o Raymond Xxxxx & Associates, Inc.
000 Xxxxxxxx Xxxxxxx
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
c/o Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
ECA Marcellus Trust I, a statutory trust formed under the laws of the State of Delaware (the
“Trust”), proposes, subject to the terms and conditions stated herein, to issue and sell to the
several Underwriters named in Schedule I hereto (the “Underwriters”), an aggregate of
10,122,875 units of beneficial interest (the “Common Units”) in the trust. The aggregate of
8,802,500 Common Units to be purchased from the Trust are called the “Firm Units.” In addition,
the Trust has agreed to sell to the Underwriters, upon the terms and conditions stated herein, up
to an additional 1,320,375 Common Units (the “Additional Units”) to cover over-allotments by the
Underwriters, if any. The Firm Units and the Additional Units are collectively referred to in this
Agreement as the “Units.” Xxxxxxx Xxxxx & Associates, Inc. and Citigroup Global Markets Inc. are
acting as the representatives of the several Underwriters and in such capacity are referred to in
this Agreement as the “Representatives.”
It is understood and agreed by all parties hereto that Energy Corporation of America, a West
Virginia corporation (the “Company”), has caused the formation of the Trust and will convey, or
cause to be conveyed, to the Trust (a) certain royalty interests comprised of (i) the “PDP Royalty
Interest,” which entitles the Trust to receive 90% of the proceeds (after deducting post-production
costs and any applicable taxes) from the sale of production of natural gas attributable to the
Company’s interest in eight producing horizontal natural gas xxxxx producing from the Marcellus
Shale formation together with six additional xxxxx that are undergoing completion operations and
are expected to be online by August 15, 2010 all of which
are located in Xxxxxx County, Pennsylvania (the “Producing Xxxxx”) and (ii) the “PUD Royalty
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Interest,” which entitles the Trust to receive 50% of the proceeds (after deducting post-production
costs and any applicable taxes) from the sale of production of natural gas attributable to the
Company’s interest in the 52 horizontal natural gas development xxxxx to be drilled to the
Marcellus Shale formation within the “Area of Mutual Interest” or “AMI” in which the Company holds
9,300 acres in Xxxxxx County, Pennsylvania (the “PUD Xxxxx”) and (b) certain hedging contracts
established for the benefit of the Trust, in exchange for all of the net proceeds of the public
offering of the Units contemplated hereby as well as Common Units and subordinated units of
beneficial interest in the Trust (the “Subordinated Units” and collectively with the Common Units,
the “Trust Units”) and the right to receive Incentive Distributions, as such term is defined in the
Trust Agreement (as defined below) (the “Incentive Distributions”).
It is further understood and agreed to by all parties hereto that the following transactions
will occur on or before the Closing Date (as hereinafter defined):
(a) The Company will convey to Eastern Marketing Corporation, a West Virginia corporation
wholly owned by the Company (the “ECA Subsidiary”), pursuant to the Term Overriding Royalty
Interest Conveyance (PDP) (the “PDP Term Conveyance”), a term royalty interest entitling the holder
of the interest to receive 45% of the proceeds from the sale of production of natural gas
attributable to the Company’s interest in the Producing Xxxxx (after deducting post-production
costs and any applicable taxes) for a period of 20 years commencing on April 1, 2010 (the “Term PDP
Royalty”) and, pursuant to the Term Overriding Royalty Interest Conveyance (PUD) (the “PUD Term
Conveyance”), a term royalty interest entitling such holder of the interest to receive 25% of the
proceeds from the sale of the production of natural gas attributable to the Company’s interest in
the PUD Xxxxx (after deducting post-production costs and any applicable taxes) for a period of 20
years commencing on April 1, 2010 (the “Term PUD Royalty”) in exchange for a demand note in the
principal amount of approximately $161 million (the “Demand Note”). The Term PDP Royalty and the
Term PUD Royalty are collectively referred to as the “Term Royalties”;
(b) Those private investors listed in Schedule IV hereto (the “Private Investors”)
will each, pursuant to an Assignment and Conveyance (collectively, the “Assignment and
Conveyances”), (i) convey to the Company all of their working interests in the Producing Xxxxx and
(ii) reserve to themselves, in the form of perpetual net overriding royalty interests, a portion of
the net revenue interests attributable to the Producing Xxxxx as set forth in the Assignment and
Conveyances;
(c) The Company and the Private Investors will convey to the Trust, pursuant to the Perpetual
Overriding Royalty Interest Conveyance (PDP) (the “PDP Perpetual Conveyance”) executed by the
Company and the Private Investor Conveyance (the “Private Investor Conveyance”) executed by the
Private Investors, perpetual royalty interests entitling the Trust to receive, in the aggregate,
45% of the proceeds from the sale of production of natural gas attributable to the interests of the
Company in the Producing Xxxxx (after deducting post-production costs and any applicable taxes)
(the “Perpetual PDP Royalty”) and the Company will convey to the Trust pursuant to the Perpetual
Overriding Royalty Interest Conveyance (PUD) the “PUD Perpetual Conveyance”), a perpetual royalty
interest entitling the Trust to receive an
additional 25% of the proceeds from the sale of production of natural gas attributable
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to the
Company’s interest in the PUD Xxxxx (after deducting post-production costs and any applicable
taxes) (the “Perpetual PUD Royalty”) in exchange for, in the case of the Company, 3,087,367 Common
Units, 4,401,250 Subordinated Units and the right to receive the Incentive Distributions and, in
the case of the Private Investors, 1,313,883 Common Units. The Perpetual PDP Royalty and the
Perpetual PUD Royalty are collectively referred to as the “Perpetual Royalties”;
(d) The public offering of the Firm Units contemplated hereby will be consummated;
(e) The Trust Agreement of the Trust by and among the Company, The Bank of New York Trust
Company, N.A., as trustee (the “Trustee”), and Corporation Trust Company, as Delaware trustee (the
“Delaware Trustee”), as amended to the date hereof (the “Organizational Trust Agreement”), shall be
amended and restated (as so amended and restated, the “Trust Agreement”);
(f) The Company will assign, or cause to be assigned, to the Trust natural gas floor price
contracts (the “Floor Price Contracts”) entered into for the benefit of the Trust and will enter
into a Swap Agreement with the Trust to provide the Trust with the benefit of the swap contracts
entered into between the Company and third parties (the “Swap Agreement”), in each case on terms
described in the Registration Statement, the Prospectus and the Time of Sale Information (each as
defined below);
(g) The Company will cause the ECA Subsidiary to convey, pursuant to the Term Royalty
Conveyance (the “Term Royalty Conveyance”) the Term Royalties to the Trust in exchange for a
distribution of the net proceeds from the public offering contemplated hereby and will use the net
proceeds to repay the demand note to the Company;
(h) The Company will purchase 209,312 Common Units from the Private Investors at the initial
offering price;
(i) The Company and the Trust will enter into an Administrative Services Agreement outlining
the provision of administrative services to the Trust and its compensation therefor (the
"Administrative Services Agreement”);
(j) The Company and the Trust will enter into a Development Agreement outlining the Company’s
drilling obligation to the Trust with respect to the PUD Xxxxx (the “Development Agreement”);
(k) The Company will execute a Mortgage, Assignment of Leases, Security Agreement, Fixture
Filing and Financing Statement (the “Drilling Support Mortgage”) and grant to the Trust a lien on
its interest in the Marcellus Shale Formation in the AMI (except the Producing Xxxxx and any other
xxxxx which are already producing and not subject to the Royalty Interests) in order to secure the
estimated amount of the drilling costs for the Trust’s interests in the PUD Xxxxx (the “Drilling
Support Lien”);
(l) The Company will execute a Mortgage, Assignment of Leases, Security Agreement, Fixture
Filing and Financing Statement (the “Royalty Interest Mortgage”) and
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grant to the Trust a lien on
the PDP Royalty Interest and the PUD Royalty Interest to provide protection to the Trust, in the
event of a bankruptcy of the Company, against the risk that the PDP Royalty Interest or PUD Royalty
Interest is not considered a real property interest (the “Royalty Interest Lien”); and
(m) The Trust will enter into a registration rights agreement with the Company and certain of
the Private Investors in connection with the Company’s conveyance to the Trust of the PDP Royalty
Interest and the PUD Royalty Interest (the “Registration Rights Agreement”).
The transactions contemplated above are referred to herein as the “Transactions.” The
“Transaction Documents” shall mean the PDP Term Conveyance, the PUD Term Conveyance, the PDP
Perpetual Conveyance, the PUD Perpetual Conveyance, the Assignment and Conveyance, the Private
Investor Conveyance and the Term Royalty Conveyance (collectively, the “Conveyances” (and together
with the related bills of sale, conveyances and similar documents in connection therewith, the
“Conveyance Documents”), the Drilling Support Mortgage and the Royalty Interest Mortgage (together
with all UCC-1 Financing Statements, deeds of trust and other documentation in connection with and
necessary to perfect the Drilling Support Lien and the Royalty Interest Lien, the “Lien
Documentation”), the Demand Note, the Administrative Services Agreement, the Development Agreement,
the Floor Price Contracts, the Swap Agreement and the Registration Rights Agreement.
The “Organizational Documents” shall mean the Organizational Trust Agreement, the Trust
Agreement, the Certificate of Trust of the Trust, the Articles of Incorporation and Bylaws of the
Company, each as amended to date, and the Articles of Incorporation and Bylaws of the ECA
Subsidiary, each as amended to date. The “Operative Agreements” shall mean the Transaction
Documents, the Organizational Trust Agreement and the Trust Agreement.
In addition, the Company and the Trust have agreed that, if the Underwriters exercise the
option to purchase Additional Units, the net proceeds of any purchase of Additional Units will be
used to redeem an equal number of Common Units held by the Company.
The Trustee, on behalf of the Trust, and the Company wish to confirm as follows their
agreement with you and the other several Underwriters, on whose behalf you are acting, in
connection with the purchase of the Units from the Trust.
1. Registration Statement and Prospectus. The Trust and the Company have prepared and
filed with the Securities and Exchange Commission (the “Commission”) in accordance with the
provisions of the Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the “Act”), a joint registration statement on Form S-1 (File
No. 333-165833), including a prospectus subject to completion, relating to the Units. Such
registration statement, as amended, including the financial statements, exhibits, annexes and
schedules thereto, at the time when it becomes effective and as thereafter amended by any
post-effective amendment, is referred to in this Agreement as the “Registration Statement.” The
prospectus in the form included in the Registration Statement or, if the prospectus included in the
Registration Statement omits certain information in reliance upon Rule 430A under the Act and
such information is thereafter included in a prospectus filed with
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the Commission pursuant to Rule
424(b) under the Act or as part of a post-effective amendment to the Registration Statement after
the Registration Statement becomes effective, the prospectus as so filed, is referred to in this
Agreement as the “Prospectus.” If the Trust or the Company files another registration statement
with the Commission to register a portion of the Units pursuant to Rule 462(b) under the Act (the
“Rule 462 Registration Statement”), then any reference to “Registration Statement” herein shall be
deemed to include the registration statement on Form S-1 (File No. 333-165833) and the Rule 462
Registration Statement, as each such registration statement may be amended pursuant to the Act. The
prospectus subject to completion in the form included in the Registration Statement at the time of
the initial filing of such Registration Statement with the Commission and each such prospectus as
amended from time to time until the date of the Prospectus is referred to in this Agreement as a
“Preliminary Prospectus.” For purposes of this Agreement, “free writing prospectus” has the meaning
ascribed to it in Rule 405 under the Act, and “Issuer Free Writing Prospectus” shall mean each free
writing prospectus prepared by or on behalf of the Trust or the Company or used or referred to by
the Trust or the Company in connection with the offering of the Units. “Time of Sale Information”
shall mean the most recent Preliminary Prospectus, together with each free writing prospectus, if
any, identified in Schedule II hereto and the information set out in Schedule III
hereto. “Effective Date” means each date and time as of which any part of the Registration
Statement was or is declared effective by the Commission.
“Time of Sale” means ____:____ a.m., St.
Petersburg, Florida time, on , 2010.
2. Agreements to Sell and Purchase. The Trust hereby agrees to sell the Firm Units to
the Underwriters and, upon the basis of the representations, warranties and agreements of the
Company and the Trust herein contained and subject to all the terms and conditions set forth
herein, each Underwriter agrees, severally and not jointly, to purchase from the Trust at a
purchase price of $[ ] per Unit (the “purchase price per Unit”), the number of Firm Units set
forth opposite the name of such Underwriter in Schedule I hereto.
The Trust hereby also agrees to sell to the Underwriters, and, upon the basis of the
representations, warranties and agreements of the Company and the Trust herein contained and
subject to all the terms and conditions set forth herein, the Underwriters shall have the right for
30 days from the date of the Prospectus to purchase from the Trust up to 1,320,375 Additional Units
at the purchase price per Unit of the Firm Units. The Additional Units may be purchased solely for
the purpose of covering over-allotments, if any, made in connection with the offering of the Firm
Units. If any Additional Units are to be purchased, each Underwriter, severally and not jointly,
agrees to purchase the number of Additional Units (subject to such adjustments as you may determine
to avoid fractional units) that bears the same proportion to the total number of Additional Units
to be purchased by the Underwriters as the number of Firm Units set forth opposite the name of such
Underwriter in Schedule I hereto bears to the total number of Firm Units. The option to
purchase Additional Units may be exercised in whole or in part at any time or from time to time
within 30 days after the date of the Prospectus.
It is further understood that seven and a half percent (7.5%) of the Firm Units (the “Directed
Units”) will initially be reserved by the several Underwriters for offer and sale upon the terms
and conditions to be set forth in the most recent Preliminary Prospectus and in
accordance with the rules and regulations of the Financial Industry Regulatory Authority
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(“FINRA”) to the officers, directors, and employees of the Company and certain other persons
associated with the Company (each such person a “Directed Unit Participant”) who have heretofore
delivered to Xxxxxxx Xxxxx & Associates, Inc. offers to purchase Firm Units in form satisfactory to
Xxxxxxx Xxxxx & Associates, Inc. (such program, the “Directed Unit Program”) and that any
allocation of such Firm Units among such persons will be made in accordance with timely directions
received by Xxxxxxx Xxxxx & Associates, Inc. from the Company; provided that under no circumstances
will Xxxxxxx Xxxxx & Associates, Inc. or any Underwriter be liable to the Trust of the Company or
to any such person for any action taken or omitted in good faith in connection with such Directed
Unit Program. It is further understood that any Directed Units not affirmatively reconfirmed for
purchase by any participant in the Directed Unit Program by 9:00 A.M., New York City time, on the
first business day following the date hereof or otherwise are not purchased by such persons will be
offered by the Underwriters to the public upon the terms and conditions set forth in the
Prospectus.
The Company agrees to pay all fees and disbursements incurred by the Underwriters in
connection with the Directed Unit Program and any stamp duties or other taxes incurred by the
Underwriters in connection with the Directed Unit Program.
3. Terms of Public Offering. The Trust and the Company have been advised by you that
the Underwriters propose to make a public offering of their respective portions of the Units as
soon after the Registration Statement and this Agreement have become effective as in your judgment
is advisable and initially to offer the Units upon the terms set forth in the Prospectus.
Not later than 12:00 p.m. on the second business day following the date the Units are released
by the Underwriters for sale to the public, the Company shall deliver or cause to be delivered
copies of the Prospectus in such quantities and at such places as the Representatives shall
request.
4. Delivery of the Units and Payment Therefor. Delivery to the Underwriters of the
Firm Units and payment therefor shall be made at the offices of the Company, 0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx at 8:00 a.m., Denver, Colorado time, on [ ], or such
other place, time and date not later than 11:30 p.m., Denver, Colorado time, on [ ] as the
Representatives shall designate by notice to the Trust and the Company (the time and date of such
closing are called the “Closing Date”). The place of closing for the Firm Units and the Closing
Date may be varied by agreement among the Representatives, the Trust and the Company. The Trust
and the Company hereby acknowledge that circumstances under which the Representatives may provide
notice to postpone the Closing Date as originally scheduled include any determination by the Trust,
the Company or the Representatives to recirculate to the public copies of an amended or
supplemented Prospectus or a delay as contemplated by the provisions of Section 11 hereof.
Delivery to the Underwriters of and payment for any Additional Units to be purchased by the
Underwriters shall be made at the offices of the Company, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxxxxx at 8:00 a.m., Denver, Colorado time, on such date or dates (each an “Additional
Closing Date”) (which may be the same as the Closing Date, but shall in no event
be earlier than the Closing Date nor earlier than three nor later than ten business days after
the
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giving of the notice hereinafter referred to) as shall be specified in a written notice or
notices, from the Representatives on behalf of the Underwriters to the Trust and the Company, of
the Underwriters’ determination to purchase a number, specified in such notice or notices, of
Additional Units. Such notice or notices may be given at any time within 30 days after the
date of
the Prospectus and must set forth (i) the aggregate number of Additional Units as to which the
Underwriters are exercising the option and (ii) the names and denominations in which ownership of
the Additional Units is to be registered. The place of closing for the Additional Units and the
Additional Closing Date may be varied by agreement among you, the Trust and the Company.
Delivery of the Firm Units and of any Additional Units to be purchased hereunder shall be made
through the facilities of The Depository Trust Company (“DTC”) against payment of the purchase
price therefore by wire transfer of immediately available funds to an account or accounts specified
in writing, not later than the close of business on the business day next preceding the Closing
Date or the Additional Closing Date, as the case may be, by the Trust. Payment for the Units shall
be delivered by the Representatives to the Trust.
It is understood that the Representatives have been authorized, for their own accounts and the
accounts of the several Underwriters, to accept delivery of and receipt for, and make payment of
the purchase price per Unit for the Firm Units and the Additional Units, if any, that the
Underwriters have agreed to purchase. Xxxxxxx Xxxxx and Associates, Inc. and Citigroup Global
Markets Inc., each individually and not as a Representative of the Underwriters, may, but shall not
be obligated to, make payment for any Units to be purchased by any Underwriter whose funds shall
not have been received by the Representatives by the Closing Date or the Additional Closing Date,
as the case may be, for the account of such Underwriter, but any such payment shall not relieve
such Underwriter from any of its obligations under this Agreement.
5. Covenants and Agreements. Each of the Company and the Trustee, on behalf of the
Trust, covenant and agree with the several Underwriters as follows:
(a) Each of the Company and the Trust will use its best efforts to cause the Registration
Statement and any amendments thereto to become effective, if it has not already become effective,
and will advise you promptly and, if requested by you, will confirm such advice in writing (i) when
the Registration Statement has become effective and the time and date of any filing of any
post-effective Registration Statement or any amendment or supplement to any Preliminary Prospectus
or the Prospectus and the time and date that any post-effective amendment to the Registration
Statement becomes effective, (ii) if Rule 430A under the Act is employed, when the Prospectus has
been timely filed pursuant to Rule 424(b) under the Act, (iii) of the receipt of any comments of
the Commission, or any request by the Commission for amendments or supplements to the Registration
Statement, any Preliminary Prospectus or the Prospectus or for additional information, (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the Units for offering or sale in any
jurisdiction or the initiation of any proceeding for such purposes and (v) within the period of
time referred to in Section 5(h) below, of any change in the condition (financial or other),
business, prospects, properties, net worth or results of operations of the Company or the
Underlying Properties (as defined in the Prospectus),
or of any event that comes to the attention of the Company or the Trust that makes any
statement
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made in the Registration Statement or the Prospectus (as then amended or supplemented)
untrue in any material respect or that requires the making of any additions thereto or changes
therein in order to make the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading in any material respect, or of the
necessity to amend or supplement the Prospectus (as then amended or supplemented) to comply with
the Act or any other applicable law. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the Company and the Trust will make
every reasonable effort to obtain the withdrawal or lifting of such order at the earliest possible
time. The Company will provide the Underwriters with copies of the form of Prospectus, in such
number as the Underwriters may reasonably request, and file with the Commission such Prospectus in
accordance with Rule 424(b) of the Act before the close of business on the first business day
immediately following the date hereof.
(b) The Company will furnish to you, without charge, a photocopy of the signed original of the
Registration Statement as originally filed with the Commission and of each amendment thereto,
including financial statements and all exhibits thereto, and will also furnish to you, without
charge, such number of conformed copies of the Registration Statement as originally filed and of
each amendment thereto as you may reasonably request.
(c) The Company and the Trust will promptly file with the Commission any amendment or
supplement to the Registration Statement or the Prospectus that may, in the judgment of the
Company, the Trust or the Representatives, be required by the Act or requested by the Commission.
(d) The Company will furnish a copy of any amendment or supplement to the Registration
Statement or to the Prospectus or any Issuer Free Writing Prospectus to you and counsel for
Underwriters and obtain your consent prior to filing any of those with the Commission.
(e) Neither the Company nor the Trust will make any offer relating to the Units that would
constitute an Issuer Free Writing Prospectus without your prior consent.
(f) The Company and the Trust will retain in accordance with the Act all Issuer Free Writing
Prospectuses not required to be filed pursuant to the Act; and if at any time after the date hereof
any events shall have occurred as a result of which any Issuer Free Writing Prospectus, as then
amended or supplemented, would conflict with the information in the Registration Statement, the
Preliminary Prospectus or the Prospectus or 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, not misleading, or, if for any other reason it shall
be necessary to amend or supplement any Issuer Free Writing Prospectus, to notify you and, upon
your request, to file such document (if required to be filed pursuant to the Act) and to prepare
and furnish without charge to each Underwriter as many copies as they may from time to time
reasonably request of an amended or supplemented Issuer Free Writing Prospectus that will correct
such conflict, statement or omission or effect such compliance.
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(g) Prior to the execution and delivery of this Agreement, the Company has delivered or will
deliver to you, without charge, in such quantities as you have requested or may hereafter
reasonably request, copies of each form of the Preliminary Prospectus. Consistent with the
provisions of Section 5(h) hereof, each of the Company and the Trust consents to the use, in
accordance with the provisions of the Act and with the securities or Blue Sky laws of the
jurisdictions in which the Units are offered by the several Underwriters and by dealers, prior to
the date of the Prospectus, of each Preliminary Prospectus so furnished by the Company.
(h) As soon after the execution and delivery of this Agreement as is practicable and
thereafter from time to time for such period as in the reasonable opinion of counsel for the
Underwriters a prospectus is required by the Act to be delivered in connection with sales by any
Underwriter or a dealer, and for so long a period as you may request for the distribution of the
Units, the Company will deliver to each Underwriter and each dealer, without charge, as many copies
of the Prospectus (and of any amendment or supplement thereto) as they may reasonably request. Each
of the Company and the Trust consents to the use of the Prospectus (and of any amendment or
supplement thereto) in accordance with the provisions of the Act and with the securities or Blue
Sky laws of the jurisdictions in which the Units are offered by the several Underwriters and by all
dealers to whom Units may be sold, both in connection with the offering and sale of the Units and
for such period of time thereafter as the Prospectus is required by the Act to be delivered in
connection with sales by any Underwriter or dealer. If at any time prior to the later of (i) the
completion of the distribution of the Units pursuant to the offering contemplated by the
Registration Statement or (ii) the expiration of prospectus delivery requirements with respect to
the Units under Section 4(3) of the Act and Rule 174 thereunder, any event shall occur that in the
judgment of the Company or the Trust or in the opinion of counsel for the Underwriters is required
to be set forth in the Prospectus (as then amended or supplemented) or should be set forth therein
in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary to supplement or amend the Prospectus to comply with
the Act or any other law, the Company and the Trust will forthwith prepare and, subject to Section
5(a) hereof, file with the Commission and use its best efforts to cause to become effective as
promptly as possible an appropriate supplement or amendment thereto, and will furnish to each
Underwriter who has previously requested Prospectuses, without charge, a reasonable number of
copies thereof.
(i) If this Agreement shall terminate or shall be terminated after execution pursuant to any
provision hereof (except Section 12), or if this Agreement shall be terminated by the Underwriters
because of any inability, failure or refusal on the part of the Company or the Trust to perform in
all material respects any agreement herein or to comply in all material respects with any of the
terms or provisions hereof or to fulfill in all material respects any of the conditions of this
Agreement, the Company agrees to reimburse the Representatives and the other Underwriters, other
than defaulting Underwriters, for all out-of-pocket expenses (including travel expenses and
reasonable fees and expenses of counsel for the Underwriters, but excluding wages and salaries paid
by you) reasonably incurred by you in connection herewith.
(j) Each of the Company and the Trust will apply the net proceeds from the sale of the Units
to be sold by the Trust hereunder in accordance in all material respects with the statements under
the caption “Use of Proceeds” in the Prospectus.
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(k) For a period commencing on the date hereof and ending on the 180th day after the date of
the Prospectus (the “Lock-Up Period”), the Company will not, directly or indirectly, (i) offer,
sell, contract to sell, pledge or otherwise dispose of (or enter into any transaction or device
that is designed to, or could be expected to, result in the disposition by any person at any time
in the future of) (collectively, a “Disposition”) any Trust Units, or other securities of the
Trust, or other securities that are derived from the Subject Interests (as defined in the
Conveyance) that are substantially similar to the Trust Units, or securities convertible into or
exchangeable for Trust Units, or sell or grant options, rights or warrants with respect to any
Trust Units or securities convertible into or exchangeable for Trust Units (collectively, “Trust
Securities”), (ii) enter into any swap or other derivatives transaction that transfers to another,
in whole or in part, any of the economic benefits or risks of ownership of such Trust Units,
whether any such transaction is to be settled by delivery of Trust Units or other securities, in
cash or otherwise, (iii) file or cause to be filed a registration statement, including any
amendments, with respect to the registration of any Trust Securities or (iv) publicly disclose the
intention to do any of the foregoing, in each case without the prior written consent of the
Representatives on behalf of the Underwriters, and the Company will procure from each individual
set forth on Schedule IV hereto and deliver to the Representatives, prior to the Closing
Date, a letter or letters substantially in the form of Exhibit G hereto (the “Lock Up
Agreements”); notwithstanding the foregoing if (x) during the last 17 days of the Lock-Up Period,
the Trust issues an earnings release or announces material news or a material event relating to the
Trust occurs or (y) prior to the expiration of the Lock-Up Period, the Trust announces that it will
release earnings results during the 16-day period beginning on the last day of the Lock-Up Period,
then the restrictions imposed in this Section 5(k) shall continue to apply until the expiration of
the 18-day period beginning on the date of issuance of the earnings release or the announcement of
the material news or the occurrence of the material event, unless the Representatives, on behalf of
the Underwriters, waives such extension in writing. The foregoing restrictions shall not apply to
(1) the sale of 209,312 Units to the Company by the Private Investors, as described in the
Registration Statement, the Time of Sale Information and the Prospectus; or (2) any redemption of
Additional Units from the Company by the Trust upon any exercise of the Underwriters’ option to
purchase Additional Units.
(l) The Company and the Trust will comply with all provisions of any undertakings contained in
the Registration Statement.
(m) Neither the Company nor the Trust will at any time, directly or indirectly, take any
action designed, or which might reasonably be expected to cause or result in, or which will
constitute, stabilization or manipulation of the price of the Trust Units to facilitate the sale or
resale of any of the Units in violation of the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder (collectively, the “Exchange Act”), the Act or
other applicable law.
(n) The Trust will file promptly all material required to be filed by it with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act or the rules and regulations of
the Commission thereunder, subsequent to the date of the Prospectus and for so long as the delivery
of a prospectus (or, in lieu thereof, the notice referred to in Rule 173(a) under the Act) is
required in connection with the offering of the Units.
10
(o) Not more than five business days following the Closing Date, the Company will file the
Conveyances with the Recorder of Deeds in the Register and Recorder’s Office of Xxxxxx County,
Pennsylvania, and immediately thereafter will file (i) the Drilling Support Mortgage and the
Royalty Interest Mortgage with the Recorder of Deeds in the Register and Recorder’s Office of
Xxxxxx County, Pennsylvania and (ii) UCC-1 Financing Statements in the Office of the Secretary of
State of West Virginia and the Office of the Secretary of State of the Commonwealth of
Pennsylvania. The Company will provide to the Underwriters evidence of all such filings reasonably
satisfactory to counsel for the Underwriters as promptly as practicable following the time of such
filing, and in any event not more than ten business days following the Closing Date.
(p) The Company and the Trust will comply with all agreements and satisfy all conditions on
their part to be complied with or satisfied pursuant to this Agreement on or prior to the Closing
Date or the Additional Closing Date, as the case may be, and the Company and the Trust will advise
the Underwriters prior to the Closing Date or the Additional Closing Date, as the case may be, if
any statements to be made on behalf of the Company or the Trust in the certificates contemplated by
Section 9 hereof would be inaccurate if made as of the Closing Date or the Additional Closing Date,
as the case may be.
(q) The Company and the Trust will cooperate with you and counsel for the Underwriters in
connection with the registration or qualification of the Units for offering and sale by the several
Underwriters and by dealers under the securities or Blue Sky laws of such jurisdictions as you may
reasonably designate and will file such consents to service of process or other documents as may be
reasonably necessary in order to effect and maintain such registration or qualification for so long
as required to complete the distribution of the Units; provided that in no event shall either the
Company or the Trust be obligated to qualify to do business in any jurisdiction where it is not now
so qualified or to take any action that would subject it to general service of process in suits,
other than those arising out of the offering or sale of the Units, as contemplated by this
Agreement and the Prospectus, in any jurisdiction where it is not now so subject. In the event that
the qualification of the Units in any jurisdiction is suspended, the Company or the Trust shall so
advise you promptly in writing. The Trust will use its reasonable best efforts to qualify or
register the Trust Units for sale in non-issuer transactions under (or obtain exemptions from the
application of) the Blue Sky laws of each state where necessary to permit market making
transactions and secondary trading and will use its reasonable best efforts to cause the Trust to
comply with such Blue Sky laws and to continue such qualifications, registrations and exemptions in
effect for a period of five years after the date hereof.
(r) The Trust will file with the Commission such information on Form 10-Q or Form 10-K as may
be required by Rule 463 under the Act.
(s) The Trust will timely file with the New York Stock Exchange (the “NYSE”) all documents and
notices required by the NYSE of trusts that have or will issue securities that are traded on the
NYSE.
(t) The Trust will engage and maintain, at its expense, a transfer agent and, if necessary
under the jurisdiction of its organization or the rules of any national securities
11
exchange on which the Trust Units will be listed, a registrar (which, if permitted by
applicable laws and rules may be the same entity as the transfer agent) for the Trust Units.
(u) The Trust will make generally available to holders of the Trust Units a consolidated
earnings statement (in form complying with the provisions of Rule 158), which need not be audited,
covering a 12-month period commencing after the effective date of the Registration Statement and
the Rule 462 Registration Statement, if any, and ending not later than 15 months thereafter, as
soon as practicable after the end of such period, which consolidated earnings statement shall
satisfy the provisions of Section 11(a) of the Act.
(v) The Trust will furnish to holders of the Trust Units 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 holders of the Trust Units summary
financial information of the Trust for such quarter in reasonable detail. For purposes of this
Section 5(v), the Trust shall be deemed to have made available such summary financial information
if such information has been filed on the Commission’s Electronic Data Gathering, Analysis and
Retrieval System (“XXXXX”).
(w) The Trust, during the period ending three years from the date hereof, will furnish to you
and, upon your request, to each of the other Underwriters, (i) as soon as available, a copy of each
proxy statement, quarterly or annual report or other report of the Trust mailed to unitholders or
filed with the Commission, the NYSE or any other national securities exchange and (ii) from time to
time such other information concerning the Trust as you may reasonably request. For purposes of
this Section 5(w), the Trust shall be deemed to have furnished the required information if such
document has been filed on XXXXX.
6. Representations and Warranties of the Company.
The Company hereby represents and warrants to each Underwriter on the date hereof, and shall
be deemed to represent and warrant to each Underwriter on the Closing Date and the Additional
Closing Date, as the case may be, that:
(a) No Stop Order. No stop order suspending the effectiveness of the Registration Statement,
any post-effective amendment thereto or the Rule 462 Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated or, to the knowledge of the Trust or
the Company, threatened by the Commission. No order preventing or suspending the use of any
Preliminary Prospectus or any Issuer Free Writing Prospectus has been issued and no proceeding for
that purpose has been initiated or, to the knowledge of the Trust or the Company, threatened by the
Commission.
(b) No Material Misstatements or Omissions in Registration Statement. The Registration
Statement conforms, and any further amendments or supplements to the Registration Statement will
conform, in all material respects to the applicable requirements of the Act and did not, as of the
applicable effective date, 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
12
statements
therein not misleading; provided that no representation or warranty is made as to information
contained in or omitted from the Registration Statement in reliance upon and in conformity with
written information furnished to the Company through the Representatives by or on behalf of any
Underwriter specifically for inclusion therein, which information is specified in Section 14.
(c) No Material Misstatements or Omissions in Prospectus. The Prospectus will conform, when
filed with the Commission under Rule 424(b), in all material respects to the applicable
requirements of the Act, and will not, as of its date and on each of the Closing Date and the
Additional Closing Date, if any, contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that no representation or warranty is made as
to information contained in or omitted from the Prospectus in reliance upon and in conformity with
written information furnished to the Company through the Representatives by or on behalf of any
Underwriter specifically for inclusion therein, which information is specified in Section 14.
(d) No Material Misstatements or Omissions in Time of Sale Information. The most recent
Preliminary Prospectus conformed, as of the effective date of the Registration Statement and as of
the date hereof, in all material respects to the applicable requirements of the Act and the rules
and regulations of the Commission thereunder. Each Issuer Free Writing Prospectus conformed or
will conform in all material respects to the applicable requirements of the Act on the date of
first use. The Time of Sale Information, as of the Time of Sale, did not include an untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading;
each Issuer Free Writing Prospectus, as of its time of first use, did not include an untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading;
and each Issuer Free Writing Prospectus does not conflict with the information contained in the
Registration Statement, the most recent Preliminary Prospectus or the Prospectus; provided that no
representation or warranty is made as to information contained in or omitted from the Time of Sale
Information in reliance upon and in conformity with written information furnished to the Company or
the Trust through the Representatives by or on behalf of any Underwriter specifically for inclusion
therein, which information is specified in Section 14.
(e) Company Not an “Ineligible Issuer.” Neither the Company nor the Trust was, at the time of
initial filing of the Registration Statement, is not on the date hereof, and will not be, on the
Closing Date and the Additional Closing Date, if any, an “ineligible issuer” (as defined in Rule
405 under the Act).
(f) Forward-Looking and Supporting Information. Each of the statements (including the
assumptions described therein) included in the Registration Statement and the most recent
Preliminary Prospectus and to be made in the Prospectus (and any supplements thereto) within the
coverage of Rule 175(b) under the Act, including (but not limited to) any statements with respect
to projected results of operations, estimated cash available for
13
distribution, future cash
distributions of the Trust or the anticipated ratio of taxable income to
distributions, and any statements made in support thereof or related thereto, under the
heading “Target distributions and subordination and incentive thresholds,” under the headings
“Summary,” “Risk Factors,” “The underlying properties” or “Federal income tax considerations,” was
made or will be made with a reasonable basis and in good faith.
(g) Formation, Due Qualification and Authority of the Company and the ECA Subsidiary. Each of
the Company and the ECA Subsidiary has been duly formed and is validly existing as a corporation in
good standing under the laws of the state of its incorporation with full power and authority to own
or lease its properties currently owned or leased or to be owned or leased at each of the Closing
Date and the Additional Closing Date, and to conduct its business as currently conducted or as to
be conducted at each of the Closing Date and the Additional Closing Date, in each case in all
material respects as described in the Registration Statement, the Time of Sale Information and the
Prospectus. The Company is duly registered or qualified to do business and is in good standing as
a foreign corporation in each jurisdiction in which its ownership or lease of property or the
conduct of its businesses requires such registration or qualification, except where the failure to
so register or qualify would not reasonably be expected to (i) have a material adverse effect on
the business, properties, financial condition, results of operations or prospects of the Trust, the
Underlying Properties or the Company (the occurrence of such an event or result being referred to
as a “Material Adverse Effect”), (ii) materially impair the ability of the Company, the ECA
Subsidiary or the Trust to consummate the Transactions or any other transactions provided for in
this Agreement or the Transaction Documents or (iii) subject the unitholders of the Trust to any
material liability or disability.
(h) Formation and Authority of Trust. The Trust has been duly created and is validly existing
in good standing as a statutory trust under the Delaware Statutory Trust Act, and all filings
required under the laws of the State of Delaware with respect to the creation and valid existence
of the Trust as a statutory trust have been made. The Trust has full power and authority to own its
properties currently owned or to be owned at the Closing Date and the Additional Closing Date and
to conduct its business as currently conducted or as to be conducted at each of the Closing Date
and the Additional Closing Date, in each case in all material respects as described in the
Registration Statement, the Time of Sale Information and the Prospectus. Neither the Trust nor the
Trustee is required to qualify to transact business or appoint an agent for service of process in
the Commonwealth of Pennsylvania as a result of the ownership, operation or activities of the Trust
or the Trustee with respect to the Trust, and the activities of the Trustee pursuant to the Trust
Agreement will not require the appointment of an ancillary trustee in the Commonwealth of
Pennsylvania.
(i) Ownership of the Sponsor Units. Assuming no purchase by the Underwriters of the
Additional Units on the Closing Date, at the Closing Date, after giving effect to the Transactions,
the Company will own 3,296,683 Common Units and 4,401,250 Subordinated Units and the Private
Investors will own 1,104,567 Common Units (collectively, the “Sponsor Units”); the Sponsor Units
and the beneficial interests in the Trust represented thereby will be duly authorized and validly
issued in accordance with the Trust Agreement, and will be fully paid and nonassessable and free
from any preemptive or similar rights; and the
14
Company and the Private Investors will collectively
own the Sponsor Units, free and clear of all liens, encumbrances, security interests, charges or
other claims (“Liens”).
(j) Valid Issuance of the Units. At each of the Closing Date and the Additional Closing Date,
if any, the Firm Units or the Additional Units, as the case may be, and the beneficial interests in
the Trust represented thereby, will be duly authorized in accordance with the Trust Agreement and,
when issued and delivered to the Underwriters against payment therefor in accordance with the terms
hereof, will be validly issued, fully paid and nonassessable and free from any preemptive or
similar rights.
(k) Capitalization of the Trust. Assuming no purchase by the Underwriters of the Additional
Units on the Closing Date, at the Closing Date, after giving effect to the Transactions, the issued
and outstanding beneficial interests in the Trust will consist of 13,203,750 Common Units, and
4,401,250 Subordinated Units; and other than the Sponsor Units, the Firm Units will be the only
beneficial interests in the Trust issued and outstanding at the Closing Date.
(l) Ownership of the ECA Subsidiary. At each of the Closing Date and the Additional Closing
Date, the Company will own directly 100% of the equity interests in the ECA Subsidiary, free and
clear of all Liens. At each of the Closing Date and the Additional Closing Date, such equity
interests will have been duly authorized and validly issued in accordance with the organizational
documents of the ECA Subsidiary and will be fully paid and nonassessable.
(m) No Preemptive Rights, Registration Rights or Options. Except as described in the
Registration Statement, the Time of Sale Information and the Prospectus, there are no options,
warrants, preemptive rights or other rights to subscribe for or to purchase, nor any restriction
upon the voting or transfer of, any Trust Securities. Neither the filing of the Registration
Statement nor the offering or sale of the Units as contemplated by this Agreement gives rise to any
rights for or relating to the registration of any Trust Securities.
(n) Authority and Authorization. Each of the Company, the ECA Subsidiary and the Trust, as
applicable, has all requisite power and authority to execute and deliver this Agreement and the
Operative Agreements to which it is a party and to perform its respective obligations hereunder and
thereunder. The Trust has all requisite power and authority to issue, sell and deliver (i) the
Units, in accordance with and upon the terms and conditions set forth in this Agreement, the Trust
Agreement, the Registration Statement, the Time of Sale Information and the Prospectus and (ii) the
Sponsor Units, in accordance with and upon the terms and conditions set forth in the Trust
Agreement, the Registration Statement, the Time of Sale Information and the Prospectus. At each of
the Closing Date and the Additional Closing Date, all corporate and trust action, as the case may
be, required to be taken by the Company, the ECA Subsidiary or the Trust or any of their respective
stockholders or unitholders or the Trustee or the Delaware Trustee for the authorization, issuance,
sale and delivery of the Units and the Sponsor Units, the execution and delivery of the Operative
Agreements and the consummation of the transactions (including the Transactions) contemplated by
this Agreement and the Operative Agreements shall have been validly taken.
15
(o) Authorization of Underwriting Agreement. This Agreement has been duly authorized and
validly executed and delivered by each of the Company and the Trust.
(p) Enforceability of Operative Agreements. At or before the Closing Date:
(i) the Trust Agreement will have been duly authorized, executed and delivered by the
Company, the Trustee and the Delaware Trustee and will be a valid and legally binding
agreement of the Company, the Trustee and the Delaware Trustee, enforceable against each of
the Company, the Trustee and the Delaware Trustee in accordance with its terms;
(ii) each of the Transaction Documents will have been duly authorized, executed and
delivered by each of the Trust, the Company, the ECA Subsidiary, the Trustee, the Delaware
Trustee and the Private Investors (the “Transaction Parties”) party thereto and will be a
valid and legally binding agreement of each party thereto, enforceable against each such
Transaction Party in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws
relating to or affecting creditors’ rights generally and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in equity or at
law).
(q) Sufficiency of Conveyance Documents.
(i) the form of each of the Conveyance Documents complies with the laws of the
Commonwealth of Pennsylvania, including all applicable recording, filing and registration
laws and regulations, and is adequate and sufficient to transfer title to the Term Royalties
and the Perpetual Royalties to the Trust;
(ii) the recording of the Conveyances with the Recorder of Deeds in the Register and
Recorder’s Office of Xxxxxx County, Pennsylvania is sufficient to impart notice of the
contents thereof, and all subsequent purchasers or creditors of the Company will be deemed
to purchase with notice of and subject to the PDP Royalty Interest and PUD Royalty Interest;
and
(iii) the Conveyances and the PDP Royalty Interest and the PUD Royalty Interest conform
in all material respects to the descriptions thereof in the Registration Statement, the Time
of Sale Information and the Prospectus. To the knowledge of the Company, the Company’s net
revenue interest with respect to each Producing Well is no less than the net revenue
interest set forth on the exhibits to the Conveyances relating to the PDP Royalties.
(r) Sufficiency of Mortgages. Each of the Drilling Support Mortgage and the Royalty Interest
Mortgage is effective to create, in favor of the Trust, a valid and enforceable security interest
(if any, in the case of the Royalty Interest Mortgage) in all of the rights, interests and
properties set forth in the Drilling Support Mortgage and the Royalty Interest Mortgage,
respectively, and defined therein as the “Mortgaged Properties.” When executed, delivered and duly
acknowledged, each of the Drilling Support Mortgage and the Royalty Interest
16
Mortgage will be in recordable form with the Recorder of Deeds in the Register and Recorder’s
Office of Xxxxxx County, Pennsylvania. When each of the Drilling Support Mortgage and the Royalty
Interest Mortgage are filed with the Recorder of Deeds in the Register and Recorder’s Office of
Xxxxxx County, Pennsylvania, the lien of the Trust in the Mortgaged Properties will be perfected
and such lien will be notice (under the law of the Commonwealth of Pennsylvania) to all third
parties of the interest of the Trust in the Mortgaged Properties. Mortgages conform in all
material respects to the descriptions thereof in the Registration Statement, the Time of Sale
Information and the Prospectus.
(s) No Conflicts. None of (i) the offering, issuance or sale by the Trust of the Units or the
application of the proceeds from the sale of the Units as described under “Use of Proceeds” in the
Time of Sale Information and the Prospectus, (ii) the execution, delivery and performance of this
Agreement or the Operative Agreements by the Trust, the Company, the ECA Subsidiary and the Private
Investors that are parties hereto or thereto, as the case may be, or (iii) the consummation of the
transactions (including the Transactions) contemplated by this Agreement or the Operative
Agreements, (A) conflicts or will conflict with or constitutes or will constitute a violation of
the Organizational Documents, (B) conflicts or will conflict with or constitutes or will constitute
a breach or violation of, or a default (or an event which, with notice or lapse of time or both,
would constitute such a default) under any indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which the Trust, the Company or any subsidiary of the
Company is a party or by which any of them or any of their respective properties may be bound, (C)
violates or will violate any statute, law or regulation or any order, judgment, decree or
injunction of any court or governmental agency or body directed to any of the Trust, the Company or
any subsidiary of the Company or any of their respective properties or assets in a proceeding to
which any of them or their respective properties or assets is a party or is bound or (D) results or
will result in the creation or imposition of any Lien upon any property or assets of any of the
Trust, the Company or any subsidiary of the Company, which conflicts, breaches, violations,
defaults or Liens, in the case of clauses (B), (C) or (D), would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect or materially impair the ability of the
Company, the ECA Subsidiary or the Trust to consummate the Transaction or any other transactions
provided for in this Agreement or the Transaction Documents.
(t) No Consents. No permit, consent, approval, authorization, order, registration, filing or
qualification (“consent”) of or with any court, governmental agency or body having jurisdiction
over any of the Trust, the Company or any subsidiary of the Company or any of their respective
properties or assets is required in connection with (i) the offering, issuance or sale by the Trust
of the Units or the application of the proceeds from the sale of the Units as described under “Use
of Proceeds” in the Time of Sale Information and the Prospectus, (ii) the execution, delivery and
performance of this Agreement or the Operative Agreements by the Trust, the Company, the ECA
Subsidiary and the Private Investors that are parties hereto or thereto, as the case may be, or
(iii) the consummation of the transactions (including the Transactions) contemplated by this
Agreement or the Operative Agreements except, in the case of clauses (i) through (iii), (A) for
registration of the Units under the Act and consents required under the Exchange Act, and
applicable state securities or “Blue Sky” laws in connection with the purchase and distribution of
the Units by the Underwriters, (B) for such consents that have
17
been, or prior to the Closing Date will be, obtained or made, (C) for such consents that, if not
obtained, would not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect or materially impair the ability of the Company, the ECA Subsidiary or the Trust to
consummate the Transaction or any other transactions provided for in this Agreement or the
Transaction Documents and (D) except as described in the Registration Statement, the Time of Sale
Information and the Prospectus.
(u) No Defaults. None of the Trust, the Company or the ECA Subsidiary is (i) in violation of
the Organizational Documents, (ii) in violation of any law, statute, ordinance, administrative or
governmental rule or regulation applicable to it or of any order, judgment, decree or injunction of
any court or governmental agency or body having jurisdiction over any of the Trust, the Company or
the ECA Subsidiary or any of their properties or assets or (iii) in breach, default (or an event
which, with notice or lapse of time or both, would constitute such a default or violation in the
performance of any obligation, agreement, covenant or condition contained in any bond, debenture,
note or any other evidence of indebtedness or in any agreement, indenture, lease or other agreement
or instrument to which it is a party or by which it or any of its properties or assets may be
bound, which breach, default or violation in the case of clauses (ii) or (iii) would, if continued,
reasonably be expected to have a Material Adverse Effect or materially impair the ability of the
Company, the ECA Subsidiary or the Trust to consummate the Transaction or any other transactions
provided for in this Agreement or the Transaction Documents. To the knowledge of the Company, no
third party to any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which any of the Trust, the Company or the ECA Subsidiary is a party or by which any
of them is bound or to which any of their properties or assets is subject, is in breach, default or
violation of any such agreement, which breach, default or violation, if continued, would reasonably
be expected to have a Material Adverse Effect or materially impair the ability of the Company, the
ECA Subsidiary or the Trust to consummate the Transaction or any other transactions provided for in
this Agreement or the Transaction Documents.
(v) Conformity of Securities to Descriptions in the Registration Statement, the Time of Sale
Information and the Prospectus. The Units, when issued and delivered in accordance with the terms
of the Trust Agreement and this Agreement against payment therefor as provided therein and herein,
and the Sponsor Units, when issued and delivered in accordance with the terms of the Trust
Agreement and the Transaction Documents, will conform in all material respects to the descriptions
thereof contained in the Registration Statement, the Time of Sale Information and the Prospectus.
(w) Private Placement. (i) The sale and issuance of Sponsor Units to the Company and the
Private Investors, (ii) the sale of the right to receive the Incentive Distributions to the
Company and (iii) the sale of 209,312 Units to the Company by the Private Investors, as further
described in the prospectus included in the Registration Statement, are exempt from the
registration requirements of the Securities Act and securities laws of any state having
jurisdiction with respect thereto, and none of the Trust, the Company or any of its subsidiaries or
the Private Investors has taken or will take any action that would cause the loss of such
exemption. Neither the Trust nor the Company nor the Private Investors has sold or issued
18
any securities that would be integrated with the offering of the Units contemplated by this
Agreement pursuant to the Act or the interpretations thereof by the Commission.
(x) Independent Public Accountants. Ernst & Young LLP, who has certified or shall certify the
audited financial statements of the Company, the Trust and for the Underlying Properties (including
the related notes thereto and supporting schedules) included in the Registration Statement, the
Time of Sale Information and the Prospectus (or any amendment or supplement thereto), is and was
during the periods covered by such financial statements, an independent registered public
accounting firm with respect to the Company, the Trust and the Underlying Properties as required by
the Act and the Public Company Accounting Oversight Board.
(y) Financial Statements. The historical financial statements (including the related notes
and supporting schedules) included in the Registration Statement, the Time of Sale Information and
the Prospectus present fairly in all material respects the financial condition of the Company, the
Trust and the Underlying Properties as of the dates indicated, and comply as to form with the
applicable accounting requirements of the Act and have been prepared in accordance with accounting
principles generally accepted in the United States applied on a consistent basis throughout the
periods involved. The summary historical financial information set forth in the Registration
Statement, the Time of Sale Information and the Prospectus under the caption “Summary Consolidated
Financial Data of ECA” is fairly presented in all material respects and prepared on a basis
consistent with the audited and unaudited historical financial statements from which it has been
derived. There are no financial statements (historical or pro forma) that are required to be
included in the Registration Statement, any Preliminary Prospectus or the Prospectus that are not
so included as required. The other financial information of the Company, the Trust and the
Underlying Properties, including non-GAAP financial measures, if any, contained in the Registration
Statement, the Time of Sale Information and the Prospectus has been derived from the accounting
records of the Company, the Trust and the Underlying Properties, and fairly presents the
information purported to be shown thereby.
(z) Pro Forma Financial Statements. The pro forma financial statements of the Trust included
in the Registration Statement, the Time of Sale Information and the Prospectus include assumptions
that provide a reasonable basis for presenting the significant effects directly attributable to the
transactions and events described therein, the related pro forma adjustments give appropriate
effect to those assumptions, and the pro forma adjustments reflect the proper application of those
adjustments to the historical financial statement amounts in the pro forma financial statements
included in the Registration Statement, the Time of Sale Information and the Prospectus. The pro
forma financial statements included in the Registration Statement, the Time of Sale Information and
the Prospectus comply as to form in all material respects with the applicable accounting
requirements of Regulation S-X under the Act and the pro forma adjustments have been properly
applied to the historical amounts in the compilation of those statements.
(aa) Reserve Engineers. The information underlying the estimates of reserves of the Company
and the Underlying Properties, which was supplied by the Company to Xxxxx Xxxxx Company, L.P.
(“Xxxxx Xxxxx”), independent petroleum engineers, for purposes of
19
preparing the reserve reports and estimates of the Company and preparing the letter (the
“Reserve Report Letter”) of Xxxxx Xxxxx, including, without limitation, production volumes, sales
prices for production costs of operation and development, and working interest and net revenue
information relating to ownership interests in the Underlying Properties, was true and correct in
all material respects on the dates such estimates were made and such information was supplied and
was prepared in accordance with customary industry practices; estimates of such reserves and
present values as described in the Registration Statement, the Time of Sale Information and the
Prospectus and reflected in the Reserve Report Letter comply in all material respects with the
applicable requirements of Regulation S-X and Subpart 1200 of Regulation S-K under the Act. Xxxxx
Xxxxx, whose report as of March 31, 2010 is referenced in the Prospectus, was, as of the date of
such report, and is, as of the date hereof, an independent petroleum engineer with respect to the
Company and the Underlying Properties.
(bb) No Material Adverse Change. Neither the Company nor the Underlying Properties have
sustained, since the date of the latest audited financial statements included in the Registration
Statement, the Time of Sale Information and 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, investigation, order or decree, otherwise
than as set forth or contemplated in the Registration Statement, the Time of Sale Information and
the Prospectus and other than as would not reasonably be expected to have a Material Adverse
Effect. Subsequent to the respective dates as of which information is given in the Registration
Statement, the Time of Sale Information and the Prospectus, in each case excluding any amendments
or supplements to the foregoing made after the execution of this Agreement, there has not been (i)
any material adverse change, or any development involving, individually or in the aggregate, a
prospective material adverse change, in the condition, financial or otherwise, business,
properties, management, financial condition, prospects, net worth or results of operations of the
Underlying Properties or the Company and (ii) any transaction which is material to the Trust or the
Company other than transactions in the ordinary course of business as such business is described in
the Registration Statement, the Time of Sale Information and the Prospectus, in each case other
than as described in the Registration Statement, the Time of Sale Information and the Prospectus
(and any amendment or supplement thereto).
(cc) No Changes Since Trust Formation. Since the date the Trust was formed through the date
hereof, and except as may otherwise be disclosed in the Registration Statement, Time of Sale
Information and the Prospectus, the Trust has not (i) issued or granted or agreed to issue or grant
any Trust Securities, (ii) incurred any liability or obligation, direct or contingent, (iii)
entered into any transaction not in the ordinary course of business or (iv) made any distribution.
(dd) Legal Proceedings or Contracts to be Described or Filed. There are no legal or
governmental proceedings pending or, to the knowledge of the Company, threatened, against any of
the Trust, the Company or the ECA Subsidiary, or to which any of the Trust, the Company or the ECA
Subsidiary is a party, or to which any of their respective properties or assets is subject, that
are required to be described in the Registration Statement, the Time of Sale Information or the
Prospectus that are not described as required by the Act. There are no
20
agreements, contracts, indentures, leases or other instruments that are required to be described in
the Registration Statement, the Time of Sale Information or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as required by the Act.
Each contract, document or other agreement described in the Registration Statement, the Time of
Sale Information or the Prospectus is in full force and effect and is valid and enforceable by and
against the Trust, the Company and the ECA Subsidiary, as the case may be, in accordance with its
terms except as the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights
generally and by general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Statements made in the Time of Sale Information
and the Prospectus insofar as they purport to constitute summaries of the terms of statutes, rules
or regulations, legal or governmental proceedings or contracts and other documents, constitute
accurate summaries of the terms of such statutes, rules and regulations, legal and governmental
proceedings and contracts and other documents in all material respects.
(ee) Certain Relationships and Related Transactions. Except as set forth in the Time of Sale
Information and the Prospectus, there are no transactions with “affiliates” (as defined in Rule 405
promulgated under the Act) or any officer, director or security holder of the Company (whether or
not an affiliate) that are required by the Act to be disclosed in the Registration Statement.
Additionally, no relationship, direct or indirect, exists between the Company or any of its
subsidiaries, on the one hand, and the directors, officers, stockholders, customers or suppliers of
the Company or any of its subsidiaries, on the other hand, that is required by the Act to be
disclosed in the Registration Statement, the Time of Sale Information and the Prospectus that is
not so disclosed.
(ff) Title to Properties.
(i) The Company, the ECA Subsidiary and the Private Investors have and will have good
and defensible title to the Subject Interests (as defined in the Conveyances) to be conveyed
by the Company, the ECA Subsidiary and the Private Investors, as applicable, free and clear
of all liens, encumbrances and defects except those described in the Time of Sale
Information and the Prospectus and except for Permitted Encumbrances (as defined in the
Conveyances); none of which in the aggregate materially affect the value of the Subject
Interests and do not materially interfere with the PDP Royalty Interest or the PUD Royalty
Interest or the use made and proposed to be made of such Underlying Properties by the
Company;
(ii) to the knowledge of the Company, there are no Prior Reversionary Interests (as
such are included in the definition of Permitted Encumbrances) in the Subject Interests;
(iii) all contracts, agreements or underlying leases, which comprise a portion of the
Subject Interests and which individually or in the aggregate are material to the Subject
Interests, are in full force and effect, the Company has paid all rents and other charges to
the extent due and payable thereunder, is not in default under any of such underlying
contracts, agreements or leases, has received no notice of default from any other party
thereto and knows of no material default by any other party thereto;
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(iv) the working interests in oil, gas and mineral leases or mineral interests that
constitute a portion of the Subject Interests held by the Company, the ECA Subsidiary or any
Private Investor reflect in all material respects the right of the Company, the ECA
Subsidiary or the Private Investor, as applicable, to explore or receive production from
such Subject Interests, and the care taken by the Company 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
(v) upon recordation and filing of the Conveyances, the Trust will have good and
defensible title to the Term Royalties and the Perpetual Royalties, free and clear of all
liens, encumbrances and defects, except Permitted Encumbrances;
(vi) as of the Closing Date, except for Permitted Encumbrances, any and all liens or
encumbrances on the Subject Interests will be subordinated to the PDP Royalty Interest and
the PUD Royalty Interest and all future liens or encumbrances on the Subject Interests shall
be subordinate and inferior to the PDP Royalty Interest and the PUD Royalty Interest; and
(vii) the Company, the ECA Subsidiary and the Private Investors have and will have good
and defensible title to the Mortgaged Properties, free and clear of all liens, encumbrances
and defects except those described in the Time of Sale Information and the Prospectus and
except for Permitted Encumbrances (as defined in the Conveyances); none of which in the
aggregate materially affect the value of the Mortgaged Properties and do not materially
interfere with the PDP Royalty Interest or the PUD Royalty Interest or the use made and
proposed to be made of such Underlying Properties by the Company;
(gg) Rights-of-Way. The Company has such easements or rights-of-way from each person
(collectively, “rights-of-way”) as are necessary to conduct its business in the manner described in
the Registration Statement, the Time of Sale Information and the Prospectus, except for such
rights-of-way that, if not obtained, would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect (including, with respect to the PUD Xxxxx, such
rights-of-way that are not routinely obtained until closer to when the Company commences drilling
such PUD Xxxxx and that the Company anticipates will be obtained in a timely manner); the Company
has fulfilled and performed all its material obligations with respect to such rights-of-way, and no
event has occurred that allows, or after notice or lapse of time would allow, revocation or
termination thereof or would result in any impairment of the rights of the Company with respect to
such rights-of-way, except for such revocations, terminations and impairments that would not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; and
none of such rights-of-way contains any restriction that is materially burdensome to the Company.
(hh) Permits. The Company has all permits, licenses, franchises, approvals, consents and
authorizations of governmental or regulatory authorities (hereinafter “permit” or “permits”) as are
necessary to own and operate the Underlying Properties and to conduct its
business related to or affecting the Underlying Properties in the manner described in the
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Registration Statement, the Time of Sale Information and the Prospectus, subject to such
qualifications as may be set forth in the Registration Statement, the Time of Sale Information and
the Prospectus, except where the failure to have obtained any such permit has not had and would not
reasonably be expected to have a Material Adverse Effect; the Company has operated and is operating
its business in material compliance with and not in material violation of all of its obligations
with respect to each such permit and no event has occurred that allows, or after notice or lapse of
time would allow, revocation or termination of any such permit or result in any other material
impairment of the rights of any such permit, subject in each case to such qualification as may be
set forth in the Registration Statement, the Time of Sale Information and the Prospectus.
(ii) Books and Records. Each of the Company and the Trust (i) makes and keeps books, records
and accounts, which, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of its assets and (ii) maintains systems of internal accounting controls sufficient to
provide reasonable assurances that (A) transactions are executed in accordance with general or
specific authorization of management or the Trustee, as applicable, (B) transactions are recorded
as necessary to permit preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets, (C) access to assets is permitted
only in accordance with general or specific authorization of management or the Trustee, as
applicable and (D) the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any differences.
(jj) Disclosure Controls and Procedures. (i) The Trust has established and maintains
disclosure controls and procedures (to the extent required by and as such term is defined in Rule
13a-15(e) under the Exchange Act); (ii) such disclosure controls and procedures are designed to
ensure that the information required to be disclosed by the Trust in the reports it files or will
file or submit under the Exchange Act, as applicable, is accumulated and communicated to management
of the Company, including its principal executive officers and principal financial officers, and
the Trustee of the Trust, as appropriate, to allow timely decisions regarding required disclosure
to be made and (iii) such disclosure controls and procedures are effective in all material respects
to perform the functions for which they were established to the extent required by Rule 13a-15 of
the Exchange Act.
(kk) No Changes in Internal Controls. Since the date of the most recent balance sheets of the
Company and the Trust reviewed or audited by Ernst & Young LLP, (i) neither the Company nor the
Trust is aware of (A) any significant deficiencies in the design or operation of internal controls
that could adversely affect the ability of any of the Trust to record, process, summarize and
report financial data in any material respect, or any material weaknesses in internal controls or
(B) any fraud, whether or not material, that involves management or other employees who have a
significant role in the internal controls of any of the Company or the Trust, and (ii) there have
been no significant changes in internal controls or in other factors that has or could
significantly and adversely affect internal controls.
(ll) Tax Returns. The Company has filed (or has obtained extensions with respect to) all
material federal, state, local and foreign income and franchise tax returns required
23
to be filed through the date hereof, which returns are complete and correct in all material
respects, and has timely paid all taxes shown to be due pursuant to such returns. No tax
deficiency has been determined adversely to the Company, and the Company has no knowledge of any
tax deficiency or related assessment, fine or penalty that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect, except those that are being contested in
good faith and for which adequate reserves have been established in accordance with generally
accepted accounting principles.
(mm) ERISA. Other than with respect to items that would not reasonably be expected to have a
Material Adverse Effect, (i) at the Closing Date and the Additional Closing Date, the Company and
each employee benefit plan or program maintained by the Company will be in compliance in form and
in operation in all material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations and published
interpretations thereunder (“ERISA”), and any other applicable law; no “reportable event” (as
defined in ERISA) has occurred or is reasonably expected to occur with respect to any “pension
plan” (as defined in ERISA) for which the Company or the Trust or any entity treated as a single
employer within the meaning of Section 414 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the “Code”) or Section 4001 of
ERISA (collectively “ERISA Affiliate”) (after giving effect to the Transactions), would have any
liability and (ii) none of the Company, the Trust or any ERISA Affiliate (after giving effect to
the Transactions) expects to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any “pension plan” or (ii) Sections 412 or 4971 of the Code.
Each pension plan established or maintained by the Company that is intended to be qualified under
Section 401 of the Code is so qualified and, to the knowledge of the Company, no event or fact
exists which would adversely affect such qualification. None of the Company, the Trust or any
ERISA Affiliate currently maintains, contributes to or has any liability with respect to a “defined
benefit plan” (within the meaning of Section 3(35) of ERISA) or a pension plan that is subject to
Title IV of ERISA.
(nn) Transfer Taxes. On the Closing Date and the Additional Closing Date, as the case may be,
all stock transfer and other taxes that are required to be paid in connection with the sale of the
Units to be sold by the Trust to the Underwriters will have been fully paid by the Trust and all
laws imposing such taxes will have been complied with.
(oo) Investment Company. Neither the Company, its subsidiaries nor the Trust is, or after
giving effect to the offering and sale of the Units and the application of net proceeds from such
sale as described in the Registration Statement, the Time of Sale Information and the Prospectus
under the caption “Use of Proceeds,” will be an “investment company” or a company “controlled by”
an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for,
an investment company within the meaning of the Investment Company Act of 1940, as amended.
(pp) Intellectual Property. The Company owns and has full right, title and interest in and
to, or has valid licenses to use, each material trade name, trademark, service xxxx, patent,
copyright, approval, trade secret and other similar rights (collectively “Intellectual Property”)
under which the Company conducts all or any material part of its business, and the
24
Company has not created any lien or encumbrance on, or granted any right or license with
respect to, any such Intellectual Property except where the failure to own or obtain a license or
right to use any such Intellectual Property has not and would not reasonably be expected to have a
Material Adverse Effect; there is no claim pending against the Company with respect to any
Intellectual Property and the Company has not received notice or otherwise become aware that any
Intellectual Property that it uses or has used in the conduct of its business infringes upon or
conflicts with the rights of any third party. The Company has not become aware that any material
Intellectual Property that it uses or has used in the conduct of its business infringes upon or
conflicts with the rights of any third party.
(qq) Environmental Compliance. The Company and is subsidiaries (i) are in compliance with any
and all foreign, federal, state and local laws and regulations relating to the prevention of
pollution or the protection of human health and safety and the environment or imposing liability or
standards of conduct concerning any Hazardous Material (as hereinafter defined) (“Environmental
Laws”), (ii) has received and is in compliance with all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their respective businesses as they
are currently being conducted, (iii) has not received written or oral notice of any actual or
potential liability under any Environmental Law, and (iv) is not a party to or affected by any
pending or, to the knowledge of the Company, threatened action, suit or proceeding relating to any
alleged violation of any Environmental Law or any actual or alleged release or threatened release
or cleanup at any location of any Hazardous Material, except where such noncompliance or deviation
from that described in (i)-(iv) above would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The term “Hazardous Material” means (A) any “hazardous
substance” as defined in the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, (B) any “hazardous waste” as defined in the Resource Conservation and Recovery
Act, as amended, (C) any petroleum or petroleum product, (D) any polychlorinated biphenyl and (E)
any pollutant or contaminant or hazardous, dangerous or toxic chemical, material, waste or
substance regulated under or within the meaning of any applicable Environmental Law. The Company
has not received written or oral notice that it is currently named as a “potentially responsible
party” under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as
amended, including, but not limited to, with respect to the Underlying Properties.
(rr) Effect of Environmental Laws. In the ordinary course of its business, the Company
periodically reviews the effect of Environmental Laws on its business, operations and properties,
in the course of which it identifies and evaluates associated costs and liabilities (including,
without limitation, any capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third parties). On the basis
of such review, the Company has reasonably concluded that such associated costs and liabilities
would not reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect.
(ss) Xxxxxxxx-Xxxxx Act of 2002. There has been no failure on the part of the Trust to comply
in all material respects with all applicable and effective provisions of the Xxxxxxxx-Xxxxx Act of
2002 and the rules and regulations promulgated in connection therewith.
25
At each of the Closing Date and the Additional Closing Date, if any, the Trust will be in
compliance in all material respects with all applicable provisions of the Xxxxxxxx-Xxxxx Act of
2002, the rules and regulations promulgated therewith and the rules of the NYSE that are effective
and applicable to the Trust.
(tt) No Labor Disputes. No labor dispute with the employees of any of the Company exists or,
to the knowledge of the Company, is imminent, that would reasonably be expected to have a Material
Adverse Effect.
(uu) Insurance. The Company maintains insurance covering its properties, operations, personnel
and businesses, including the Underlying Properties, against such losses and risks, in such amounts
and from such insurers as is commercially reasonable, when considered in conjunction with the
Company’s self insurance practices, for the conduct of their respective businesses and the value of
their respective properties. The Company has not received notice from any insurer or agent of such
insurer that substantial capital improvements or other expenditures will have to be made in order
to continue such insurance (including after giving effect to the Transactions). The Company is in
compliance with the terms of such policies in all material respects, and all such insurance is duly
in full force and effect on the date hereof and will be duly in full force and effect on the
Closing Date and any Additional Closing Date. There are no claims by the Company under any such
policy or instrument as to which any insurance company is denying liability or defending under a
reservation of rights clause; and the Company has not received written notice that it will be
denied renewal of its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its businesses at a cost
that would not reasonably be expected to have a Material Adverse Effect.
(vv) Legal Proceedings. Except as described in the Registration Statement, the Time of Sale
Information or the Prospectus, there is (i) no action, suit or proceeding before or by any court,
arbitrator or governmental agency, body or official, domestic or foreign, now pending or, to the
knowledge of the Company, threatened, to which the Trust or the Company is or may be a party or to
which the business or property of any of the Company is or may be subject, (ii) no injunction,
restraining order or order of any nature issued by a federal or state court or foreign court of
competent jurisdiction to which the Trust or the Company is or may be subject, that, in the case of
clauses (i) and (ii) above, is reasonably expected to (A) individually, or in the aggregate, have a
Material Adverse Effect, (B) prevent or result in the suspension of the offer, issuance or sale of
the Units, or (C) call into question the validity of this Agreement, any of the Operative Agreement
or the consummation of the transactions (including the Transactions) contemplated by this Agreement
or the Operative Agreements.
(ww) No Distribution of Other Offering Materials. Neither the Trust nor the Company has
distributed and, prior to the later to occur of the Closing Date, any Additional Closing Date and
completion of the distribution of the Units, will not distribute, any offering material in
connection with the offering and sale of the Units other than the Registration Statement, any
Preliminary Prospectus, the Time of Sale Information, the Prospectus and any Issuer Free Writing
Prospectus to which the Representatives have consented in accordance with this Agreement.
26
(xx) Anti-Corruption. Neither the Company nor, to the Company’s knowledge, any employee or
agent of the Company, acting in such capacity, has, directly or indirectly, (i) made any unlawful
contribution to any candidate for political office, or failed to disclose fully any contribution in
violation of applicable law, (ii) made any payment to any federal, state, local or foreign
governmental official, or other person charged with similar public or quasi-public duties, other
than payments required or permitted by the laws of the United States or any jurisdiction thereof or
applicable foreign jurisdictions, or (iii) violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977.
(yy) Money Laundering Laws. The operations of the Company are and have been conducted at all
times in material compliance with applicable financial recordkeeping and reporting requirements of
the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all jurisdictions, the rules and regulations thereunder and any related or similar
rules, regulations or guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator involving the Company with
respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
(zz) Office of Foreign Assets Control. Neither the Company nor, to the Company’s knowledge,
any employee or agent of the Company, acting in such capacity, or affiliate of the Company is
currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the
U.S. Treasury Department (“OFAC”); and the Company will not directly or indirectly use the proceeds
of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary,
joint venture partner or other person or entity, for the purpose of financing the activities of any
person who, to the knowledge of the Company, is currently subject to any U.S. sanctions
administered by OFAC.
(aaa) Lock-Up Agreements. The Company has procured Lock-Up Agreements, in the form of
Exhibit G attached hereto, from each of the individuals set forth on Schedule IV hereto.
(bbb) Listing. The Units have been approved for listing on the NYSE under the symbol “ECT”,
subject to official notice of issuance of the Units being sold by the Trust, and upon consummation
of the offering contemplated hereby the Trust will be in compliance with the designation and
maintenance criteria applicable to NYSE issuers.
(ccc) Market Stabilization. The Company and the Trust have not taken and will not take,
directly or indirectly, any action that constituted, or any action designed to, or that might
reasonably be expected to cause or result in or constitute, under the Exchange Act or otherwise,
stabilization or manipulation of the price of any Trust Security or facilitate the sale or resale
of the Units or for any other purpose.
(ddd) FINRA Affiliations. To the knowledge of the Company, no officer, director or nominee
for director or stockholder of the Company has a direct or indirect affiliation or association with
any member of FINRA.
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(eee) No Restrictions on Royalty Payments. The Company is not currently prohibited, directly
or indirectly, from making any payments on account of the Term Royalties or Perpetual Royalties to
the Trust.
(fff) Solvency. Immediately after the Closing Date, the Company (after giving
effect to the Conveyances and the other transactions (including the Transactions) contemplated
hereby) will be Solvent. As used in this paragraph, the term “Solvent” means, with respect to a
particular date, that on such date (i) the present fair market value (or present fair saleable
value) of the assets of the Company is not less than the total amount required to pay the probable
liabilities of the Company on its total existing debts and liabilities (including contingent
liabilities) as they become absolute and matured, (ii) the Company is able to realize upon its
assets and pay its debts and other liabilities, contingent obligations and commitments as they
mature and become due in the normal course of business, (iii) the Company is not engaged in any
business or transaction, and is not about to engage in any business or transaction, for which its
property would constitute unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which the Company is engaged and (v) the Company is not a
defendant in any civil action that would result in a judgment that the Company would become unable
to satisfy. In computing the amount of such contingent liabilities at any time, it is intended
that such liabilities will be computed at the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
(ggg) Statistical and Market-Related Data. All statistical or market-related data included in
the Registration Statement, the Time of Sale Information and the Prospectus, if any, are based on
or derived from sources that the Company believes to be reliable and accurate, and the Company has
obtained the written consent to the use of such data from such sources to the extent required.
(hhh) Directed Unit Sales. Neither the Company nor the Trust has offered, or caused Xxxxxxx
Xxxxx & Associates, Inc. to offer, Common Units to any person pursuant to the Directed Unit Program
with the specific intent to unlawfully influence (i) a customer or supplier of the Company to alter
the customer’s or supplier’s level or type of business with the Company or (ii) a trade journalist
or publication to write or publish favorable information about the Trust or the Company, its
business or its products.
(iii) Accuracy of Statements in Prospectus. The statements set forth in the Registration
Statement, the Time of Sale Information and the Prospectus under the captions “The trust,” “Target
distributions and subordination and incentive thresholds,” “Description of the trust agreement,”
“Description of the trust units,” and “ERISA considerations,” “The underlying
properties—regulation,” and “Underwriting,” fairly and accurately describe the provisions of the
laws and documents referred to therein in all material respects; and the descriptions of the Trust
Units contained in the Registration Statement, the Time of Sale Information and the Prospectus
under the captions “Summary,” “The trust,” “Target distributions and subordination and incentive
thresholds,” “The underlying properties,” “Description of the royalty interests,” “Description of
the trust agreement,” and “Description of the trust units” constitute accurate summaries of the
terms of the Trust Units in all material respects.
28
(jjj) Authorization and Qualification of Trustee. The Trustee is a national banking
association duly authorized and empowered to act as trustee of the Trust pursuant to the
Organizational Trust Agreement and the Trust Agreement.
(kkk) Authorization and Qualification of Delaware Trustee. The Delaware Trustee is a Delaware
banking corporation duly authorized and empowered to act as Delaware trustee of the Trust pursuant
to the Organizational Trust Agreement and the Trust Agreement.
(lll) No Consent Needed for Trustee Action. No consent, approval, authorization or filing is
required under any law, rule or regulation of the States of Delaware or Pennsylvania, or of the
United States of America in order to permit the Trustee to act as Trustee of the Trust.
Any certificate signed by any officer of the Company or the Trust and delivered to the
Representatives or to counsel for the Underwriters pursuant to this Agreement shall be deemed a
representation and warranty by the Company or the Trust, as applicable, to each Underwriter as to
the matters covered thereby.
7. Expenses. Whether or not the transactions contemplated hereby are consummated or
this Agreement becomes effective or is terminated, the Company agrees to pay or cause to be paid
the following: (i) the fees, disbursements and expenses of the Company’s counsel and accountants in
connection with the registration of the Units under the Act and all other expenses in connection
with the preparation, printing and filing of the Registration Statement and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies thereof and of any
Preliminary Prospectus to the Underwriters and dealers; (ii) the printing or reproduction and
delivery (including postage, air freight charges and charges for counting and packaging) of such
copies of the Registration Statement, the Prospectus, each Preliminary Prospectus, the Time of Sale
Information, any Blue Sky memoranda, the Master Agreement Among Underwriters, this Agreement, the
Selected Dealers Agreement and all amendments or supplements to any of them as may be reasonably
requested for use in connection with the offering and sale of the Units; (iii) consistent with the
provisions of Section 5(a), all expenses in connection with the qualification of the Units for
offering and sale under state securities laws or Blue Sky laws; (iv) the filing fees incident to
securing any required review by FINRA of the fairness of the terms of the sale of the Units; (v)
the fees and expenses associated with listing the Units on the NYSE; (vi) the cost of preparing any
unit certificates, if any; (vii) the costs and charges of any transfer agent or registrar; (viii)
the cost of the tax stamps, if any, in connection with the issuance and delivery of the Units to
the respective Underwriters; (ix) all other fees, costs and expenses referred to in Item 13 of the
Registration Statement; and (x) the transportation, lodging, graphics and other expenses of the
Company incidental to the Company’s preparation for and participation in the “roadshow” for the
offering contemplated hereby. Except as provided in this Section 7 and in Section 8 hereof, the
Underwriters shall pay their own expenses, including the fees and disbursements of their counsel.
In addition, in the event that the proposed offering is terminated for the reasons set forth in
Section 5(i) hereof, the Company agrees to reimburse the Underwriters as provided in Section 5(i).
8. Indemnification and Contribution. Subject to the limitations in this paragraph, the
Company agrees to indemnify and hold harmless you and each other Underwriter, the directors,
29
officers, employees and agents of each Underwriter, each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act and any
“affiliate” (within the meaning of Rule 405 under the Act) of such Underwriter from and against any
and all losses, claims, damages, liabilities and expenses, including reasonable costs of
investigation and attorneys’ fees and expenses (collectively, “Damages”) arising out of or based
upon (i) any untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement, the Time of Sale Information, any Issuer Free
Writing Prospectus or the Prospectus or in any amendment or supplement thereto, or (ii) (A) the
omission or alleged omission to state in the Registration Statement or in any amendment or
supplement thereto any material fact required to be stated therein or necessary to make the
statements therein not misleading or (B) the omission or alleged omission to state in any
Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus or in any amendment or
supplement thereto, any material fact necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, except to the extent that any such
Damages arise out of or are based upon an untrue statement or omission or alleged untrue statement
or omission that has been made therein or omitted therefrom in reliance upon and in conformity with
the information furnished in writing to the Company by or on behalf of any Underwriter through you,
expressly for use in connection therewith, (ii) any inaccuracy in or breach of the representations
and warranties of the Company contained herein or any failure of the Company to perform its
obligations hereunder or under law and (iii) any claims (or actions, including rescission actions,
in respect thereof) that are arise out of or are based on the transactions described under “Certain
Transactions” in the Registration Statement, Time of Sale Information and Prospectus. This
indemnification shall be in addition to any liability that the Company may otherwise have.
If any action or claim shall be brought against any Underwriter or any person controlling any
Underwriter in respect of which indemnity may be sought against the Company, such Underwriter or
such controlling person or such affiliate (an “indemnified party”) shall promptly notify in writing
the party against whom indemnification is being sought (the “indemnifying party”), but failure to
so notify the indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall
not relieve it from any liability which it may have otherwise than on account of this Section 8,
and such indemnifying party shall assume the defense thereof, including the employment of counsel
reasonably acceptable to such indemnified party and the payment of all reasonable fees of and
expenses incurred by such counsel. Such Underwriter or any such controlling person shall have the
right to employ separate counsel in any such action and participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such indemnified party, unless (i) the
indemnifying party has agreed in writing to pay such fees and expenses, (ii) the indemnifying party
has failed to assume the defense and employ counsel reasonably acceptable to the indemnified party
or (iii) the named parties to any such action (including any impleaded parties) include both the
indemnified party and the indemnifying party, and such indemnified party shall have been advised by
its counsel that one or more legal defenses may be available to the Underwriter that may not be
available to the Company, or that
representation of such indemnified party and any indemnifying party by the same counsel would
be inappropriate under applicable standards of professional conduct (whether or not such
representation by the same counsel has been proposed) due to actual or
30
potential differing interests between them (in which case the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party (but the Company shall not be liable for
the fees and expenses of more than one counsel for the Underwriters and such controlling persons)).
The indemnifying party shall not be liable for any settlement of any such action effected without
its (their several) written consent, but if settled with such written consent, or if there be a
final judgment for the plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any Underwriter and any such controlling person from and against any loss, claim,
damage, liability or expense by reason of such settlement or judgment, but in the case of a
judgment only to the extent stated in the first paragraph of this Section 8.
Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the
Company, its directors, its officers who sign the Registration Statement and any person who
controls the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
and any “affiliates” (within the meaning of Rule 405 under the Act) of the Company, to the same
extent as the foregoing several indemnity from the Company to each Underwriter, but only with
respect to information furnished in writing by or on behalf of such Underwriter through you
expressly for use in the Registration Statement, the Prospectus, the Time of Sale Information, any
Issuer Free Writing Prospectus or any Preliminary Prospectus, or any amendment or supplement
thereto. If any action or claim shall be brought or asserted against the Company, any of its
directors, any of its officers or any such controlling person or affiliate based on the
Registration Statement, the Prospectus, the Time of Sale Information or any Preliminary Prospectus,
or any amendment or supplement thereto, and in respect of which indemnity may be sought against any
Underwriter pursuant to this paragraph, such Underwriter shall have the rights and duties given to
the Company by the immediately preceding paragraph (except that if the Company shall have assumed
the defense thereof such Underwriter shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof, but the fees and expenses of such counsel
shall be at such Underwriter’s expense), and the Company, its directors, any such officers and any
such controlling persons, shall have the rights and duties given to the Underwriters by the
immediately preceding and following paragraph.
In any event, the Company will not, without the prior written consent of the Representatives,
settle or compromise or consent to the entry of any judgment in any proceeding or threatened claim,
action, suit or proceeding in respect of which the indemnification may be sought hereunder (whether
or not the Representatives or any person who controls a Representative within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act is a party to such claim, action, suit or
proceeding) unless such settlement, compromise or consent includes an unconditional release of all
Underwriters and such controlling persons from all liability arising out of such claim, action,
suit or proceeding and does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any Underwriter or such controlling persons.
If the indemnification provided for in this Section 8 is unavailable or insufficient for any
reason whatsoever to an indemnified party in respect of any Damages referred to herein, then an
indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such Damages (i) in such
31
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 hand, from the offering and sale of the Units or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in clause (i) above but
also the relative and several fault of the Company and the Trust on the one hand, and the
Underwriters on the other hand, in connection with the statements or omissions that resulted in
such Damages as well as any other relevant equitable considerations. The relative and several
benefits received by the Company and the Trust on the one hand, and the Underwriters on the other
hand, shall be deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Trust 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; provided that, in the event that the Underwriters shall have purchased any
Additional Units hereunder, any determination of the relative benefits received by the Company and
the Trust or the Underwriters from the offering of the Units shall include the net proceeds (before
deducting expenses) received by the Trust and the underwriting discounts and commissions received
by the Underwriters, from the sale of such Additional Units, in each case computed on the basis of
the respective amounts set forth in the table or in the notes to the table on the cover page of the
Prospectus. The relative fault of the Company and the Trust on the one hand, and the Underwriters
on the other hand, 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 and the Trust on the one hand, or by the
Underwriters on the other hand and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 8 was determined by a pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation that does not take
into account the equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the Damages referred to in the
immediately preceding paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the provisions of this
Section 8, no Underwriter shall be required to contribute any amount in excess of the amount of the
underwriting commissions received by such underwriter in connection with the Units underwritten by
it and distributed to the public. 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 to contribute pursuant
to this Section 8 are several in proportion to the respective numbers of Firm Units set forth
opposite their names in Schedule I hereto (or such numbers of Firm Units increased as set forth in
Section 11 hereof) and not joint.
Any Damages for which an indemnified party is entitled to indemnification or contribution
under this Section 8 shall be paid by the indemnifying party to the indemnified party as Damages
are incurred after receipt of reasonably itemized invoices therefor. The
32
indemnity, contribution
and reimbursement agreements contained in this Section 8 and the representations and warranties of
the Company set forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter, any person controlling
any Underwriter, the Company, its directors or officers or any person controlling the Company, (ii)
acceptance of any Units and payment therefor hereunder and (iii) any termination of this Agreement.
A successor to any Underwriter, any person controlling any Underwriter or any affiliate of any
Underwriter, or to the Company, its directors, officers, any person controlling the Company or any
affiliate of the Company, shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 8.
The Company shall indemnify and hold harmless Xxxxxxx Xxxxx & Associates, Inc. (including its
directors, officers and employees) and each person, if any, who controls Xxxxxxx Xxxxx &
Associates, Inc. within the meaning of Section 15 of the Securities Act (“Xxxxxxx Xxxxx Entities”),
from and against any loss, claim, damage or liability or any action in respect thereof to which any
of the Xxxxxxx Xxxxx Entities may become subject, under the Act or otherwise, insofar as such loss,
claim, damage, liability or action (i) arises out of, or is based upon, any untrue statement or
alleged untrue statement of a material fact contained in any material prepared by or with the
approval of the Company for distribution to Directed Unit Participants in connection with the
Directed Unit Program or any omission or alleged omission to state therein a material fact
necessary to make the statements therein not misleading, in light of the circumstances under why
any such statements were made, (ii) arises out of, or is based upon, the failure of the Directed
Unit Participant to pay for and accept delivery of Directed Units that the Directed Unit
Participant agreed to purchase or (iii) is otherwise related to the Directed Unit Program; provided
that the Company shall not be liable under this clause (iii) for any loss, claim, damage, liability
or action that is determined in a final judgment by a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of the Xxxxxxx Xxxxx Entities. The
Company shall reimburse the Xxxxxxx Xxxxx Entities promptly upon demand for any legal or other
expenses reasonably incurred by them in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such expenses are incurred.
9. Conditions of Underwriters’ Obligations. The several obligations of the
Underwriters to purchase the Firm Units to be delivered on the Closing Date, and any Additional
Units to be delivered on an Additional Closing Date, shall be subject hereunder are subject to the
following conditions:
(a) The Registration Statement shall have become effective not later than 12:00 noon, New York
City time, on the date hereof, or at such later date and time as shall be consented to in writing
by the Representatives, and all filings required by Rules 424(b), 430A and 462 under the Act shall
have been timely made.
(b) All corporate proceedings and other legal matters incident to the authorization, form and
validity of this Agreement, the Transaction Documents, the Registration
Statement and the Prospectus, and all other legal matters relating to this Agreement and the
transactions (including the Transactions) contemplated hereby shall be reasonably satisfactory in
33
all material respects to counsel for the Underwriters, and the Company shall have furnished to such
counsel all documents and information that they may reasonably request to enable them to pass upon
such matters.
(c) You shall be satisfied that since the respective dates as of which information is given in
the Registration Statement, the Time of Sale Information and Prospectus, (i) there shall not have
been any change in the Trust Units or any material change in the indebtedness (other than in the
ordinary course of business) of the Company, (ii) except as set forth or contemplated by the
Registration Statement, Time of Sale Information and the Prospectus, no material oral or written
agreement or other transaction shall have been entered into by the Trust that is not in the
ordinary course of business or by the Company that could reasonably be expected to result in a
material reduction in the future income of the Trust, (iii) no loss or damage (whether or not
insured) to the property of the Company shall have been sustained that had or would reasonably be
expected to have a Material Adverse Effect, (iv) no legal or governmental action, suit or
proceeding affecting the Company or the Trust or any of its properties that would reasonably be
expected to result in a Material Adverse Effect or that affects or would reasonably be expected to
affect the transactions (including the Transactions) contemplated by this Agreement shall have been
instituted or threatened and (v) there shall not have been any material change in the condition
(financial or otherwise), business, management, results of operations or business prospects of the
Company or the Trust that makes it impractical or inadvisable in your judgment to proceed with the
public offering or purchase of the Units as contemplated hereby.
(d) You shall have received on the Closing Date (and any Additional Closing Date) an opinion
of Xxxxxx & Xxxxxx L.L.P., counsel to the Company, substantially in the form of Exhibit A
hereto.
(e) You shall have received on the Closing Date (and any Additional Closing Date) an opinion
of Xxxxxxx & Xxxxxxx, counsel to the Company, substantially in the form of Exhibit B
hereto.
(f) You shall have received on the Closing Date (and any Additional Closing Date) an opinion
of Xxxxxx X. Xxxxxx, to the Company, substantially in the form of Exhibit C hereto.
(g) You shall have received on the Closing Date (and any Additional Closing Date) an opinion
of Keevican Xxxxx Xxxxxxx & Xxxxxx LLC, Pennsylvania counsel to the Company, substantially in the
form of Exhibit D hereto.
(h) You shall have received on the Closing Date (and any Additional Closing Date) an opinion
of Xxxxxxxx, Xxxxxx & Finger, P.A., Delaware counsel to the Company, substantially in the form of
Exhibit E hereto.
(i) You shall have received on the Closing Date (and any Additional Closing Date) an opinion
of Xxxxxxxxx & Xxxxxxxx LLP, counsel to the Trustee, substantially in the form of Exhibit F
hereto.
34
(j) You shall have received on the Closing Date and any Additional Closing Date an opinion of
Xxxxx Xxxxx L.L.P., as counsel for the Underwriters, dated the Closing Date or Additional Closing
Date, as the case may be, with respect to such matters as you may reasonably request, and the
Company and its counsel shall have furnished to your counsel such documents as they may reasonably
request for the purpose of enabling them to pass upon such matters.
(k) You shall have received on the Closing Date or Additional Closing Date, as the case may
be, a certificate of the Trustee, dated the Closing Date or Additional Closing Date, as the case
may be, executed by a duly authorized officer of the Trustee, representing and warranting to each
of the Underwriters that:
(i) The Trustee is a national banking association authorized and empowered to act as
trustee of the Trust pursuant to the Trust Agreement, and no consent, approval,
authorization or filing is required under any law, rule or regulation of the State of
Delaware or of the United States of America in order to permit the Trustee to act as trustee
of the Trust;
(ii) The Trust Agreement has been executed and delivered by the Trustee and, assuming
the due authorization, execution and delivery thereof by the Company and the Delaware
Trustee, 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 by (A) the
application of bankruptcy, reorganization, insolvency or other laws affecting creditors’
rights generally and (B) equitable principles being applied at the discretion of a court
before which any proceeding may be brought; and the Operative Agreements to which the Trust
is a party have been duly and validly executed by the Trustee;
(iii) The Trust has complied with all of the agreements and satisfied all of the
conditions on the part of the Trust to be performed or satisfied hereunder on or before such
Closing Date or Additional Closing Date; and
(iv) There are 13,203,750 Common Units and 4,401,250 Subordinated Units authorized and
outstanding under the Trust Agreement, all of which have been duly and validly issued in
accordance with the Trust Agreement; and holders of the Trust Units are entitled to the
benefits of the Trust Agreement.
(l) You shall have received, on each of the date hereof and the Closing Date and any
Additional Closing Date, a letter dated the date hereof or the applicable Closing Date or
Additional Closing Date, as the case may be, in form and substance satisfactory to the
Underwriters, from Ernst & Young LLP, independent public accountants, containing statements and
information of the type ordinarily included in accountants’ “comfort letters” to underwriters with
respect to the financial statements and certain financial information contained in the
Registration Statement, the Time of Sale Information and the Prospectus; provided that the
letter delivered on the date hereof shall use a “cut-off date” within three business days of the
date hereof and each letter delivered on the Closing Date or any Additional Closing Date shall use
a “cut-off date” within two business days of such date.
35
(m) (i) No stop order suspending the effectiveness of the Registration Statement shall have
been issued by the Commission and no proceedings for that purpose shall be pending or, to the
knowledge of the Company, shall be threatened or contemplated by the Commission at or prior to the
Closing Date or Additional Closing Date, as the case may be; (ii) no order suspending the
effectiveness of the Registration Statement or the qualification or registration of the Units under
the securities or Blue Sky laws of any jurisdiction shall be in effect and no proceeding for such
purpose shall be pending or, to the knowledge of the Company, threatened or contemplated by the
authorities of any jurisdiction; (iii) any request for additional information on the part of the
staff of the Commission or any such authorities shall have been complied with to the satisfaction
of the staff of the Commission or such authorities; (iv) after the date hereof, no amendment or
supplement to the Registration Statement or the Prospectus or any Issuer Free Writing Prospectus
shall have been filed unless a copy thereof was first furnished to you and the Company obtained
your consent prior to filing any of those with the Commission; (v) all of the representations and
warranties of the Company contained in this Agreement shall be true and correct as of the Closing
Date and any Additional Closing Date, and the Company and the Trust have complied with all of the
agreements and satisfied all of the conditions on the part of the Company or the Trust to be
performed or satisfied hereunder on or before such Closing Date or Additional Closing Date; and
(vi) neither the Company nor the Trust shall have failed in any material respect at or prior to the
Closing Date or the Additional Closing Date, as the case may be, to have performed or complied with
any of its agreements herein contained and required to be performed or complied with by it
hereunder at or prior to the Closing Date or Additional Closing Date, as the case may be, and you
shall have received a certificate, dated the Closing Date or the Additional Closing Date, as the
case may be, and signed by the chief executive officer and the chief financial officer of the
Company (or such other officers as are acceptable to you) to the effect set forth in this Section
9(m) and in Section 9(c) hereof and certifying that they have carefully examined the Registration
Statement, the Time of Sale Information and the Prospectus, as well as each electronic road show
used in connection with the offering of the Units, and, in their opinion (A) the Registration
Statement, as of the Effective Date, (B) the Prospectus, as of its date and on the Closing Date or
Additional Closing Date, as applicable, or (C) the Time of Sale Information, as of the Time of
Sale, did not contain any untrue statement of a material fact and did not omit to state a material
fact required to be stated therein or necessary to make the statements therein (except in the case
of the Registration Statement, in the light of the circumstances under which they were made) not
misleading.
(n) At or prior to the effective date of the Registration Statement, you shall have received a
letter from the Corporate Financing Department of FINRA confirming that such Department has
determined to raise no objections with respect to the fairness or reasonableness of the
underwriting terms and arrangements of the offering contemplated hereby.
(o) You shall have received letters addressed to you and dated the Closing Date or the
Additional Closing Date, as the case may be, from Xxxxx Xxxxx stating the
conclusions and findings of such firm with respect to oil and gas reserves of the Company
substantially in the form approved by you.
36
If any of the conditions hereinabove provided for in this Section 9 shall not have been
satisfied when and as required by this Agreement, this Agreement may be terminated by you by
notifying the Company of such termination in writing at or prior to such Closing Date, but you
shall be entitled to waive any of such conditions.
10. Effective Date of Agreement. This Agreement shall become effective upon the later
of (a) the execution and delivery hereof by the parties hereto and (b) release of notification of
the effectiveness of the Registration Statement by the Commission; provided, however, that the
provisions of Sections 7 and 8 shall at all times be effective.
11. Use of Free Writing Prospectus. Each Underwriter severally covenants with the
Company that it has not made and will not make any offer relating to the Units that would
constitute a “free writing prospectus,” as defined in Rule 405 under the Act, required to be filed
with the Commission without the consent of the Company, not to be unreasonably withheld, other than
any such offer included in an Issuer Free Writing Prospectus. The Company covenants with the
Underwriters that it has not made and will not make any offer relating to the Units that would
constitute a “free writing prospectus,” as defined in Rule 405 under the Act, required to be filed
with the Commission without the consent of the Representatives, not to be unreasonably withheld,
other than any such offer included in an Issuer Free Writing Prospectus included in the Time of
Sale Information.
12. Defaulting Underwriters. If any one or more of the Underwriters shall fail or
refuse to purchase Firm Units that it or they have agreed to purchase hereunder, and the aggregate
number of Firm Units that such defaulting Underwriter or Underwriters agreed but failed or refused
to purchase is not more than one-tenth of the aggregate number of the Firm Units, each
non-defaulting Underwriter shall be obligated, severally, in the proportion in which the number of
Firm Units set forth opposite its name in Schedule I hereto bears to the aggregate number of Firm
Units set forth opposite the names of all non-defaulting Underwriters or in such other proportion
as you may specify in the Agreement Among Underwriters, to purchase the Firm Units that such
defaulting Underwriter or Underwriters agreed, but failed or refused to purchase. If any
Underwriter or Underwriters shall fail or refuse to purchase Firm Units and the aggregate number of
Firm Units with respect to which such default occurs is more than one-tenth of the aggregate number
of Firm Units and arrangements satisfactory to you and the Company for the purchase of such Firm
Units are not made within 48 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter or the Company. In any such case that does
not result in termination of this Agreement, either you or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven (7) days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or any other documents
or arrangements may be effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any such default of any such Underwriter under
this Agreement.
13. Termination of Agreement. This Agreement shall be subject to termination in your
absolute discretion, without liability on the part of any Underwriter to the Company or the Trust
by notice to the Company and the Trust, if prior to the Closing Date or the Additional Closing Date
(if different from the Closing Date and then only as to the Additional Units), as the
37
case may be,
in your sole judgment, (i) trading in the Common Units shall have been suspended by the Commission
or the NYSE, (ii) trading in securities generally on the NYSE or NASDAQ shall have been suspended
or materially limited, or minimum or maximum prices shall have been generally established on such
exchange, or additional material governmental restrictions, not in force on the date of this
Agreement, shall have been imposed upon trading in securities generally by any such exchange or by
order of the Commission or any court or other governmental authority, (iii) a general moratorium on
commercial banking activities shall have been declared by either federal or New York State
authorities or (iv) there shall have occurred any outbreak or escalation of hostilities or other
international or domestic calamity, crisis or change in political, financial or economic conditions
or other material event the effect of which on the financial markets of the United States is such
as to make it, in your judgment, impracticable or inadvisable to market the Units or to enforce
contracts for the sale of the Units. Notice of such cancellation shall be promptly given to the
Company and its counsel by telegraph, telecopy or telephone and shall be subsequently confirmed by
letter.
14. Information Furnished by the Underwriters. The Company acknowledges that (i) the
list of Underwriters and their respective participation in the sale of the Units, (ii) the first
and second sentences of the fourth paragraph (iii) the thirteenth through eighteenth paragraphs,
the twenty-first paragraph, the twenty-fifth paragraph and the twenty-sixth paragraph, each under
the caption “Underwriting” in any Preliminary Prospectus, constitute the only information furnished
by or on behalf of the Underwriters through you or on your behalf as such information is referred
to in Sections 6(b), 6(c), 6(d) and 8 hereof.
15. Miscellaneous. Notice given pursuant to any of the provisions of this Agreement
shall be in writing and shall be delivered:
(i) | to the Company Energy Corporation of America 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000 Xxxxxx, Xxxxxxxx 00000 Attention: Xxxxxx X. Xxxxxx |
||
(ii) | to the Trust ECA Marcellus Trust I x/x Xxx Xxxx xx Xxx Xxxx Xxxxxx Trust Company, N.A. 000 Xxxxxxxx Xxxxxx, Xxxxx 000 Xxxxxx, Xxxxx 00000 Attention: Xxxxxxx X. Xxxxxx |
||
with a copy to | |||
Bracewell & Xxxxxxxx LLP 000 Xxxxxxxx Xxxxxx Xxxxxx, Xxxxx 00000 Attention: Xxx Xxxxxx |
38
(ii) | to the Underwriters |
||
Xxxxxxx Xxxxx & Associates, Inc. 000 Xxxxxxxx Xxxxxxx Xx. Xxxxxxxxxx, Xxxxxxx 00000 Attention: Xxxx Crtichlow |
|||
Citigroup Global Markets Inc. 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Facsimile: 212.816.7912 Attention: General Counsel |
This Agreement has been and is made solely for the benefit of the several Underwriters, the
Company and its directors and officers and the Trust.
16. No Fiduciary Duty. Notwithstanding any preexisting relationship, advisory or
otherwise, between the parties or any oral representations or assurances previously or subsequently
made by any of the Underwriters, each of the Company and the Trust acknowledge and agree that (i)
nothing herein shall create a fiduciary or agency relationship between the Company or the Trust, on
the one hand, and the Underwriters, on the other hand; (ii) the Underwriters have been retained
solely to act as underwriters and, except to the extent set out in clause (xi) of Section 7 hereof
are not acting as advisors, expert or otherwise, to either the Company or the Trust in connection
with this offering, the sale of the Units or any other services the Underwriters may be deemed to
be providing hereunder, including, without limitation, with respect to the public offering price of
the Units; (iii) the relationship between the Company and the Trust, on the one hand, and the
Underwriters, on the other hand, is entirely and solely commercial, and the price of the Units was
established by the Company, the Trust and the Underwriters based on discussions and arms’ length
negotiations and each of the Company and the Trust understand and accept the terms, risks and
conditions of the transactions contemplated by this Agreement; (iv) any duties and obligations that
the Underwriters may have to the Company or the Trust shall be limited to those duties and
obligations specifically stated herein; and (v) notwithstanding anything in this Agreement to the
contrary, the Company and the Trust acknowledge that the Underwriters may have financial interests
in the success of the Offering that are not limited to the difference between the price to the
public and the purchase price paid to the Trust by the Underwriters for the Units and that such
interests may differ from the interests of the Company and the Trust, and the Underwriters have no
obligation to disclose, or account to the Company or the Trust for any benefit that they may derive
from, such additional financial interests. Each of the Company and the Trust hereby waive and
release, to the fullest extent permitted by applicable law, any claims that the Company or the
Trust may have against the Underwriters with respect to any breach or alleged breach of fiduciary
duty and agree that the
Underwriters shall have no liability (whether direct or indirect) to the Company or the Trust
in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on
behalf of or in right of the Company, the Trust or any of their respective members, managers,
employees or creditors.
39
17. Applicable Law; Counterparts. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to choice of law principles
thereunder.
This Agreement may be signed in various counterparts, which together shall constitute one and
the same instrument.
This Agreement shall be effective when, but only when, at least one counterpart hereof shall
have been executed on behalf of each party hereto.
The Trust, the Company and the Underwriters each hereby irrevocably waive any right they may
have to a trial by jury in respect to any claim based upon or arising out of this Agreement or the
transactions contemplated hereby.
40
Please confirm that the foregoing correctly sets forth the agreement among the Company, the
Trust and the several Underwriters.
Very truly yours, ECA MARCELLUS TRUST I By: The Bank of New York Mellon Trust Company, N.A., as Trustee |
||||
By: | ||||
Xxxxxxx X. Xxxxxx | ||||
Title: | ||||
ENERGY CORPORATION OF AMERICA |
||||
Xxxx Xxxx President and Chief Executive Officer |
||||
41
CONFIRMED as of the date first above
mentioned, on behalf of the Representatives
and the other several Underwriters named in
Schedule I hereto.
mentioned, on behalf of the Representatives
and the other several Underwriters named in
Schedule I hereto.
XXXXXXX XXXXX & ASSOCIATES, INC.
By: |
||||
Authorized Representative | ||||
CITIGROUP GLOBAL MARKETS INC. | ||||
By: |
||||
Authorized Representative |
42
SCHEDULE I
Number | ||||
Name | Firm Units | |||
Xxxxxxx Xxxxx & Associates, Inc. |
||||
Citigroup Global Markets Inc. |
||||
Xxxxxxxxxxx & Co. Inc. |
||||
RBC Capital Markets Corporation |
||||
Xxxxxx X. Xxxxx & Co. |
||||
Total |
8,802,500 | |||
SCHEDULE II
Free Writing Prospectuses
None.
SCHEDULE III
Information Included in “Time of Sale Information”
Public offering price: |
$[____] per Common Unit | |||
Number of Firm Units: |
8,802,500 |
SCHEDULE IV
Persons Delivering Lock-up Agreements
W. Xxxxxx Xxxxxxxx, III
Xxxxx Xxxxxxx
Xxxx Xxxxxxx
Xxxxx X. Xxxxx
Xxxxxx Xxx
X.X. Xxxxxx
Xxxx X. Xxxxxx
Xxxxx Xxxxxxx
Xxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxxx
J. Xxxxxxx Xxxxxx
Xxxx Xxx
Xxxxxx X. Xxxxxxx
Xxx Xxxxxx
Xxxxx Xxxxx
Xxxx Xxxxxx
X.X. XxXxxxxxxx III
Xxxxx XxXxxxx
Xxxx Xxxx
Xxxxx X. Xxxx
Xxxx X. Xxxx
Xxxxxx X. Xxxxxxx, Xx.
Xxxxxx X’Xxxxxx
Xxx X. Xxxxx
Xxxx Xxxxxxxx
Xxxxx Xxxxxxxx
Xxxx Xxxxxx
Xxxx Xxxxxxxx
Xxxxxx X. Xxxxxx
Xxx Xxxxxxx
Xxxxx Xxxxxxx
Xxxx Xxxxxxx
Xxxxx X. Xxxxx
Xxxxxx Xxx
X.X. Xxxxxx
Xxxx X. Xxxxxx
Xxxxx Xxxxxxx
Xxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxxx
J. Xxxxxxx Xxxxxx
Xxxx Xxx
Xxxxxx X. Xxxxxxx
Xxx Xxxxxx
Xxxxx Xxxxx
Xxxx Xxxxxx
X.X. XxXxxxxxxx III
Xxxxx XxXxxxx
Xxxx Xxxx
Xxxxx X. Xxxx
Xxxx X. Xxxx
Xxxxxx X. Xxxxxxx, Xx.
Xxxxxx X’Xxxxxx
Xxx X. Xxxxx
Xxxx Xxxxxxxx
Xxxxx Xxxxxxxx
Xxxx Xxxxxx
Xxxx Xxxxxxxx
Xxxxxx X. Xxxxxx
Xxx Xxxxxxx
EXHIBIT A
FORM OF OPINION OF XXXXXX & XXXXXX L.L.P.
1. Assuming no purchase by the Underwriters of the Additional Units on the Closing Date and
the due authorization, execution and delivery of this Agreement and the Operative Agreements by the
parties thereto, at the Closing Date, after giving effect to the Transactions, the Company will own
3,926,683 Common Units, 4,401,250 Subordinated Units and the right to receive Incentive
Distributions, free and clear of all Liens (i) in respect of which a financing statement under the
Uniform Commercial Code of the State of Delaware naming the Company as a debtor is on file in the
office of the Secretary of State of the State of Delaware or (ii) otherwise known to such counsel,
without independent investigation, other than those created by or arising under the Delaware
Statutory Trust Act.
2. Neither the filing of the Registration Statement nor the offering or sale of the Units as
contemplated by this Agreement gives rise to any rights for or relating to the registration of any
Trust Units or other securities of the Trust.
3. Assuming the due authorization, execution and delivery thereof by the parties thereto, each
of the Administrative Services Agreement, the Floor Price Contracts, the Swap Agreement and the
Registration Rights Agreement constitutes a valid and legally binding agreement of the Company, the
ECA Subsidiary and the Trust that are parties thereto, enforceable against each of them in
accordance with its respective terms, subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights
generally and by general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4. None of (i) the offering, issuance or sale by the Trust of the Units or the application of
the proceeds from the sale of the Units as described under “Use of Proceeds” in the Time of Sale
Information and the Prospectus, (ii) the execution, delivery and performance of this Agreement or
the Operative Agreements by the Trust, the Company, the ECA Subsidiary and the Private Investors
that are parties hereto or thereto, as the case may be, or (iii) the consummation of the
transactions (including the Transactions) contemplated by this Agreement or the Operative
Agreements, violates or will violate federal law; provided, however, that with respect to the
foregoing, such counsel need express no opinion with respect to federal securities laws or other
anti-fraud laws.
5. No permit, consent, approval, authorization, order, registration, filing or qualification
(“consent”) of or with any court, governmental agency or body under federal law is required in
connection with (i) the offering, issuance or sale by the Trust of the Units or the application of
the proceeds from the sale of the Units as described under “Use of Proceeds” in the Time of Sale
Information and the Prospectus, (ii) the execution, delivery and performance of this Agreement or
the Operative Agreements by the Trust, the Company, the ECA Subsidiary and the Private Investors
that are parties hereto or thereto, as the case may be, or (iii) the consummation of the
transactions (including the Transactions) contemplated by this Agreement or the Operative
Agreements except (A) for registration of the Units under the Act and consents
A-1
required under the
Exchange Act, and applicable state securities or “Blue Sky” laws in connection with the purchase
and distribution of the Units by the Underwriters and (B) for such consents that have been, or
prior to the Closing Date will be, obtained or made.
6. The statements set forth in the Registration Statement, the Time of Sale Information and
the Prospectus under the captions “The trust,” “Target distributions and subordinated and incentive
thresholds,” “Description of the trust agreement,” “Description of the trust units,” and “ERISA
considerations” and “The underlying properties—Regulation,” insofar as they purport to constitute
summaries of provisions of federal statutes, rules or regulations, of statutes, rules or
regulations of the State of Delaware or of any specific agreement or instrument, constitute
complete and accurate summaries thereof in all material respects; and the descriptions of the Trust
Units contained in the Registration Statement, the Time of Sale Information and the Prospectus
under the captions “Summary,” “The trust,” “Target distributions and subordination and incentive
thresholds,” “The underlying properties,” “Description of the royalty interest,” “Description of
the trust agreement,” and “Description of the trust units” constitute accurate summaries of the
terms of the Trust Units in all material respects.
7. The opinion letter of Xxxxxx & Xxxxxx L.L.P. that is filed as Exhibit 8.1 to the
Registration Statement is confirmed, and the Underwriters may rely upon such opinion letter as if
it were addressed to them.
8. To the knowledge of such counsel, there are no (i) legal or governmental proceedings
pending or threatened to which the Company, any of its subsidiaries or the Trust is a party or to
which any of their respective properties is subject that are required to be described in the
Registration Statement, the Time of Sale Information or the Prospectus but are not so described as
required by the Act or (ii) agreements, contracts, indentures, leases or other instruments that are
required to be described in the Registration Statement, the Time of Sale Information and the
Prospectus or to be filed as exhibits to the Registration Statement that are not described or filed
as required by the Act.
9. The Registration Statement was declared effective under the Act as of the date and time
specified in such opinion; to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings for that purpose
have been instituted or threatened by the Commission; and any required filing of the Prospectus
pursuant to Rule 424(b) under the Act has been made in the manner and within the time period
required by such Rule.
10. The Registration Statement, on the latest effective date and on the Closing Date and
Additional Closing, and the Prospectus, when filed with the Commission pursuant to Rule 424(b) and
on the Closing Date and the Additional Closing Date, appeared, on their face, appropriately
responsive, in all material respects, to the requirements of the Act and the rules and regulations
thereunder, except that in each case such counsel need express no opinion with respect to the
financial statements and the notes and schedules thereto and the independent public accounting
firm’s report thereon, the oil and gas reserve data, or other financial data, accounting
data and statistical data derived from financial data contained in or omitted from the Registration
Statement, the Time of Sale Information or the Prospectus.
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11. Neither the Company, its subsidiaries nor the Trust is, or after giving effect to the
offering and sale of the Units and the application of net proceeds from such sale as described in
the Registration Statement, the Time of Sale Information and the Prospectus under the caption “Use
of Proceeds,” will be an “investment company” within the meaning of the Investment Company Act of
1940, as amended.
In addition, such counsel shall state that they have participated in conferences with officers
and other representatives of the Company, the independent registered public accounting firm of the
Company and representatives of the Underwriters, at which the contents of the Registration
Statement, the Time of Sale Information and the Prospectus and related matters were discussed, and
although such counsel has not independently verified, is not passing upon, and is not assuming any
responsibility for the accuracy, completeness or fairness of the statements contained in, the
Registration Statement, the Time of Sale Information and the Prospectus (except to the extent
specified in the foregoing opinions), based on the foregoing, no facts have come to such counsel’s
attention that lead such counsel to believe that:
(A) the Registration Statement, at the time it was declared effective, 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) the Time of Sale Information, as of the Time of Sale, included an untrue statement
of a material fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading, or
(C) the Prospectus, as of its date and as of the Closing Date or the Additional Closing
Date, included or includes an untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
it being understood that such counsel expresses no statement or belief with respect to (a) the
financial statements and related schedules, including the notes thereto and the independent public
accounting firm’s report thereon, (b) the oil and gas reserve data, or (c) other financial data,
accounting data and statistical data derived from financial data contained therein or omitted
therefrom.
In rendering such opinion, such counsel may (i) rely in respect of matters of fact upon
certificates of officers and other employees of the Company and the ECA Subsidiary and of the
Trustee and upon information obtained from public officials, (ii) assume that all documents
submitted to them as originals are authentic, that all copies submitted to them conform to the
originals thereof, and that the signatures on all documents examined by them are genuine, (iii)
state that their opinion is limited to federal laws, the Delaware General Corporation Law and the
laws of the State of New York, (v) state that they express no opinion with respect to (A) any
permits to own or operate any real or personal property or (B) state or local taxes or state or
local tax statutes to which the Company or the Trust may be subject, and (vi) with respect to the
existence of any Lien for which a financing statement under the Uniform Commercial Code of any
state is on file, such counsel’s opinion is based solely upon such counsel’s review of a
A-3
specific
search of such state’s Secretary of State (each of which shall be as of a date not more than 10
days prior to the Closing Date or the Additional Closing Date and shall be provided to counsel to
the Underwriters).
A-4
EXHIBIT B
FORM OF OPINION OF XXXXXXX & XXXXXXX
1. Each of the Company and the ECA Subsidiary (the “ECA Entities”) has been duly formed and is
validly existing as a corporation in good standing under the laws of the State of West Virginia
with all corporate power and authority necessary to own or lease its properties currently owned or
leased or to be owned or leased at each of the Closing Date and the Additional Closing Date, and to
conduct its business as currently conducted or as to be conducted at each of the Closing Date and
the Additional Closing Date, in each case, in all material respects as described in the
Registration Statement, the Time of Sale Information and the Prospectus.
2. Each of the ECA Entities has all requisite power and authority to execute and deliver this
Agreement and the Operative Agreements to which it is a party and perform its obligations hereunder
and thereunder. All corporate action required to be taken by the ECA Entities or their respective
stockholders for the execution and delivery of the Operative Agreements to which an ECA Entity is a
party and the consummation of the transactions (including the Transactions) contemplated by this
Agreement and such Operative Agreements has been validly taken.
3. The Company owns directly 100% of the equity interests in the ECA Subsidiary. Such equity
interests have been duly authorized and validly issued in accordance with the organizational
documents of the ECA Subsidiary and are fully paid and nonassessable, and the Company directly owns
such equity interests free and clear of all Liens (i) in respect of which a financing statement
under the Uniform Commercial Code of the State of West Virginia naming the Company as a debtor is
on file in the office of the Secretary of State of the State of West Virginia or (ii) otherwise
known to such counsel, without independent investigation, other than those created by or arising
under the West Virginia Business Corporation Act.
4. This Agreement has been duly authorized and validly executed and delivered by the Company.
5. Each of the Operative Agreements to which an ECA Entity is a party has been duly
authorized, executed and delivered by such ECA Entity.
6. None of (i) the offering, issuance or sale by the Trust of the Units or the application of
the proceeds from the sale of the Units as described under “Use of Proceeds” in the Time of Sale
Information and the Prospectus, (ii) the execution, delivery and performance of this Agreement or
the Operative Agreements by the Trust, the ECA Entities and the Private Investors that are parties
hereto or thereto, as the case may be, or (iii) the consummation of the transactions (including the
Transactions) contemplated by this Agreement or the Operative Agreements, (A) conflicts or will
conflict with or constitutes or will constitute a breach of, or a default under, the articles of
incorporation or bylaws of the ECA Entities, (B) conflicts or will conflict with or constitutes or
will constitute a breach or violation of, or a default (or an event which, with notice or lapse of
time or both, would constitute such a default) under, or give the holder of any indebtedness the
right to require the repurchase, redemption or repayment of all or
B-1
part of such
indebtedness under, any bond, indenture, mortgage, deed of trust, loan agreement or other evidences
of indebtedness to which the Trust, the Company or any subsidiary of the Company is a party or by
which any of them or any of their respective properties (including, without limitation, the Subject
Interests) are bound, (C) violates or will violate any statute, law or regulation of the State of
West Virginia or any order, judgment, decree or injunction (assuming compliance with all applicable
state securities and Blue Sky laws) of any court or governmental agency or body directed to any of
the Trust, the Company or any subsidiary of the Company or any of their respective properties or
assets in a proceeding to which any of them or their respective properties or assets is a party or
is bound that is known to such counsel or (D) to the knowledge of such counsel, results or will
result in the creation or imposition of any Lien upon any property (including, without limitation,
the Subject Interests) or assets of any of the Trust, the Company or any subsidiary of the Company,
which conflicts, breaches, violations, defaults or Liens, in the case of clauses (B), (C) or (D),
would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
7. No permit, consent, approval, authorization, order, registration, filing or qualification
(“consent”) of or with any court, governmental agency or body of the State of West Virginia, or
under the laws of the State of West Virginia is required in connection with (i) the offering,
issuance or sale by the Trust of the Units or the application of the proceeds from the sale of the
Units as described under “Use of Proceeds” in the Time of Sale Information and the Prospectus, (ii)
the execution, delivery and performance of this Agreement or the Operative Agreements by the Trust,
the Company, the ECA Subsidiary and the Private Investors that are parties hereto or thereto, as
the case may be, or (iii) the consummation of the transactions (including the Transactions)
contemplated by this Agreement or the Operative Agreements except (A) for registration of the Units
under the Act and consents required under the Exchange Act, and applicable state securities or
“Blue Sky” laws in connection with the purchase and distribution of the Units by the Underwriters,
(B) for such consents that have been, or prior to the Closing Date will be, obtained or made, and
(C) which, if not obtained, would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect (including, with respect to the PUD Xxxxx, such permits that
are not routinely obtained until closer to when the Company commences drilling such PUD Xxxxx and
that, to the knowledge of such counsel, the Company anticipates will be obtained in a timely
manner).
In addition, such counsel shall state that they have participated in conferences with officers
and other representatives of the Company, the independent registered public accounting firm of the
Company and representatives of the Underwriters, at which the contents of the Registration
Statement, the Time of Sale Information and the Prospectus and related matters were discussed, and
although such counsel has not independently verified, is not passing upon, and is not assuming any
responsibility for the accuracy, completeness or fairness of the statements contained in, the
Registration Statement, the Time of Sale Information and the Prospectus (except to the extent
specified in the foregoing opinions), based on the foregoing, no facts have come to such counsel’s
attention that lead such counsel to believe that:
(A) the Registration Statement, at the time it was declared effective, 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-2
(B) the Time of Sale Information, as of the Time of Sale, included an untrue statement of a
material fact or omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading, or
(C) the Prospectus, as of its date and as of the Closing Date or the Additional Closing
Date, included or includes an untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
it being understood that such counsel expresses no statement or belief with respect to (a) the
financial statements and related schedules, including the notes thereto and the independent public
accounting firm’s report thereon, (b) the oil and gas reserve data, or (c) other financial data,
accounting data and statistical data derived from financial data contained therein or omitted
therefrom.
In rendering such opinion, such counsel may (i) rely in respect of matters of fact upon
certificates of officers and other employees of the Company upon information obtained from public
officials; (ii) assume that all documents submitted to them as originals are authentic, that all
copies submitted to them conform to the originals thereof, and that the signatures on all documents
examined by them are genuine; (iii) with respect to the opinion expressed as to the good standing
of the ECA Entities, state that such opinion is based upon certificates provided by the Secretary
of State of West Virginia (which shall be dated as of a date not more than 10 days prior to the
Closing Date and the Additional Closing Date and shall be provided to counsel to the Underwriters)
and express no conclusions beyond what are stated in such certificates; (iv) state that their
opinion is limited to matters governed by the laws of the State of West Virginia and that such
counsel is not admitted to practice in the States of Delaware and Pennsylvania; and (v) state that
they express no opinion with respect to (A) any permits to own or operate any real or personal
property or (B) state or local taxes or state or local tax statutes to which the Company or the
Trust may be subject.
B-3
EXHIBIT C
FORM OF OPINION OF GENERAL COUNSEL
1. Except as described in the Prospectus and the Time of Sale Information, and except as
arising pursuant to the Trust Agreement, there are no options, warrants, preemptive rights or other
rights to subscribe for or to purchase, nor any restriction upon the voting or transfer of, any
Trust Units or other securities of the Trust.
2. Assuming the due authorization, execution and delivery of this Agreement and the Operative
Agreements by the parties thereto, at the Closing Date, after giving effect to the Transactions,
the Private Investors will own 1,104,567 Common Units, free and clear of all Liens known to such
counsel, without independent investigation, other than those created by or arising under the
Delaware Statutory Trust Act.
3. None of (i) the offering, issuance or sale by the Trust of the Units or the application of
the proceeds from the sale of the Units as described under “Use of Proceeds” in the Time of Sale
Information and the Prospectus, (ii) the execution, delivery and performance of this Agreement or
the Operative Agreements by the Trust, the Company, the ECA Subsidiary and the Private Investors
that are parties hereto or thereto, as the case may be, or (iii) the consummation of the
transactions (including the Transactions) contemplated by this Agreement or the Operative
Agreements, (A) conflicts or will conflict with or constitutes or will constitute a breach or
violation of, or a default (or an event which, with notice or lapse of time or both, would
constitute such a default) under, any agreement or instrument to which the Company or any
subsidiary of the Company is a party or by which any of them or any of their respective properties
(including, without limitation, the Subject Interests) are bound, other than any bond, indenture,
mortgage, deed of trust, loan agreement or other evidences of indebtedness to which the Company or
any subsidiary of the Company is a party, (B) violates or will violate any order, judgment, decree
or injunction (assuming compliance with all applicable state securities and Blue Sky laws) of any
court or governmental agency or body directed to any of the Company or any subsidiary of the
Company or any of their respective properties or assets in a proceeding to which any of them or
their respective properties or assets is a party or is bound that is known to such counsel or (C)
to the knowledge of such counsel, results or will result in the creation or imposition of any Lien
(other than those Liens created pursuant to the Drilling Support Lien or the Royalty Interest Lien)
upon any property (including, without limitation, the Subject Interests) or assets of any of the
Company or any subsidiary of the Company, which conflicts, breaches, violations, defaults or Liens
would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
4. To the knowledge of such counsel, there are no legal or governmental proceedings pending to
which the Company, any of its subsidiaries or the Trust is a party or of which any property or
assets of the Company, any of its subsidiaries or the Trust (including, without limitation, the
Subject Interests) is or may be the subject that could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect or could, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the performance of
C-1
this Agreement or the Operative Agreements or the consummation of the transactions
contemplated thereby; and to the knowledge of such counsel, no such proceedings are threatened or
contemplated by governmental authorities.
In addition, such counsel shall state that he has participated in conferences with officers
and other representatives of the Company, the independent registered public accounting firm of the
Company and representatives of the Underwriters, at which the contents of the Registration
Statement, the Time of Sale Information and the Prospectus and related matters were discussed, and
although such counsel has not independently verified, is not passing upon, and is not assuming any
responsibility for the accuracy, completeness or fairness of the statements contained in, the
Registration Statement, the Time of Sale Information and the Prospectus (except to the extent
specified in the foregoing opinions), based on the foregoing, no facts have come to such counsel’s
attention that lead such counsel to believe that:
(A) the Registration Statement, at the time it was declared effective, 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) the Time of Sale Information, as of the Time of Sale, included an untrue statement of a
material fact or omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading, or
(C) the Prospectus, as of its date and as of the Closing Date or the Additional Closing Date,
included or includes an untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading;
it being understood that such counsel expresses no statement or belief with respect to (a) the
financial statements and related schedules, including the notes thereto and the independent public
accounting firm’s report thereon, (b) the oil and gas reserve data, or (c) other financial data,
accounting data and statistical data derived from financial data contained therein or omitted
therefrom.
In rendering such opinion, such counsel may (i) rely in respect of matters of fact upon
certificates of officers and other employees of the Company and upon information obtained from
public officials, (ii) assume that all documents submitted to him as originals are authentic, that
all copies submitted to him conform to the originals thereof, and that the signatures on all
documents examined by him are genuine, (iii) state that such opinions are limited to matters
governed by the laws of the State of West Virginia and that such counsel is not admitted in the
State of Delaware and is on inactive status in the Commonwealth of Pennsylvania, and (iv) state
that he expresses no opinion with respect to (A) any permits to own or operate any real or personal
property or (B) federal, state or local taxes or state or local tax statutes to which the Company
or the Trust may be subject.
C-2
EXHIBIT D
FORM OF OPINION OF KEEVICAN XXXXX XXXXXXX & XXXXXX LLC
1. The Company is duly registered or qualified to do business and is in good standing as a
foreign corporation in the Commonwealth of Pennsylvania. Neither the Trust nor the Trustee is
required to qualify to transact business or appoint an agent for service of process in the
Commonwealth of Pennsylvania as a result of the ownership, operation or activities of the Trust or
the Trustee with respect to the Trust (as all such activities are described in the Registration
Statement, Time of Sale Information and the Prospectus), and such activities of the Trustee
pursuant to the Trust Agreement will not require the appointment of an ancillary trustee in the
Commonwealth of Pennsylvania, to the extent the aforementioned involve acquiring real estate and
mortgages and other liens thereon and personal property and security interests therein, and
holding, leasing, conveying and transferring them, as fiduciary or other.
2. Each of the Conveyances, the Development Agreement, and the Lien Documentation constitutes
a valid and legally binding agreement of the Company, the ECA Subsidiary, the Private Investors and
the Trust that are parties thereto, enforceable against each of them in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws relating to or affecting creditors’ rights generally and by general principles of
equity (regardless of whether such enforceability is considered in a proceeding in equity or at
law).
3. The form of the Conveyances to be recorded is adequate and sufficient under the laws of the
Commonwealth of Pennsylvania to transfer title to the Term Royalties and the Perpetual Royalties to
the Trust and complies with the laws of the Commonwealth of Pennsylvania relating to recording,
filing and registration laws and regulations; the recording of the Conveyances with the Recorder of
Deeds in the Register and Recorder’s Office of Xxxxxx County, Pennsylvania is sufficient to provide
the Trust the protections afforded under the recordation laws of the Commonwealth of Pennsylvania
against purchasers or creditors of the Company subsequently acquiring interests in the Subject
Interests, and such purchasers and creditors of the Company will be deemed to purchase with notice
of, and subject to, such Term Royalties and Perpetual Royalties; and the Company is not required to
make any recordings or filings of the Conveyances under the laws of the Commonwealth of
Pennsylvania other than those recordings or filings described in this paragraph.
4. Each of the Drilling Support Mortgage and the Royalty Interest Mortgage is effective to
create, in favor of the Trust, a valid and enforceable security interest in all of the rights,
interests and properties set forth in the Drilling Support Mortgage and the Royalty Interest
Mortgage, respectively and defined therein as the “Mortgaged Properties.” When executed,
delivered, duly acknowledged and attested, each of the Drilling Support Mortgage and the Royalty
Interest Mortgage will be in recordable form for recording with the Recorder of Deeds in the
Register and Recorder’s Office of
D-1
Xxxxxx County, Pennsylvania. When executed and delivered, the
Financing Statements will be in proper form for filing with the Pennsylvania Department of State.
When each of the Drilling Support Mortgage and the Royalty Interest
Mortgage are recorded with the Recorder of Deeds in the Register and Recorder’s Office of Xxxxxx
County, Pennsylvania, and when the Financing Statements are filed with the Pennsylvania Department
of State, the lien of the Trust in the Mortgaged Properties will be perfected and such lien will be
notice (under the law of the Commonwealth of Pennsylvania) to all third parties of the interest of
the Trust in the Mortgaged Properties. With respect to the foregoing, such counsel need express no
opinion in regard to the priority of liens as between the Drilling Support Mortgage and the Royalty
Interest Mortgage.
5. None of (i) the offering, issuance or sale by the Trust of the Units or the application of
the proceeds from the sale of the Units as described under “Use of Proceeds” in the Time of Sale
Information and the Prospectus, (ii) the execution, delivery and performance of this Agreement or
the Operative Agreements by the Trust, the Company, the ECA Subsidiary and the Private Investors
that are parties hereto or thereto, as the case may be, or (iii) the consummation of the
transactions (including the Transactions) contemplated by this Agreement or the Operative
Agreements, violates or will violate any statute, law or regulation of any court or governmental
agency or body of the Commonwealth of Pennsylvania.
6. No permit, consent, approval, authorization, order, registration, filing or qualification
(“consent”) of or with any court, governmental agency or body of the Commonwealth of Pennsylvania,
or under the laws of the Commonwealth of Pennsylvania is required in connection with (i) the
offering, issuance or sale by the Trust of the Units or the application of the proceeds from the
sale of the Units as described under “Use of Proceeds” in the Time of Sale Information and the
Prospectus, (ii) the execution, delivery and performance of this Agreement or the Operative
Agreements by the Trust, the Company, the ECA Subsidiary and the Private Investors that are parties
hereto or thereto, as the case may be, or (iii) the consummation of the transactions (including the
Transactions) contemplated by this Agreement or the Operative Agreements except (A) for consents
required under applicable state securities or “Blue Sky” laws in connection with the purchase and
distribution of the Units by the Underwriters, (B) for such consents that have been, or prior to
the Closing Date will be, obtained or made, (C) except as described in the Registration Statement,
the Time of Sale Information and the Prospectus, and (D) which, if not obtained, would not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect
(including, with respect to the PUD Xxxxx, such permits that are not routinely obtained until
closer to when the Company commences drilling such PUD Xxxxx and that, to the knowledge of such
counsel, the Company anticipates will be obtained in a timely manner).
7. A beneficial owner of a Trust Unit will not be subject to personal liability under state
and local laws in the Commonwealth of Pennsylvania by virtue of said ownership, including liability
regulating the discharge of materials into the environment or otherwise relating to the protection
of the environment.
In rendering such opinion, counsel may rely, to the extent they deem such reliance proper, as to
matters of fact upon certificates of officers of the Company and of government officials, provided
that counsel shall state their belief that they and you are justified in relying thereon. Copies
of all such certificates shall be furnished to you and your counsel on the Closing Date and
the Additional Closing Date, as the case may be. With respect to the opinion expressed as to
D-2
the
due qualification or registration as a foreign corporation of the Company, state that such opinion
is based upon certificates of foreign qualification or registration provided by the Secretary of
State of the Commonwealth of Pennsylvania (which shall be dated as of a date not more than 10 days
prior to the Closing Date and the Additional Closing Date and shall be provided to counsel to the
Underwriters) and express no conclusions beyond what are stated in such certificate.
D-3
EXHIBIT E
FORM OF OPINION OF XXXXXXXX, XXXXXX & FINGER, P.A.
1. The Trust has been duly created and is validly existing in good standing as a statutory
trust under the Delaware Statutory Trust Act, and all filings required under the laws of the State
of Delaware with respect to the creation and valid existence of the Trust as a statutory trust have
been made.
2. Under the Delaware Statutory Trust Act and the Trust Agreement, the Trust has the trust
power and authority to own its property and conduct its business, all as described in the
Registration Statement, the most recent Preliminary Prospectus and the Prospectus.
3. The Trust Agreement constitutes a valid and legally binding obligation of the Company and
the Trustees, and is enforceable against the Company and the Trustees, in accordance with its
terms.
4. Under the Delaware Statutory Trust Act and the Trust Agreement, the Trust has the trust
power and authority to execute and deliver, and to perform its obligations under the Underwriting
Agreement (including the issuance of the Units pursuant thereto) and the Operative Agreements to
which it is a party.
5. The Trust Units have been duly authorized for issuance by the Trust Agreement and, upon (i)
each Person to whom a Trust Unit is to be issued by the Trust (collectively, the “Trust Unit
Holders”) having been issued such Trust Unit and paid for the Trust Unit acquired by it, in
accordance with the Trust Agreement and as described in the Registration Statement, the most recent
Preliminary Prospectus and the Prospectus and (ii) the Trust Units having been issued and sold to
the Trust Unit Holders in accordance with the Trust Agreement and the as described in the
Registration Statement, the most recent Preliminary Prospectus and the Prospectus, the Trust Units
will constitute valid and, subject to the qualifications set forth in paragraph 8 below, fully paid
and nonassessable undivided beneficial interests in the assets of the Trust.
6. This Agreement and the Operative Agreements to which the Trust is a party have been duly
authorized by the Trust.
7. Neither the execution, delivery and performance by the Trust of the Underwriting Agreement
(including the issuance of the Units pursuant thereto) and the Operative Agreements to which the
Trust is a party or the consummation by the Trust of any of the transactions contemplated thereby,
(i) requires the consent or approval of, the withholding of objection on the part of, the giving of
notice to, the filing, registration or qualification with, or the taking of any other action in
respect of, any governmental authority or agency of the State of Delaware, other than the filing of
the Certificate of Trust with the Secretary of State of the State of Delaware
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pursuant to the Trust Agreement, or (ii) violates the Trust Agreement, the Certificate of Trust or
any law, rule or regulation of the State of Delaware applicable to the Trust.
8. The Trust Unit Holders, as beneficial owners of the Trust, are entitled to the same
limitation of personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware. Such counsel notes that the
Trust Unit Holders may be obligated to make payments as set forth in the Trust Agreement.
In rendering such opinion, such counsel may (i) rely in respect of matters of fact upon
certificates of officers and other employees of the Company and upon information obtained from
public officials, (ii) assume that all documents submitted to such counsel as originals are
authentic, that all copies submitted to such counsel conform to the originals thereof, and that the
signatures on all documents examined by such counsel are genuine and (iii) state that such opinions
are limited to matters governed by the laws of the State of Delaware.
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EXHIBIT F
FORM OF OPINION OF XXXXXXXXX & XXXXXXXX LLP
1. Assuming the due authorization thereto by the Trust, this Agreement and the Operative
Agreements to which the Trust is a party have been validly executed and delivered by the Trust.
In rendering such opinion, such counsel may (i) rely in respect of matters of fact upon
certificates of the Trustee and upon information obtained from public officials, (ii) assume that
all documents submitted to such counsel as originals are authentic, that all copies submitted to
such counsel conform to the originals thereof, and that the signatures on all documents examined by
such counsel are genuine and (iii) state that such opinion is limited to matters governed by the
laws of the State of Delaware.
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EXHIBIT G
June ___, 2010
ECA Marcellus Trust I
x/x Xxx Xxxx xx Xxx Xxxx Xxxxxx Trust Company, N.A.
Attn: Xxxxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
x/x Xxx Xxxx xx Xxx Xxxx Xxxxxx Trust Company, N.A.
Attn: Xxxxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Xxxxxxx Xxxxx & Associates, Inc.
Citigroup Global Markets Inc.
As Representative of the Several Underwriters
Citigroup Global Markets Inc.
As Representative of the Several Underwriters
c/o Raymond Xxxxx & Associates, Inc.
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
c/o Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Re: Restriction of Sales of ECA Marcellus Trust I Common Units
Dear Sirs:
This letter is delivered to you pursuant to the Underwriting Agreement (the “Underwriting
Agreement”) to be entered into among ECA Marcellus Trust I, a statutory trust formed under the laws
of the state of Delaware (the “Trust”), Energy Corporation of America, a West Virginia corporation
(the “Company”), and Xxxxxxx Xxxxx & Associates, Inc. and Citigroup Global Markets Inc. as the
representatives (the “Representatives”) of the several underwriters (the “Underwriters”) listed on
Schedule I thereto. Upon the terms and subject to the conditions of the Underwriting Agreement, (i)
the Trust proposes to sell to the Underwriters units of beneficial interest (the “Units”) in the
Trust, and (ii) the Underwriters intend to effect a public offering of the Units, as described in
and contemplated by the registration statement of the Trust and the Company on Form S-1, File No.
000-000000-00 (the “Registration Statement”), as filed with the Securities and Exchange Commission
on April 1, 2010 and as amended thereafter (the “Offering”).
The undersigned recognizes that it is in the best financial interests of the undersigned, as
an officer or director of the Company, or an owner of Units or other securities of the Trust or
other securities that are derived from the Subject Interests that are substantially similar to the
Units (the “Trust Securities”), that the Company and Trust complete the proposed Offering.
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The undersigned further recognizes that the Trust Securities held by the undersigned are, or
may be, subject to certain restrictions on transferability, including those imposed by United
States federal securities laws. Notwithstanding these restrictions, the undersigned has agreed to
enter into this letter agreement to further assure the Underwriters that the Trust Securities of
the undersigned, now held or hereafter acquired, will not enter the public market at a time that
might impair the underwriting effort.
Therefore, as an inducement to the Underwriters to execute the Underwriting Agreement, the
undersigned hereby acknowledges and agrees that the undersigned will not (i) offer, sell, contract
to sell, announce the intention to sell, pledge, grant or sell any option or contract to purchase
or otherwise dispose of (collectively, a “Disposition”) any Trust Securities, or any securities
convertible into or exercisable or exchangeable for, or any rights to purchase or otherwise
acquire, any Trust Securities held by the undersigned or acquired by the undersigned after the date
hereof, or that may be deemed to be beneficially owned by the undersigned (collectively, the
“Lock-Up Units”), pursuant to the Rules and Regulations promulgated under the Securities Act of
1933, as amended (the “Act”), and the Securities Exchange Act of 1934, as amended, for a period
commencing on the date hereof and ending 180 days after the date of the Prospectus first filed
pursuant to Rule 424(b) under the Act, inclusive (the “Lock-Up Period”), without the prior written
consent of the Representatives or (ii) exercise or seek to exercise or effectuate in any manner any
rights of any nature that the undersigned has or may have hereafter to require the Company or the
Trust to register under the Act the undersigned’s sale, transfer or other disposition of any of the
Lock-Up Units or other securities of the Trust held by the undersigned, or to otherwise participate
as a selling securityholder in any manner in any registration effected by the Company or the Trust
under the Act, including under the Registration Statement, during the Lock-Up Period. The foregoing
restrictions are expressly agreed to preclude the undersigned from (x) entering into any swap or
other agreement that transfers any of the economic consequences of ownership of or otherwise
transfer or dispose of, directly or indirectly, any of the Lock-Up Units or (y) entering into any
hedging, collar (whether or not for any consideration) or other transaction or arrangement that is
designed to or reasonably expected to lead or result in a transfer, in whole or part, of any of the
economic consequences of ownership of the Lock-Up Units. Such prohibited hedging or other
transactions would include any short sale or any purchase, sale or grant of any right (including
any put or call option or reversal or cancellation thereof) with respect to any Lock-Up Units or
with respect to any security (other than a broad-based market basket or index) that includes,
relates to or derives any significant part of its value from Lock-Up Units.
Notwithstanding the foregoing if (i) during the last 17 days of the Lock-Up Period, the Trust
issues an earnings release or announces material news or a material event relating to the Trust
occurs or (ii) prior to the expiration of the Lock-Up Period, the Trust announces that it will
release earnings results during the 16-day period beginning on the last day of the Lock-Up Period,
then the Lock-Up Period shall continue until the expiration of the 18-day period beginning on the
date of issuance of the earnings release or the announcement of the material news or the occurrence
of the material event, unless the Representatives, on behalf of the Underwriters, waives such
extension in writing.
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Notwithstanding the agreement not to make any Disposition during the Lock-Up Period, you have
agreed that the foregoing restrictions shall not apply to:
(1) | the sale of 209,312 Units to the Company by the Private Investors, as further described in the prospectus included in the Registration Statement; or |
(2) | any redemption of Units from ECA by the Trust upon any exercise of the Underwriters’ over-allotment option. |
It is understood that, if the Underwriting Agreement (other than the provisions thereof that
survive termination) shall terminate or be terminated prior to payment for and delivery of the
Units, you will release the undersigned from the obligations under this letter agreement.
In furtherance of the foregoing, the Trust and its transfer agent and registrar are hereby
authorized to decline to make any transfer of Lock-Up Units if such transfer would constitute a
violation or breach of this letter. This letter shall be binding on the undersigned and the
respective successors, heirs, personal representatives and assigns of the undersigned. Capitalized
terms used but not defined herein have the respective meanings assigned to such terms in the
Underwriting Agreement.
Very truly yours, | ||||
Name of Securityholder: |
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