11,085,000 Trust Units VOC ENERGY TRUST UNDERWRITING AGREEMENT
Exhibit 1.1
11,085,000 Trust Units
VOC ENERGY TRUST
St. Petersburg, Florida
[_______], 2011
[_______], 2011
Xxxxxxx Xxxxx & Associates, Inc.
Xxxxxx Xxxxxxx & Co. Incorporated
As Representatives of the Several Underwriters
listed on Schedule I hereto
Xxxxxx Xxxxxxx & Co. Incorporated
As Representatives of the Several Underwriters
listed on Schedule I hereto
c/o Raymond Xxxxx & Associates, Inc.
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
VOC Brazos Energy Partners, L.P., a Texas limited partnership (the “Company”), proposes,
subject to the terms and conditions stated herein, to sell to the several Underwriters named in
Schedule I hereto (the “Underwriters”), an aggregate of 11,085,000 units of beneficial interest
(the “Trust Units”) in VOC Energy Trust, a statutory trust formed under the laws of the State of
Delaware (the “Trust”). The aggregate of 11,085,000 Trust Units to be purchased from the Company
are called the “Firm Units.” In addition, the Company has agreed to sell to the Underwriters, upon
the terms and conditions stated herein, up to an additional 1,662,750 Trust 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 Xxxxxx Xxxxxxx & Co. Incorporated 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 the Company and VOC Kansas Energy
Partners, LLC, a Kansas limited liability company (“KEP,” and together with the Company, the
“Grantor”) have caused the formation of the Trust and will convey, or cause to be conveyed, to the
Trust a net profits interest (the “Net Profits Interest”) entitling the Trust to receive 80% of the
net proceeds from the sale of production of oil and natural gas attributable to the Grantor’s
interest in substantially all of its oil and natural gas properties after deduction of all
royalties and other burdens on production thereon that are produced during the term of the Trust,
in exchange for 17,000,000 Trust Units. VOC Partners, LLC, a Kansas limited liability company (“VOC
Partners”), and the Company entered into the Trust Unit Purchase Agreement dated
December 27, 2010 (the “Trust Unit Purchase Agreement”) pursuant to which the Company agreed
to sell to VOC Partners, on the 45th day after the Closing Date (as defined in Section 4 hereof),
all Trust Units it owns at such time.
It is further understood and agreed to by all parties hereto that the following transactions
have occurred or will occur on or before the Closing Date (as hereinafter defined):
(a) The Company will acquire all of the membership interests in KEP in exchange for newly
issued limited partnership interests in the Company pursuant to the Contribution and Exchange
Agreement dated August 30, 2010, as amended by the First Amendment thereto dated April 11, 2011
(the “Contribution and Exchange Agreement”).
(b) The Grantor will convey to the Trust the Net Profits Interest by execution of the
Conveyance of Term Net Profits Interest and Assignment of Pre-Effective Time Payment (the
“Conveyance”) in exchange for 17,000,000 Trust Units in the aggregate issued to the Company.
(c) The Company will enter into the Amended and Restated Credit Agreement dated as of the date
hereof among the Company, VOC Partners, Bank of America, N.A. and the other lenders party thereto
from time to time (the “Amended and Restated Credit Agreement”).
(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 Mellon
Trust Company, N.A., as trustee (the “Trustee”), and Wilmington 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 and the Trustee will enter into an Administrative Services Agreement outlining
the provision of administrative services for the Trust by the Company and its compensation therefor
(the “Administrative Services Agreement”).
(g) VOC Partners and the Trust will enter into a registration rights agreement granting
registration rights to VOC Partners with respect to the Trust Units it will purchase pursuant to
the Trust Unit Purchase Agreement (the “Registration Rights Agreement”).
The transactions contemplated above are referred to herein as the “Transactions.” The
“Transaction Documents” shall mean the Conveyance, the Administrative Services Agreement, the
Contribution and Exchange Agreement, the Registration Rights Agreement and the Amended and Restated
Credit Agreement.
The “Organizational Documents” shall mean the Organizational Trust Agreement, the Trust
Agreement, the Certificate of Trust of the Trust, the Certificate of Limited Partnership of the
Company, the Amended and Restated Agreement of Limited Partnership of the Company, the Articles of
Organization of KEP, the Operating Agreement of KEP, the Articles of Organization of VOC Partners
and the Operating Agreement of VOC Partners.
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The “Operative Agreements” shall mean the Transaction Documents, the Organizational Trust
Agreement and the Trust Agreement.
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. 333-171474), 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 last 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 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 and the Company file another registration statement with the Commission to register
additional Trust 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. 333-171474) 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 Company or the Trust or used or referred to by the
Company or the Trust 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 as being included in the Time of Sale Information, and the
information set out in Schedule III hereto. All references in this Agreement to the Registration
Statement, the Rule 462 Registration Statement, the Preliminary Prospectus, the Prospectus or the
Time of Sale Information, or any amendments or supplements to any of the foregoing, shall be deemed
to refer to and include any documents incorporated by reference therein, and shall include any copy
thereof filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
System (“XXXXX”). “Effective Date” means each date and time as of which any Registration Statement
was or is declared effective by the Commission. “Time of Sale” means [•] [a][p].m., Xx.
Xxxxxxxxxx, Xxxxxxx time, on [•], 2011.
2. Agreements to Sell and Purchase. The Company 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 Company 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.
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The Company 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 Company up to 1,662,750 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 up to 8.2% 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 (“FINRA”) to the executive management
team 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 or 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. Each Directed Unit Participant
purchasing in excess of $100,000 worth of Units shall execute a Lock-Up Agreement, in the form of
Exhibit A attached hereto.
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
reasonably request.
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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 Xxxxx Xxxxx L.L.P., 000 Xxxxxxxxx, Xxxxxxx, Xxxxx at 9:00 a.m., Houston, Texas time, on [•],
2011 or such other place, time and date not later than 12:30 p.m., Houston, Texas time, on [•],
2011 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 12 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 Xxxxx Xxxxx, L.L.P., 000 Xxxxxxxxx, Xxxxxxx, Xxxxx at
9:00 a.m., Houston, Texas 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 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 Company and the Trust, 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 against payment of the purchase price
therefor 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 Company. Payment for the Firm Units
sold by the Company hereunder shall be delivered by the Representatives to the Company. Payment
for the Additional Units sold by the Company hereunder, if any, shall be delivered by the
Representatives to the Company.
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 Xxxxxx Xxxxxxx & Co.
Incorporated, 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.
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5. Covenants and Agreements. Each of the Company and the Trust, each as to itself,
covenants and agrees with the several Underwriters as follows:
(a) Each of the Company and the Trust will use their 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, the Trust or
the Underlying Properties (as defined in the Registration Statement, the Prospectus and the Time of
Sale Information), or of any event that comes to the attention of the Company or the Trust that
makes any statement 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 the
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, upon request 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.
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(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 the Representatives and
counsel for the Underwriters and obtain your consent prior to filing any of those with the
Commission, which consent shall not be unreasonably withheld or delayed.
(e) Neither the Company nor the Trust has made or will make any offer relating to the Units
that would constitute an Issuer Free Writing Prospectus without your prior consent, which consent
shall not be unreasonably withheld or delayed.
(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.
(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, the Company and the Trust consent 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 or the Trust.
(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 the Time of Sale Information (and of any amendment or supplement thereto) as
they may reasonably request. The Company and the Trust
consent to the use of the Prospectus and the Time of Sale Information (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 their 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.
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(i) If this Agreement shall terminate or shall be terminated after execution pursuant to any
provision hereof (except pursuant to a termination under Section 12 hereof) 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 the Representatives or the other
Underwriters) reasonably incurred by the Representatives or the other Underwriters in connection
herewith.
(j) The Company will apply the net proceeds from the sale of the Units to be sold by it
hereunder in accordance in all material respects with the statements under the caption “Use of
Proceeds” in the Prospectus.
(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”), neither the Company nor the Trust will, 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) any 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 Units, or securities convertible into or exchangeable for Units, or
sell or grant options, rights or warrants with respect to any Units or securities convertible into
or exchangeable for 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 Units, whether any such transaction is to be settled by
delivery of 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; 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, announcement of earnings 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 the
sale of up to 5,915,000 Units by the Company to VOC Partners pursuant to the Trust Unit Purchase
Agreement and to the pledge of Trust Units pursuant to and in accordance with the Amended and
Restated Credit Agreement.
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(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) On the Closing Date and on each Additional Closing Date, if any, all stock transfer, stamp
duties and other taxes (other than income taxes) that are required to be paid in connection with
the sale and transfer of the Units to be sold by the Company to the several Underwriters or
otherwise in connection with the performance of the Company’s obligations hereunder will have been
fully paid for by the Company and all laws imposing such taxes will have been fully complied with.
(o) In order to document the Underwriters’ compliance with the reporting and withholding
provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations
promulgated thereunder, with respect to the transactions herein contemplated, the Company shall
deliver to you at least two days prior to the Closing Date a properly completed and executed United
States Treasury Department Substitute Form W-9.
(p) Not more than seven days following the Closing Date, the Company will record the
Conveyance in the Recorder of Deeds in the Register and Recorder’s Offices of the Kansas and Texas
counties where the Subject Interests are located. The Company will provide to the Underwriters
evidence of such filings reasonably satisfactory to counsel for the Underwriters as promptly as
practicable following the time of such filings, and in any event not more than sixty days following
the Closing Date.
(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 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 and the Trust shall so advise you promptly in writing.
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(r) 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.
(s) 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 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.
(t) 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.
(u) 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(u), the Trust shall be deemed to have made available such summary financial information
if such information has been filed on XXXXX.
(v) During the period ending three years from the date hereof, the Trust 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, FINRA or the NYSE or any 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.
6.1 Of the Company and the Trust. The Company and the Trust hereby jointly and
severally represent and warrant to each Underwriter on the date hereof, and shall be deemed to
jointly and represent and warrant to each Underwriter on the Closing Date and the Additional
Closing Date, as the case may be, that:
(a) Not an “Ineligible Issuer.” The Trust was not at the time of initial filing of the
Registration Statement and at the earliest time thereafter that the Trust or any other offering
participant made a bona fide offer (within the meaning of Rule 164(h) under the Act) of the Trust
Units, is not on the date hereof and will not be on the Closing Date and the Additional Closing
Date, as the case may be, an “ineligible issuer” (as defined in Rule 405).
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(b) 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.
(c) 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
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 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 or the Trust 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 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, 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; 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 or the Trust by or on behalf of any Underwriter
specifically for inclusion therein, which information is specified in Section 14.
(e) No Material Misstatements or Omissions in Time of Sale Information. The most recent
Preliminary Prospectus conformed, as of the Effective Date and as of the date hereof, in all
material respects to the applicable requirements of the Act. 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 by or on behalf of any Underwriter specifically
for inclusion therein, which information is specified in Section 14. Neither the Company nor the
Trust has made any offer relating to the Trust Units that would constitute an Issuer Free Writing
Prospectus without the prior written consent of the Representatives. The
Company and the Trust have
retained in accordance with the Act all Issuer Free Writing Prospectuses that were not required to
be filed pursuant to the Act. The Company and the Trust have taken all actions necessary so that
any “road show” (as defined in Rule 433 of the Act) in connection with the offering of the Units
will not be required to be filed pursuant to the Act.
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(f) Formation, Due Qualification and Authority of the Trust. The Trust has been duly formed
and is validly existing as a statutory trust in good standing under the Delaware Statutory Trust
Act, and all filings required under the laws of the State of Delaware with respect to the formation
and valid existence of the Trust as a statutory trust have been made. The Trust has full power and
authority to own or lease, as the case may be, its properties and to conduct its business as
described in the Registration Statement, the Time of Sale Information and the Prospectus (and any
amendment or supplement thereto) and is duly registered and qualified to conduct its business and
is in good standing in each jurisdiction or place where the nature of its properties or the conduct
of its business requires such registration or qualification, except where the failure to so
register or qualify (i) has not had or will not have a material adverse effect on the business,
properties, financial condition, results of operations or prospects of the Trust or the Underlying
Properties (the occurrence of such an event or result being referred to as a “Material Adverse
Effect”), (ii) has not materially impaired or will not materially impair the ability of the Trust,
the Company or KEP to consummate the Transactions or any other transactions provided for in this
Agreement or the Transaction Documents to which the Trust is a party or (iii) has not subjected or
will not subject the unitholders of the Trust to any material liability or disability. The
activities of the Trustee pursuant to the Trust Agreement will not require the appointment of an
ancillary trustee in the States of Texas or Kansas.
(g) Outstanding Trust Units. At the Closing Date, after giving effect to the Transactions and
assuming no exercise of the Underwriters’ over-allotment option, the Trust will have outstanding
17,000,000 Trust Units; such Trust 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.
(h) Conformity of Securities to Description in the Registration Statement, the Time of Sale
Information and the Prospectus. The Trust Units conform in all material respects to the
descriptions thereof contained in the Registration Statement, the Time of Sale Information and the
Prospectus.
(i) Legal Proceedings. Except as described in the Registration Statement, the Time of Sale
Information and 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 Trust or the Company, threatened, to which the Trust is or may be a party or to
which the business or assets of the Trust is or may be subject or (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 is a party or to which the business or assets of the Trust is
subject, that, individually or in the aggregate, will result in a Material Adverse Effect or
materially impair the ability of the Trust, the Company or KEP to consummate the Transactions or
any other transactions provided for in this Agreement or the Transaction Documents to which the
Trust is a party.
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(j) Legal Proceedings to be Described or Filed. There are no legal or governmental proceedings
pending or, to the knowledge of the Trust or the Company, threatened, against the Trust or the
Company or to which the Trust, the Company or any of their properties or assets, including the
Subject Interests, are subject, that are required to be described in the Registration Statement,
the Time of Sale Information or the Prospectus (or any amendment or supplement thereto) but are not
described as required.
(k) Contracts to be Described or Filed. There are no agreements, contracts, indentures, leases
or other instruments of the Trust that are required to be described in the Registration Statement,
the Time of Sale Information or the Prospectus (or any amendment or supplement thereto) or to be
filed as an exhibit to the Registration Statement that are not described, filed or incorporated by
reference in the Registration Statement, the Time of Sale Information and the Prospectus as
required by the Act.
(l) No Defaults. The Trust is not (i) in violation of the Trust Agreement or the Certificate
of Trust for the Trust, (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 it or any of its 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 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 instrument to which it is a party or by which it or any of its
properties may be bound, which breach, default or violation in the cases of clause (ii) or (iii)
has not or will not have a Material Adverse Effect or materially impair the ability of the Trust,
the Company or KEP to consummate the Transactions or any other transactions provided for in this
Agreement or the Transaction Documents to which the Trust is a party.
(m) Authority and Authorization. The Trust has all requisite power and authority to execute
and deliver this Agreement and to perform its obligations hereunder. The Trust has all requisite
power and authority to issue, sell and deliver the Trust 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
trust action required to be taken by the Trust or any of its unitholders or the Trustee or the
Delaware Trustee for the authorization, issuance, sale and delivery of the Trust Units, the
execution and delivery of the Operative Agreements to which the
Trust is a party and the consummation by the Trust of the Transactions and any other
transactions contemplated by this Agreement and the Operative Agreements to which the Trust is a
party shall have been validly taken by the Trust. The holders of the Trust Units are entitled to
the benefits of the Trust Agreement.
(n) Authorization of the Underwriting Agreement. This Agreement has been duly authorized and
validly executed and delivered by the Trust.
(o) Enforceability of the Operative Agreements. Each of the Operative Agreements to which the
Trust is a party has been duly authorized, executed and delivered by the Trustee or the Delaware
Trustee, on behalf of the Trust, and is a valid and legally binding agreement of the Trust and the
Trustee, enforceable against each of the Trust and the Trustee in
accordance with each of its
terms, except as such 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).
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(p) No Consents. No consent, approval, authorization, order, registration, filing or
qualification (“consent”) of or with any court, governmental agency or body having jurisdiction
over the Trust or its properties is required in connection with (i) the issuance and sale of the
Trust Units as described in the Registration Statement, the Time of Sale Information and the
Prospectus, (ii) the execution, delivery and performance of this Agreement and the Operative
Agreements by the Trust, the Company and KEP and (iii) the consummation by the Trust of the
Transactions or any other transactions contemplated by this Agreement or the Operative Agreements,
except (A) for registration of the Trust Units under the Act and consents required under the
Exchange Act, and applicable state securities or “Blue Sky” laws or FINRA regulations 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) for such consents that, if
not obtained, has not had and would not have, individually or in the aggregate, a Material Adverse
Effect or materially impair the ability of the Trust, the Company, KEP or VOC Partners to
consummate the Transactions or any other transactions provided for in this Agreement or the
Transaction Documents to which it is a party and (D) except as described in the Registration
Statement, the Time of Sale Information and the Prospectus.
(q) No Conflicts. None of (i) the issuance and sale by the Trust of the Trust Units as
described in the Registration Statement, 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 and KEP and (iii) the consummation of the Transactions and any other transactions
contemplated by this Agreement and the Operative Agreements, (A) conflicts with or will conflict
with or constitutes or will constitute a breach of, or a default under, the Trust Agreement or the
Certificate of Trust for the Trust, (B) conflicts with 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 is a party or by which any of
its properties may be bound, (C) violates or will violate any statute, law, regulation, ruling or
any order, judgment, decree or injunction of any court or governmental agency or body directed to
the Trust or its properties in a proceeding to which it or
its properties is a party or is bound or (D) results in the creation or imposition of any free
and clear of all liens, encumbrances, security interests, charges or other claims (each, a “Lien”)
upon any property or assets of the Trust, except with respect to (B) — (D) for such conflicts,
violations, breaches, defaults or Liens that have not had and will not have, individually or in the
aggregate, a Material Adverse Effect or materially impair the ability of the Trust, the Company,
KEP or VOC Partners to consummate the Transactions or any other transactions provided for in this
Agreement or the Transaction Documents.
(r) Independent Public Accountants. Xxxxx Xxxxxxxx LLP, who has certified the financial
statements of the Trust (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 Trust as required by the Act and
the Public Company Accounting Oversight Board.
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(s) Financial Statements. The financial statements of the Trust, together with the related
schedules and notes, included in the Registration Statement, the Time of Sale Information and the
Prospectus (and any amendment or supplement thereto), present fairly in all material respects the
financial condition of the Trust on the basis stated in the Registration Statement, the Time of
Sale Information and the Prospectus (and any amendment or supplement thereto) at the respective
dates or for the respective periods to which they apply. Such statements and related schedules and
notes have been prepared in accordance with generally accepted accounting principles consistently
applied throughout the periods involved, except as disclosed therein; and the other financial
information relating to the Trust set forth in the Registration Statement, the Time of Sale
Information and the Prospectus (and any amendment or supplement thereto) is accurately presented in
all material respects and prepared on a basis consistent with such financial statements and the
books and records of the Trust. No other financial statements or schedules are required to be
included in the Registration Statement, the Time of Sale Information and the Prospectus (and any
amendment or supplement thereto).
(t) Listing. The Units have been approved for listing on the NYSE under the symbol “VOC.”
(u) 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, the Time of Sale
Information or the Prospectus, the Trust has not (i) issued or granted any Trust Securities, (ii)
incurred any liability or obligation, direct or contingent other than liabilities and obligations
that were incurred in the ordinary course of business and except for this Agreement and the
Operative Agreements, (iii) entered into any transaction not in the ordinary course of business or
(iv) made any distribution on its equity interests.
(v) Market Stabilization. The Trust has 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, the Act or otherwise, stabilization or
manipulation of the price of the Trust Units to facilitate the sale or resale of the Trust Units or
for any other purpose in violation of the Exchange Act, the Act or other applicable law.
(w) 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) of the Trust or any unitholder of the Trust (whether or not an
affiliate) that are required by the Act to be disclosed in the Registration Statement, the Time of
Sale Information or the Prospectus. Additionally, no relationship, direct or indirect, exists
between the Trust, on the one hand, and the Trustee or unitholders of the Trust, 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.
15
(x) Investment Company. The Trust is not, and after giving effect to the offering and sale of
the Trust Units, and the application of the 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” and the sale of the Trust Units to VOC Partners pursuant to the Trust Unit Purchase
Agreement, will not 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.
(y) Books and Records. 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.
(z) 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 the
Trustee 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.
(aa) No Changes in Internal Controls. Since the date of the most recent balance sheets of the
Trust reviewed or audited by Xxxxx Xxxxxxxx LLP, (i) the Trust is not aware of (A) any significant
deficiencies in the design or operation of internal controls that could adversely affect the
ability 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
the Trust, and (ii) there have been no changes in internal controls that have
materially affected, or in other factors that has or could materially and adversely affect,
internal controls.
(bb) Accuracy of Statements in Prospectus. The statements set forth in the Prospectus under
the caption “Description of the Trust Units,” insofar as they purport to constitute a summary of
the terms of the Trust Units, and the statements under the captions “The Trust,” “Computation of
Net Proceeds,” “Description of the Trust Agreement,” and “Description of the Trust Units,” fairly
and accurately describe the provisions of the laws and documents referred to therein in all
material respects.
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(cc) 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.
(dd) Sarbanes—Oxley 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 Sarbanes—Oxley Act of
2002 and the rules and regulations promulgated in connection therewith. 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 Sarbanes—Oxley Act of 2002, the rules and
regulations promulgated therewith and the rules of the NYSE that are effective and applicable to
the Trust.
(ee) Directed Unit Program. The Trust has not offered, or caused Xxxxxxx Xxxxx & Associates,
Inc. to offer, Trust 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 or KEP to alter the
customer’s or supplier’s level or type of business with the Company or KEP or (ii) a trade
journalist or publication to write or publish favorable information about the Trust, the Company or
KEP or their business or products.
(ff) Anti-Corruption. The Trust is not aware of nor has taken any action, directly or
indirectly, that would result in a violation by the Trust of the Foreign Corrupt Practices Act of
1977, as amended, and the rules and regulations thereunder (the “FCPA”), including, without
limitation, making use of the mails or any means or instrumentality of interstate commerce
corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of
any money, or other property, gift, promise to give, or authorization of the giving of anything of
value to any “foreign official” (as such term is defined in the FCPA) or any foreign political
party or official thereof or any candidate for foreign political office, in contravention of the
FCPA; and the Trust has conducted its business in compliance with the FCPA and has instituted and
maintained policies and procedures designed to ensure, and which are reasonably expected to
continue to ensure, continued compliance therewith.
(gg) Money Laundering Laws. The operations of the Trust are and have been conducted at all
times in 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 Trust with respect to the Money Laundering Laws is pending or, to the knowledge of
the Trustee, threatened.
(hh) Office of Foreign Assets Control. Neither the Trust nor, to the knowledge of the Company
and the Trust, any trustee, agent, employee or affiliate of the Trust, 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 Trust will not directly or indirectly use any 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 and the Trust, is currently subject to any U.S. sanctions administered by
OFAC.
17
(ii) No Consent Needed for Trustee Action. No consent, approval, authorization or filing is
required under any law, rule or regulation of the States of Kansas or Texas, or of the United
States of America, in order to permit the Trustee to act as Trustee of the Trust.
6.2 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 Additional
Closing Date, that:
(a) Not an “Ineligible Issuer.” The Company was not at the time of initial filing of the
Registration Statement and at the earliest time thereafter that the Company or any other offering
participant made a bona fide offer (within the meaning of Rule 164(h) under the Act) of the Trust
Units, is not on the date hereof and will not be on the Closing Date and the Additional Closing
Date, as the case may be, an “ineligible issuer” (as defined in Rule 405).
(b) Forward-Looking and Supporting Information. Each of the statements (including the
assumptions described therein) included in the Registration Statement and the Time of Sale
Information 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 distribution and future cash distributions of
the Trust, and any statements made in support thereof or related thereto, was made or will be made
with a reasonable basis and in good faith.
(c) Formation, Due Qualification and Authority of the Company and KEP. Each of the Company and
KEP has been duly formed and is validly existing as a limited partnership or a limited liability
company, as applicable, in good standing under the laws of state of its formation with full power
and authority to own, lease and operate its properties and to conduct its business as presently
conducted and as described in the Registration Statement, the Time of Sale Information and the
Prospectus (and any amendment or supplement thereto) and is duly registered and qualified to
conduct its business and is in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or qualification, except where
the failure to so register or qualify would not reasonably be expected to (i) result in a Material
Adverse Effect, (ii) materially impair the ability of the Trust,
the Company, KEP or VOC Partners 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.
(d) Ownership of KEP. At each of the Closing Date and any Additional Closing Date, the Company
will own directly 100% of the outstanding limited liability company interests in KEP, free and
clear of all Liens. All of such limited liability company interests have been duly authorized and
validly issued and are fully paid and nonassessable.
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(e) Ownership of the Units. The Company has, and immediately prior to the Closing Date and any
Additional Closing Date will have, good and valid title to the Trust Units to be sold by the
Company hereunder, free and clear of all liens, encumbrances, equities or claims whatsoever, and
the Company has full power and authority to sell, assign, transfer and deliver such Trust Units
hereunder; and, upon the delivery of such Trust Units and payment therefor pursuant hereto, good
and valid title to such Trust Units, free and clear of all liens, encumbrances, equities or claims,
will pass to the several Underwriters.
(f) Outstanding Trust Units Held by Company. At the Closing Date, after giving effect to the
Transactions and assuming no exercise of the Underwriters’ over-allotment option, the Company will
own 5,755,000 Trust Units free and clear of all Liens except for the pledge of such Trust Units
pursuant to the Amended and Restated Credit Agreement.
(g) Legal Proceedings. Except as described in the Registration Statement, the Time of Sale
Information and 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 Company or KEP is or may be a party or to which
the business or assets of the Company or KEP is or may be subject or (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 Company or KEP is subject, that will, individually or in the
aggregate, result in a Material Adverse Effect or materially impair the ability of the Trust, the
Company, KEP or VOC Partners to consummate the Transactions or any other transactions provided for
in this Agreement or the Transaction Documents.
(h) Legal Proceedings to be Described or Filed. There are no legal or governmental proceedings
pending or, to the knowledge of the Company, threatened, against KEP or to which KEP or any of its
properties or assets, including the Subject Interests, are subject, that are required to be
described in the Registration Statement, the Time of Sale Information or the Prospectus (or any
amendment or supplement thereto) but are not described as required.
(i) Contracts to be Described or Filed. There are no 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 any amendment or supplement thereto) or to be filed as an
exhibit to the Registration Statement that are not described, filed or incorporated by reference in
the Registration Statement, the Time of Sale Information and the Prospectus as required by the Act.
(j) No Defaults. Neither the Company nor KEP is (i) in violation of, with respect to the
Company, its Certificate of Limited Partnership or its Amended and Restated Agreement of Limited
Partnership and, with respect to KEP, its Articles of Organization or its Operating Agreement, (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 it or any of its 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 inany 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) had or will, if continued, have a Material Adverse Effect or materially impair the ability
of the Trust, the Company, KEP or VOC Partners to consummate the Transactions or any other
transactions provided for in this Agreement or the Transaction Documents.
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(k) Authority and Authorization. The Company has all requisite power and authority to execute
and deliver this Agreement and to perform its obligations hereunder, including the sale of the
Trust 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. Each
of the Company and KEP, as the case may be, has all requisite power and authority to enter into the
Operative Agreements to which it is a party and to perform its obligations thereunder. At each of
the Closing Date and the Additional Closing Date, all partnership or limited liability company
action, as the case may be, required to be taken by the Company or KEP or any of their respective
partners or members for the authorization, issuance, sale and delivery of the Trust Units, the
execution and delivery of the Operative Agreements and the consummation of the Transactions and any
other transactions contemplated by this Agreement and the Operative Agreements shall have been
validly taken.
(l) Authorization of Underwriting Agreement. This Agreement has been duly authorized and
validly executed and delivered by the Company.
(m) Enforceability of the Operative Agreements. Each of the Operative Agreements has been duly
authorized, executed and delivered by the Company, KEP or VOC Partners, as applicable, and is a
valid and legally binding agreement of the Company, KEP or VOC Partners, as applicable, enforceable
against the Company, KEP or VOC Partners in accordance with its terms, except as such
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).
(n) Authorization and Enforceability of the Conveyance. The Conveyance among the Company, KEP
and the Trust, when duly executed by the proper officers of the Company and KEP (assuming due
execution and delivery by the Trustee) and delivered by the Company and KEP to the Trust will
constitute a fully conveyed and vested interest in real property under the laws of the States of
Kansas and Texas, and is adequate and sufficient to transfer title to the Net Profits Interest to
the Trust; the recording of the Conveyance in the real
property records in each county where the Subject Interests are located is sufficient to
impart notice of the contents thereof, and all subsequent purchasers or creditors of the Company or
KEP will be deemed to purchase with notice of and subject to such Net Profits Interest; the
Conveyance and the Net Profits Interest conform in all material respects to the descriptions
thereof in the Registration Statement, the Time of Sale Information and the Prospectus; and the Net
Profits Interest is described in the Conveyance in a manner sufficient to identify the interests
conveyed under the laws of each of the States of Kansas and Texas. To the knowledge of the Company,
the Company’s net revenue interest with respect to each Subject Well or Subject Lease is no less
than the net revenue interest set forth set forth on the exhibit to the Conveyance.
20
(o) No Consents. No consent of or with any court, governmental agency or body having
jurisdiction over the Company or KEP or their properties is required in connection with (i) the
issuance and sale of the Trust Units as described in the Registration Statement, the Time of Sale
Information and the Prospectus, (ii) the execution, delivery and performance of this Agreement and
the Operative Agreements by the Trust, the Company or KEP and (iii) the consummation of the
Transactions and any other transactions contemplated by this Agreement and the Operative
Agreements, except (A) for registration of the Trust 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, (C) for such consents that, if not
obtained, have not had or will not have, individually or in the aggregate, a Material Adverse
Effect or materially impair the ability of the Trust, the Company, KEP or VOC Partners to
consummate the Transactions 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.
(p) No Conflicts. None of (i) the issuance and sale of the Trust Units as described in the
Registration Statement, the Time of Sale Information and the Prospectus, (ii) the execution,
delivery and performance of this Agreement and the Operative Agreements by the Trust, the Company,
KEP and VOC Partners and (iii) the consummation of the Transactions and any other transactions
provided for in this Agreement or the Operative Agreements, (A) conflicts with or will conflict
with or constitutes or will constitute a breach of, or a default under, the Company’s, KEP’s or VOC
Partners’ articles of organization or operating agreement, (B) conflicts with 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 bond, indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which the
Company, KEP or VOC Partners is a party or by which any of their properties may be bound, (C)
violates or will violate any statute, law, regulation, ruling or any order, judgment, decree or
injunction of any court or governmental agency or body directed to the Company, KEP or VOC Partners
or their properties in a proceeding to which they or their properties is a party or is bound or (D)
results in the creation or imposition of any Lien upon any property or assets of the Company, KEP
or VOC Partners, except with respect to (B) — (D) for such conflicts, violations, breaches,
defaults, events or Liens that have not had or will not have, individually or in the aggregate, a
Material Adverse Effect or materially impair the ability of the Trust, the Company, KEP or VOC
Partners to consummate the Transactions or any other transactions provided for in this Agreement or
the Transaction Documents.
(q) Independent Public Accountants. Xxxxx Xxxxxxxx LLP, who has certified the financial
statements of the Company and the Underlying Properties (as defined in the Conveyance) (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 and KEP as required by the Act and the Public Company
Accounting Oversight Board.
21
(r) Financial Statements. The financial statements, together with related schedules and notes,
included or incorporated by reference in the Registration Statement, the Time of Sale Information
and the Prospectus (and any amendment or supplement thereto), present fairly in all material
respects the results of operations of the Underlying Properties and the financial condition,
results of operations, cash flows and changes in equity of the Company on the basis stated in the
Registration Statement, the Time of Sale Information and the Prospectus (and any amendment or
supplement thereto) at the respective dates or for the respective periods to which they apply. Such
statements and related schedules and notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved, except as disclosed
therein; and the other financial information relating to the Underlying Properties and the Company
set forth in the Registration Statement, the Time of Sale Information and the Prospectus (and any
amendment or supplement thereto) is accurately presented in all material respects and prepared on a
basis consistent with such financial statements and the books and records of the Underlying
Properties and the Company. The pro forma financial statements together with related notes thereto
included in the Registration Statement, the Time of Sale Information and the Prospectus (and any
amendment or supplement thereto) present fairly in all material respects the information contained
therein, have been prepared in accordance with the Commission’s rules and regulations with respect
to pro forma financial statements and have been properly represented on the bases described
therein. Additionally, the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions and circumstances
referred to therein.
(s) 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 Trust Units as contemplated by this Agreement gives rise
to any rights for or relating to the registration of any Trust Securities except for those rights
relating to the registration of Trust Units provided in the Registration Rights Agreement.
(t) Reserve Engineers. The information supplied by the Company and KEP to Xxxxxx Xxxxxxxxx for
purposes of preparing the reserve reports and estimates of the Underlying Properties and the Net
Profits Interest and preparing the letters (the “Reserve Report Letters”) of Xxxxxx Xxxxxxxxx,
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 Net Profits Interest and the Underlying Properties, was true and correct in all material
respects on the date supplied and such information was supplied and was prepared
in accordance with customary industry practices; and 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 Letters comply in all material respects with the applicable
requirements of Regulation S-X and Subpart 1200 of Regulation S-K under the Act. Xxxxxx Xxxxxxxxx,
whose reports on reserves is attached as Annexes A, B and C to the most recent Preliminary
Prospectus and the Prospectus were, as of the date of each such report, and are, as of the date
hereof, independent petroleum engineers with respect to the Company, KEP and the Trust.
22
(u) No Material Changes. Except as disclosed in the Registration Statement, the Time of Sale
Information and the Prospectus (or any amendment or supplement thereto), since the respective dates
as of which information is given in the Registration Statement, the Time of Sale Information and
the Prospectus, (i) the Company has not incurred any material liabilities or obligations, indirect,
direct or contingent, or entered into any transaction that is not in the ordinary course of
business, (ii) neither the Company nor the Underlying Properties has sustained any material loss or
interference with its business or properties from fire, flood, windstorm, accident or other
calamity, whether or not covered by insurance, (iii) the Company is not in default under the terms
of any class of membership interest of the Company or any outstanding debt obligations, (iv) there
has not been any material change in the indebtedness of the Company (other than in the ordinary
course of business) and (v) there has not been any material adverse change, or any development
involving or that had or will have a Material Adverse Effect, in the condition (financial or
otherwise), business, properties, prospects, net worth or result of operations of the Company or
the Underlying Properties.
(v) Market Stabilization. The Company has 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, the Act or otherwise, stabilization or
manipulation of the price of the Trust Units to facilitate the sale or resale of the Trust Units or
for any other purpose in violation of the Exchange Act, the Act or other applicable law.
(w) Tax Returns. The Company and KEP have filed all tax returns required to be filed (other
than certain state or local tax returns, as to which the failure to file, individually or in the
aggregate, would not have a Material Adverse Effect), which returns are complete and correct in all
material respects, and neither the Company nor KEP is in default in the payment of any taxes that
were payable pursuant to said returns or any assessments with respect thereto other than taxes
being challenged in good faith by the Company or KEP. No tax deficiency has been determined
adversely to the Company or KEP, and the Company has no knowledge of any tax deficiency or related
assessment, fine or penalty that, individually or in the aggregate, has had or will 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. There are no
outstanding agreements or waivers extending the statutory period of limitation applicable to any
federal, state, local or foreign tax return for any period.
(x) Transfer Taxes. On the Closing Date and any 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 Company to the Underwriters will have been fully paid
by the Company and all laws imposing such taxes will have been complied with.
(y) 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) of the Company or KEP or any limited partner, member, officer, director
or security holder of the Company or KEP (whether or not an affiliate) that are required by the Act
to be disclosed in the Registration Statement, the Time of Sale Information or the Prospectus.
23
(z) Investment Company. Neither the Company, KEP nor VOC Partners is, nor after giving effect
to the offering and sale of the Trust Units and the application of the 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” and the sale of the Trust Units to VOC Partners pursuant to the Trust
Unit Purchase Agreement, 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.
(aa) Permits. The Company and KEP have, and to the Company’s knowledge their affiliated
operators have, all permits, licenses, franchises, approvals, consents and authorizations of
governmental or regulatory authorities (hereinafter, “permit” or “permits”) as are necessary to own
their properties and to conduct their businesses in the manner described in the 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 will not have a Material Adverse
Effect; the Company and KEP have, and to the Company’s knowledge their affiliated operators have,
operated and are operating their businesses in material compliance with and not in material
violation of all of their 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; and, except as described in the Registration Statement, the Time of
Sale Information and the Prospectus, such permits contain no restrictions that are materially
burdensome to the Company or KEP or, to the Company’s knowledge, their affiliated operators.
(bb) 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
KEP and each employee benefit plan or program maintained by the Company and KEP 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 Trust, the Company, KEP 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 Trust, the Company, KEP 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 or KEP 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 Trust, the Company, KEP 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.
24
(cc) Books and Records. The Company (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.
(dd) Insurance. The Company and KEP maintain insurance covering their 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 and KEP’s self insurance practices, for the conduct of its businesses and the
value of its properties. Neither the Company nor KEP has 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. 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 or KEP under any such policy or instrument as to which any
insurance company is denying liability or defending under a reservation of rights clause; and
neither the Company nor KEP has 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.
(ee) Disclosure Controls and Procedures. (i) The Company 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 the
Company 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.
(ff) No Changes in Internal Controls. Since the date of the most recent balance sheets of the
Company reviewed or audited by Xxxxx Xxxxxxxx LLP, (i) the Company is not aware of (A) any
significant deficiencies in the design or operation of internal controls that could adversely
affect the ability of the Company 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 the Company, 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.
25
(gg) Environmental Compliance and Review. The Company and KEP (i) are in compliance with any
and all applicable federal, state and local laws and regulations relating to the prevention of
pollution or the protection of human health and safety (to the extent such human health and safety
relate to exposure to Hazardous Materials, as hereinafter defined) and the environment or imposing
legally enforceable liability or standards of conduct concerning any Hazardous Material
(“Environmental Laws”), (ii) has received and is in compliance with all permits, licenses or other
approvals required of them under Environmental Laws to conduct their respective businesses as they
are currently being conducted, (iii) has not received written notice of any actual or potential
liability under any Environmental Law, and (iv) is not a party to any pending or, to the knowledge
of the Company, threatened action, suit or proceeding alleging that the Company or KEP is liable
for a violation of any Environmental Law or any release or threatened release or cleanup at any
location of any Hazardous Material arising from the operations of the Company or KEP, except where
such failure to comply as described in (i)—(ii) above, such failure to apply for a permit, license
or other approval as described in (ii) above, such receipt of a notice as described in (iii) above,
and such action, suit or proceeding as described in (iv) 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 or toxic chemical,
material, waste or substance regulated under any Environmental Law. Neither the Company nor KEP
has received written 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. In the ordinary course
of its business, the Company and KEP conduct a periodic review of the effect of Environmental Laws
on the businesses, operations and properties of the Company and KEP, in the course of which they
identify and evaluate associated costs and liabilities (including any capital or operating
expenditures required for remedial clean-up, regulatory closure of properties or compliance with
Environmental Laws or any permit, license or approval required under Environmental Laws, any
environmental-related constraints on operating activities and any potential liabilities to third
parties imposed pursuant to Environmental Laws). On the basis of such review and amount of its
established reserves, the Company and KEP have each reasonably
concluded that such associated costs and liabilities have not had and will not have a Material
Adverse Effect.
(hh) FINRA Affiliations. No officer or member or stockholder of the Company or KEP has a
direct or indirect affiliation or association with any member of FINRA.
(ii) No Restrictions on Payments. The Company is not currently prohibited, directly or
indirectly, from making any payments on account of the Net Profits Interest to the Trust.
26
(jj) Title to Properties. Grantor, as of Closing Date and the Additional Closing Date, as the
case may be, will have good and defensible title to the Subject Interests (as defined in the
Conveyance), free and clear of all liens, encumbrances and defects except (i) those described in
the Registration Statement, Prospectus or the Time of Sale Information; (ii) royalties and other
burdens and obligations, expressed and implied, under oil and gas leases; (iii) overriding
royalties, production payments and similar interests and other burdens created by Grantor or their
respective predecessors in title; (iv) contractual obligations arising under operating agreements,
farm-out agreements and other agreements that may affect the properties or their titles of a type
and nature customary in the oil and gas industry; (v) liens that arise in the normal course of
operations, such as those for unpaid taxes, statutory liens securing unpaid suppliers and
contractors and contractual liens under operating agreements to secure payments of all amounts that
are not yet delinquent or, if delinquent are being contested in good faith by appropriate
proceedings; (vi) pooling, unitization and communalization agreements, declarations and orders;
(vii) easements, restrictions, rights-of-way and other matters that commonly affect property;
(viii) conventional rights of reassignment that obligate Grantor to reassign all or part of any
Subject Interest to a third party if Grantor intends to release or abandon each interest before the
termination of such interest; and (ix) rights reserved to or vested in appropriate governmental
agencies or authorities to control or regulate the Subject Interests and the Net Profits Interest
therein; none of which in the aggregate materially adversely affect the value of the Subject
Interests and do not materially interfere with the Net Profits Interest or the use made and
proposed to be made of such property by the Grantor. 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, Grantor 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. The working interests
in oil, gas and mineral leases or mineral interests that constitute a portion of the Subject
Interests held by Grantor reflect in all material respects the right of Grantor to explore or
receive production from such Subject Interests and the care taken by Grantor 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. Upon recordation and filing of the Conveyance, the Trust will have good and
defensible title to the Net Profits Interest, free and clear of all liens, encumbrances and
defects, except Permitted Encumbrances (as defined in the Conveyance).
(kk) Rights-of-Way. The Grantor 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; the Grantor 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 Grantor 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 or KEP.
27
(ll) Sarbanes—Oxley Act of 2002. There has been no failure on the part of the Company or any
of members of its management team, in their capacities as such, to comply in all material respects
with all applicable and effective provisions of the Sarbanes—Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith. At each of the Closing Date and the Additional
Closing Date, the Company will be in compliance in all material respects with all applicable
provisions of the Sarbanes—Oxley Act of 2002, the rules and regulations promulgated therewith and
the rules of the NYSE that are effective and applicable to the Company.
(mm) 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.
(nn) Directed Unit Program. The Company has not offered, or caused Xxxxxxx Xxxxx & Associates,
Inc. to offer, Trust 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 or KEP to alter the
customer’s or supplier’s level or type of business with the Company or KEP or (ii) a trade
journalist or publication to write or publish favorable information about the Trust, the Company or
KEP or their business or products.
(oo) Anti-Corruption. Neither the Company nor any of its subsidiaries nor, to the knowledge of
the Company, any member, partner, director, officer, agent, employee or affiliate of the Company or
any of its subsidiaries is aware of or has taken any action, directly or indirectly, that would
result in a violation by such persons of the FCPA, including, without limitation, making use of the
mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer,
payment, promise to pay or authorization of the payment of any money, or other property, gift,
promise to give, or authorization of the giving of anything of value to any “foreign official” (as
such term is defined in the FCPA) or any foreign political party or official thereof or any
candidate for foreign political office, in contravention of the FCPA; and the Company, its
subsidiaries and, to the knowledge of the Company, its affiliates have conducted their businesses
in compliance with the FCPA and have instituted and maintain policies and procedures designed to
ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.
(pp) Money Laundering Laws. The operations of the Company and its subsidiaries and, to the
knowledge of the Company, each member, partner, director, officer, agent, employee or affiliate of
the Company are and have been conducted at all times in compliance with 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 or any of its subsidiaries and, to the knowledge of the
Company, each member, partner, director, officer, agent, employee or affiliate of the Company with
respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
28
(qq) Office of Foreign Assets Control. Neither the Company nor any of its subsidiaries nor,
to the knowledge of the Company, any director, officer, agent, employee or affiliate of the Company
or any of its subsidiaries is currently subject to any U.S. sanctions administered by 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.
(rr) 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 will result in a Material Adverse Effect.
(ss) Solvency. Immediately after the Closing Date, each of the Company and KEP (after giving
effect to the Conveyance and the Transactions and any other 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 each of the Company and KEP are not less than the total amount required to pay the probable
liabilities of each of the Company and KEP on their total existing debts and liabilities (including
contingent liabilities) as they become absolute and matured, (ii) the Company and KEP are able to
realize upon their assets and pay their debts and other liabilities, contingent obligations and
commitments as they mature and become due in the normal course of business, (iii) the Company and
KEP are not engaged in any business or transaction, and are not about to engage in any business or
transaction, for which their property would constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in which the Company or KEP is engaged and
(v) neither the Company nor KEP is a defendant in any civil action that would result in a judgment
that the Company or KEP 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.
(tt) Private Placement. The sale and issuance of 17,000,000 Trust Units to the Grantor
pursuant to the Conveyance is exempt from the registration requirements of the Act and securities
laws of any state having jurisdiction with respect thereto, and none of the Trust, the Company, KEP
or VOC Partners has taken or will take any action that would cause the loss of such exemption. The
Trust has not issued or sold 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. The sale of Trust Units by the Company to VOC Partners pursuant to
the Trust Unit Purchase Agreement is exempt from the registration requirements of the Act and
securities laws of any state having jurisdiction with respect thereto, and neither the Company nor
VOC Partners has taken or will taken any action that would cause the loss of such exception.
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.
29
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 5.2(a), all expenses in connection with the qualification of the Units for
offering and sale under state securities laws or Blue Sky laws, including reasonable attorneys’
fees and out-of-pocket expenses of the counsel for the Underwriters in connection therewith; (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; (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 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 and the Trust agree, jointly and severally, to indemnify and hold harmless you and each
other Underwriter, the directors, officers, employees and agents of each Underwriter, and 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 of the Act) of such
Underwriter participating in the offering of the Units 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 any omission or alleged
omission to state therein a material fact required to be stated therein or necessary to make the
statements therein (in the case of the Preliminary Prospectus, the Time of Sale Information, any
Issuer Free Writing Prospectus or the Prospectus or in any amendment or supplement thereto, in the
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 or the Trust by or on behalf of
any Underwriter expressly for use in connection therewith as set forth in
Section 14 hereof, or
(ii) any failure of the Trust or the Company to perform its obligations hereunder or under
applicable law; provided, however, that with respect to any untrue statement or omission made in
any Preliminary Prospectus, the indemnity agreement contained in this paragraph shall not inure to
the benefit of any Underwriter (or to the benefit of any person controlling such Underwriter or to
any officer, director, employee or agent of any Underwriter) from whom the person asserting any
such Damages purchased the Units concerned if both (A) a copy of the Time of Sale Information was
not sent or given to such person at or prior to the written confirmation of the sale of such Units
to such person as required by the Act and (B) the untrue statement or omission in the Preliminary
Prospectus was corrected in the Time of Sale Information. This indemnification shall be in
addition to any liability that the Company or the Trust may otherwise have.
30
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 or the Trust, such
Underwriter or such controlling person or any affiliate (within the meaning of Rule 405 of the Act)
of such Underwriter participating in the offering of the Units (each, an “indemnified party”) shall
promptly notify in writing the party against whom indemnification is being sought (each, an
“indemnifying party”), 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 indemnified party 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 the indemnified party shall have been advised by
its counsel that one or more legal defenses may be available to the indemnified party that may not
be available to the Company or the Trust, 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 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 and the Trust, as applicable, shall not be liable for the fees and expenses of more
than one counsel for the indemnified party)). It is understood that the indemnifying party shall
not, in respect of the legal expenses of the indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for fees and expenses of more than one
separate firm (in addition
to any local counsel) for all indemnified parties. In the case of any such separate firm for
the indemnified party, such firm shall be designated in writing by the Representatives. 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 indemnified party 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 and second paragraph of this Section 8.
31
Notwithstanding the foregoing, the Trust shall not be obligated to make any payments to an
indemnified party under this Section 8 until the earlier to occur of the following: (a) with
respect to a final, nonappealable judgment of a court of competent jurisdiction or a settlement
agreement, the Company has not paid such indemnified party the amount owed within 60 days of the
due date under such judgment or settlement, (ii) with respect to expenses, the Company has not paid
such indemnified party the amount owed within 60 days of submission by the indemnified party for
reimbursement of such expenses or (iii) the Company shall become the subject of any bankruptcy or
insolvency proceedings or publicly declares its inability to pay its debts as they become due.
Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company
and the Trust, their respective trustees, directors, officers, managers or members who sign the
Registration Statement and any person who controls the Company or the Trust within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, to the same extent as the foregoing
several indemnity from the Company and the Trust to each Underwriter, but only with respect to
information furnished in writing by or on behalf of such Underwriter 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 or the Trust, any of their respective
trustees, directors, officers, managers or members or any such controlling person 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 and the Trust by the immediately preceding paragraph (except that if the Company or the
Trust 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 and the Trust,
their respective trustees, directors, officers, managers or members 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 and the Trust will not, without the prior written consent of the
Representatives, settle, compromise or consent to the entry of any judgment in any proceeding or
threatened claim, action, suit or proceeding in respect of which 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.
32
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 proportion as is
appropriate to reflect the relative benefits received by the Company and the
Trust, respectively,
on the one hand, and the Underwriters, on the other hand, from the offering and sale of the Trust
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, respectively, 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, respectively, 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 Company and the
Trust, as the case may be, 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 (and the
relative and several benefits received by the Trust shall be deemed to be $0); 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 Trust Units shall include the net proceeds (before deducting expenses)
received by the Company and 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 second table in the section of the Prospectus entitled
“Underwriting.” The relative fault of the Company and the Trust, respectively, 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 or 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, the Trust 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 12 hereof) and
not joint.
33
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 indemnity,
contribution
and reimbursement agreements contained in this Section 8 and the representations and warranties of
the Company and the Trust 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 or any person
controlling any Underwriter, the Company, the Trust, their respective trustees, directors,
officers, managers or members or any person controlling the Company or the Trust, (ii) acceptance
of any Units and payment therefor hereunder and (iii) any termination of this Agreement. A
successor to any Underwriter or any person controlling any Underwriter, or to the Company or the
Trust, their respective trustees, directors, officers, managers or members or any person
controlling the Company or the Trust, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 8.
It is agreed that any controversy arising out of the operation of the interim reimbursement
arrangements set forth in the third paragraph of this Section 8, including the amounts of any
requested reimbursement payments and the method of determining such amounts, shall be settled by
arbitration conducted pursuant to the Code of Arbitration Procedure of FINRA. Any such arbitration
must be commenced by service of a written demand for arbitration or written notice of intention to
arbitrate, therein electing the arbitration tribunal. In the event the party demanding arbitration
does not make such designation of an arbitration tribunal in such demand or notice, then the party
responding to said demand or notice is authorized to do so. Such arbitration would be limited to
the operation of the interim reimbursement provisions contained in the third and fifth paragraphs
of this Section 8, and would not resolve the ultimate propriety or enforceability of the obligation
to reimburse expenses that is created by the provisions of the third paragraph of 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.
34
9. Conditions of Underwriters’ Obligations. The several obligations of the
Underwriters to purchase the Firm Units and Additional Units hereunder are subject to the following
conditions:
(a) The Registration Statement shall have become effective not later than 4:00 p.m., 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 Organizational Trust Agreement, the Trust Agreement, the
Administrative Services Agreement, the Conveyance, the Registration Statement, the Time of Sale
Information and the Prospectus, and all other legal matters relating to this Agreement and the
Transactions and any other transactions contemplated hereby shall be reasonably satisfactory in 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 reasonably satisfied that since the respective dates as of which information
is given in the Registration Statement, the Time of Sale Information and the Prospectus, (i) except
as set forth or contemplated by the Registration Statement, the Time of Sale Information and the
Prospectus, 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, the Time of Sale Information and the
Prospectus, no material oral or written agreement or other transaction shall have been entered into
by the Company or the Trust that is not in the ordinary course of business or 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 could reasonably be expected to have a Material Adverse Effect or have a material adverse effect
on the Subject Interests, (iv) no legal or governmental action, suit or proceeding affecting the
Company or the Trust or any of its properties that is material to the Trust or the Company or that
affects or could reasonably be expected to affect the Transactions and any other 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 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 the Additional Closing Date, if any) an
opinion of Xxxxxx Xxxxx LLP, special Delaware counsel to the Trust, substantially in the form of
Exhibit B hereto.
(e) You shall have received on the Closing Date (and the Additional Closing Date, if any) an
opinion of Xxxxxxxx Xxxxxxx LLP, Kansas counsel to the Company, substantially in the form of
Exhibit C hereto.
35
(f) You shall have received on the Closing Date (and the Additional Closing Date, if any) an
opinion of Xxxxxx & Xxxxxx L.L.P., counsel to the Company, substantially in the form of Exhibit
D hereto.
(g) You shall have received on the Closing Date (and the Additional Closing Date, if any) an
opinion of Xxxxxxx Xxxxx L.L.P., counsel to the Trust, substantially in the form of Exhibit
E hereto.
(h) 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 representations and warranties of the Trust contained in this Agreement are
true and correct as of such Closing Date or Additional Closing Date.
(iii) 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 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); and the
Operative Agreements to which the Trust is a party have been duly and validly executed by
the Trustee.
(iv) 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.
(v) 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 Trust, threatened or contemplated by the
authorities of any jurisdiction.
(i) 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 Closing Date or any Additional
Closing Date, as the case may be, in form and substance satisfactory to the Underwriters, from
Xxxxx Xxxxxxxx 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
36
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.
(j) 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 or the Trust, 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 or the Trust, 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
and the Trust obtained your consent prior to filing with the Commission; (v) all of the
representations and warranties of the Trust and the Company contained in this Agreement shall be
true and correct in all material respects (except for such representations and warranties qualified
by materiality, which representations and warranties shall be true and correct in all respects) on
and as of the date hereof and on and as of the Closing Date or Additional Closing Date, as the case
may be, as if made on and as of the Closing Date or Additional Closing Date, as the case may be,
and (vi) neither the Company nor the Trust shall have failed in any material respect at or prior to
the Closing Date or any 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 managing member of the Company to the effect set forth in this
Section 9(j) and in Sections 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 (in the case of the Registration Statement) 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.
(k) The Company shall have furnished or caused to have been furnished to you such further
certificates and documents as you shall have reasonably requested.
(l) 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.
37
(m) You shall have received letters addressed to you and dated the Closing Date or the
Additional Closing Date, as the case may be, from Xxxxxx Xxxxxxxxx stating the conclusions and
findings of such firm with respect to oil and gas reserves of the Underlying Properties and the Net
Profits Interest, substantially in the form approved by you.
All such opinions, certificates, letters and other documents will be in compliance with the
provisions hereof only if they are reasonably satisfactory in form and substance to you and your
counsel.
The several obligations of the Underwriters to purchase Additional Units hereunder are subject
to the satisfaction on and as of the Additional Closing Date of the conditions set forth in this
Section 9, except that, if the Additional Closing Date is other than the Closing Date, the
certificates, opinions and letters referred to in this Section 9 shall be dated as of the
Additional Closing Date and the opinions called for by paragraphs (d), (e), (f) and (g) shall be
revised to reflect the sale of Additional Units. In addition, the several obligations of the
Underwriters to purchase Additional Units hereunder are subject to the receipt of certificates
dated the Additional Closing Date from the Company and the Trust to the effect that, as of the
Additional Closing Date: (i) the representations and warranties made by the Company and the Trust
herein are true and correct in all material respects and (ii) the Company and the Trust have
complied with all obligations and satisfied all conditions that are required to be performed or
satisfied on its part at or prior to the Additional Closing Date.
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 Trust 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 and the Trust, not to be unreasonably
withheld, other than any such offer included in an Issuer Free Writing Prospectus. The Company
and the Trust covenant with the Underwriters that they have 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.
38
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, the Trust 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, the Company or the Trust. In any
such case that does not result in termination of this Agreement, either you, the Trust 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 case may be,
in your sole judgment, (i) trading in the Trust 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 the Trust and their counsel by telegraph, telecopy or telephone and shall be
subsequently confirmed by letter.
14. Information Furnished by the Underwriters. The Company and the Trust acknowledge
that (i) the list of Underwriters and their respective participation in the sale of Units, (ii) the
first and second sentences of the third paragraph and (iii) paragraphs under “Stabilization”, each
under the caption “Underwriting” in the most recent Preliminary Prospectus and 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 6.1(c), 6.1(d), 6.1(e) and Section 8
hereof.
39
15. Miscellaneous. Except as otherwise provided in Sections 5 and 12 hereof, notice
given pursuant to any of the provisions of this Agreement shall be in writing and shall be
delivered:
(i)
|
to the Company | |
VOC Brazos Energy Partners, L.P. | ||
0000 Xxxxxxxxx Xxxxxxx | ||
Xxxxxxxx 000 | ||
Xxxxxxx, Xxxxxx 00000 | ||
Attention: Xxxxx Xxxx | ||
with a copy to | ||
Xxxxxx & Xxxxxx L.L.P. | ||
0000 Xxxxxx Xxxxxx, Xxxxx 0000 | ||
Xxxxxxx, Xxxxx 00000 | ||
Attention: Xxxxx X. Xxxxxx | ||
(ii)
|
to the Trust | |
The Bank of New York Mellon Trust Company, N.A. | ||
Global Corporate Trust | ||
000 Xxxxxxxx Xxxxxx, Xxxxx 000 | ||
Xxxxxx, Xxxxx 00000 | ||
Attention: Xxxxxxx X. Xxxxxx | ||
with a copy to | ||
Xxxxxxx Xxxxx LLP | ||
000 Xxxxxx | ||
Xxxxx 0000 | ||
Xxxxxxx, Xxxxx 00000 | ||
Attention: W. Xxxxx Xxxxxxx | ||
(iii)
|
to the Underwriters | |
Xxxxxxx Xxxxx & Associates, Inc. | ||
000 Xxxxxxxx Xxxxxxx | ||
Xx. Xxxxxxxxxx, Xxxxxxx 00000 | ||
Attention: Xxxx Xxxxxxxxx | ||
Xxxxxx Xxxxxxx & Co. Incorporated | ||
0000 Xxxxxxxx | ||
Xxx Xxxx, Xxx Xxxx 00000 | ||
Attention: Xxxxx Xxxxxxxxxx | ||
with a copy to | ||
Xxxxx Xxxxx L.L.P. | ||
One Shell Plaza | ||
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000 | ||
Xxxxxxx, Xxxxx 00000 | ||
Attention: Xxxxxx Xxxxxxxx |
40
This Agreement has been and is made solely for the benefit of the several Underwriters, the
Company, its directors, officers, managers and members, 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 acknowledges and agrees 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 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 and the Underwriters based on
discussions and arms’ length negotiations and each of the Company and the Trust understands and
accepts 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, each of the Company and the Trust acknowledges that the
Underwriters may have financial interests in the success of the offering of the Units that are not
limited to the difference between the price to the public and the purchase price delivered to the
Company 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 waives and releases, 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 or the Trust or any of their respective members, managers, employees
or creditors.
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 Company, the Trust 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.
41
Please confirm that the foregoing correctly sets forth the agreement among the Company, the
Trust and the several Underwriters.
Very truly yours, VOC BRAZOS ENERGY PARTNERS, L.P. |
||||
By: | Xxxx Texas Partners, LLC, | |||
its General Partner | ||||
By: | Xxxx Holding Corporation, | |||
its Sole Managing Member | ||||
By: | ||||
Name: | J. Xxxxxxx Xxxx | |||
Title: | Designated Representative and Sole Member of the Board of Directors | |||
VOC ENERGY TRUST |
||||
By: | The Bank of New York Mellon Trust Company, N.A., Trustee | |||
By: | ||||
Name: | Xxxxxxx X. Xxxxxx | |||
Title: | Vice President | |||
42
CONFIRMED as of the date first above mentioned, on behalf of the Representatives and the other several Underwriters named in Schedule I hereto. |
||||
XXXXXXX XXXXX & ASSOCIATES, INC. |
||||
By: | ||||
Name: | ||||
Authorized Representative | ||||
XXXXXX XXXXXXX & CO. INCORPORATED |
||||
By: | ||||
Name: | ||||
Authorized Representative | ||||
43
SCHEDULE I
Number | ||||
Name | Firm Units | |||
Xxxxxxx Xxxxx & Associates, Inc. |
||||
Xxxxxx Xxxxxxx & Co. Incorporated |
||||
Xxxxxxxxxxx & Co., Inc. |
||||
RBC Capital Markets, LLC |
||||
Xxxxxx X. Xxxxx & Co. Incorporated |
||||
Xxxxxx Xxxxxxxxxx Xxxxx, LLC |
||||
Xxxxxx Xxxxxx & Company, Inc. |
||||
Xxxxxxxxxx Securities, Inc. |
||||
Total: |
11,085,000 |
I-1
SCHEDULE II
Free Writing Prospectuses
None.
II-1
SCHEDULE III
Information Included in “Time of Sale Information”
Title of securities:
|
Trust Units | |
Total number of units offered:
|
11,085,000 Trust Units (excluding option to purchase an additional 1,662,750 Trust Units) |
|
Public offering price:
|
$[•] per Trust Unit |
III-1
SCHEDULE IV
Persons Delivering Lock-Up Agreements
VOC Partners, LLC
J. Xxxxxxx Xxxx
X. X. Xxxxx
Will Price
X. X. Xxxx
Xxxxxxx X. Xxxxxxx
Xxxxx Xxxxxxxx
Xxxxx Xxxx
Xxxx Xxxxxxxx
Each Directed Unit Program Participant purchasing in excess of $100,000 worth of Trust Units
IV-1
EXHIBIT A
________, 2011
VOC Energy Trust
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.
Xxxxxx Xxxxxxx & Co. Incorporated
As Representatives of the Several Underwriters
Xxxxxx Xxxxxxx & Co. Incorporated
As Representatives 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 Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Re: | Restriction of Sales of VOC Energy Trust Units |
Dear Sirs:
This letter is delivered to you pursuant to the Underwriting Agreement (the “Underwriting
Agreement”) to be entered into among VOC Energy Trust, a statutory trust formed under the laws of
the State of Delaware (the “Trust”), VOC Brazos Energy Partners, L.P., a Texas limited partnership
(the “Company”), and Xxxxxxx Xxxxx & Associates, Inc. and Xxxxxx Xxxxxxx & Co. Incorporated 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 Company 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.
333-171474 (the “Registration Statement”), as filed with the Securities and Exchange Commission on
December 30, 2010 and as amended thereafter (the “Offering”).
The undersigned recognizes that it is in the best financial interests of the undersigned, as a
limited partner or member of the executive management team 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.
A-1
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 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.
A-2
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
A-3
EXHIBIT B
FORM OF OPINION OF XXXXXX XXXXX LLP
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 or lease its properties and conduct its business, all as described in
the Trust Agreement.
3. The Trust Agreement has been duly authorized by the Trustee and the Delaware Trustee, and
assuming the due execution and delivery by the parties thereto, is a valid and legally binding
agreement of each of the parties thereto, enforceable against each of them 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 issue Trust Units to the Company as contemplated by the Trust Agreement and
the Conveyance and to execute and deliver, and to perform its obligations under, this Agreement and
the Operative Agreements to which it is a party.
5. The Trust Units have been duly authorized for issuance by the Trust, and assuming that the
Company has paid for the Trust Units in accordance with the Trust Agreement as described in the
Registration Statement, the Time of Sale Information and the Prospectus and that the Trust Units
were issued and sold to the Company in accordance with the Trust Agreement and as described in the
Registration Statement, the Time of Sale Information and the Prospectus, the Trust Units constitute
valid and fully paid and nonassessable undivided beneficial interests in the assets of the Trust.
6. The Underwriting Agreement has been duly authorized by the Trust.
7. No consent of or with any Delaware court, governmental agency or body having jurisdiction
over the Trust or its properties is required in connection with (i) the issuance and sale of the
Trust Units as described in the Registration Statement, the Time of Sale Information and the
Prospectus, (ii) the execution, delivery and performance of this Agreement and the Operative
Agreements by the Trust, or (iii) the consummation by the Trust of the Transactions and any other
transactions contemplated by the Agreement and the Operative Agreements, except such as may be
required under the Exchange Act and applicable securities or Blue Sky laws of the State of
Delaware, as to which we give no opinion, and except for the filing of the Certificate of Trust
with the Secretary of the State of Delaware (which Certificate of Trust has been duly filed).
8. None of (i) the issuance and sale of the Trust Units as described in the Registration
Statement, the Time of Sale Information and the Prospectus, (ii) the execution, delivery and
performance of this Agreement and the Operative Agreements by the Trust, the Company, KEP and VOC
Partners, or (iii) the consummation by the Trust of the Transactions and any other transactions
contemplated by the Agreement and the Operative Agreements,
B-1
conflicts with or will conflict with or constitutes or will constitute a breach of, or a
default under, the Trust Agreement or the Certificate of Trust for the Trust or any Delaware
statute, law or regulation applicable to the Trust.
9. The holders of Trust Units, 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.
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.
B-2
EXHIBIT C
1. The Trust is duly qualified to conduct its business as a foreign statutory trust and is in
good standing in the State of Kansas. The Trustee is not required to qualify to transact business
or appoint an agent for service of process in the State of Kansas solely as a result of the
activities of the Trustee with respect to the Trust (as all such activities are described in the
Registration Statement, the 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 State of Kansas.
2. KEP is a limited liability company validly existing in good standing under the laws of the
State of Kansas, with full limited liability company power and authority to own oil and gas assets
and conduct its business as described in the Registration Statement, the Time of Sale Information
and the Prospectus (and any amendment or supplement thereto).
3. As of the Closing Date the Company owns 100% of the outstanding limited liability company
interests in KEP. All of such limited liability company interests
have been duly authorized and have been validly issued, and are fully paid and nonassessable.
4. The Conveyance has been duly authorized and when duly executed by the proper officers,
managers or members KEP and delivered by KEP to the Trust, will constitute valid and binding
agreements of KEP enforceable against KEP in accordance with its terms, except as such
enforceability 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; the form of the Conveyance to be
filed is adequate and sufficient under the laws of the State of Kansas to transfer title to the Net
Profits Interest to the Trust and complies with the laws of the State of Kansas relating to
recording, filing and registration laws and regulations; the recording of the Conveyance in the
appropriate real property records in each county in the State of Kansas where the Subject Interests
are located is sufficient to provide the Trust the protections afforded to a grantee of real
property under the recordation laws of the State of Kansas against purchasers or creditors of KEP subsequently acquiring interests in the Subject Interests, and such purchasers and
creditors of KEP will be deemed to purchase with notice of, and subject to, such Net
Profits Interest.
5. No consent of or with any Kansas court, governmental agency or body having jurisdiction
over the Trust or its properties in the State of Kansas is required in connection with (i) the
issuance and sale of the Trust Units as described in the Registration Statement, the Time of Sale
Information and the Prospectus, (ii) the execution, delivery and
performance of the Underwriting Agreement and
the Operative Agreements by the Trust, the Company, KEP and VOC Partners
C-1
and (iii) the consummation of the Transactions and any other transactions contemplated by the
Underwriting Agreement or the Operative Agreements, except (A) consents required under state
securities or “Blue Sky” laws in the State of Kansas in connection with the purchase and
distribution of the Units by the Underwriters, as to which we give no opinion, (B) for such
consents that have been, or prior to the Closing Date will be, obtained or made or (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 Trust, the Company,
KEP or VOC Partners to consummate the Transactions or any other transactions provided for in this
Agreement or the Transaction Documents.
6. None
of (i) the issuance, offer, sale or delivery of the Firm Units by the Company, (ii) the
execution, delivery or performance of the Underwriting Agreement, the Organizational Trust
Agreement, the Trust Agreement, the Administrative Services Agreement, Contribution and Exchange
Agreement or the Registration Rights Agreement by the Company, KEP or VOC Partners, or (iii) the
consummation by the Company, KEP or VOC Partners of the Transactions or any other transactions
contemplated by the Underwriting Agreement and the Operative Agreements, (A) conflicts or will
conflict with the articles of KEP’s Articles of Organization or operating agreement, (B)
constitutes or will constitute a breach of, or a default under, any bond, mortgage, deed of trust,
loan, indenture, material agreement, lease or other instrument known to us to which KEP is a party
or by which any of its properties is bound, or (C) violates or will result in any violation of the
laws of the State of Kansas, except in the case of clauses (B) and (C) for any breach, default or
violation that would not reasonably be expected to have a Material Adverse Effect or materially
impair the ability of the Trust, the Company, KEP or VOC Partners to consummate the Transactions or
any other transactions provided for in the Underwriting Agreement or the Transaction Documents.
7. A beneficial owner of a Trust Unit will not be subject to personal liability under the laws
of the State of Kansas by virtue of said ownership.
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 KEP and 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 the laws of the State of Kansas, (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 tax
statutes to which the Company, KEP 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 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).
C-2
EXHIBIT D
FORM OF OPINION OF XXXXXX & XXXXXX L.L.P.
1. The Company is a limited partnership duly formed and validly existing in good standing
under the laws of the State of Texas, with full power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration Statement, the Time of Sale
Information and the Prospectus (and any amendment or supplement thereto).
2. Neither the Trust nor the Trustee is required to qualify to transact business or appoint an
agent for service of process in the State of Texas 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, the 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 State of Texas.
3. The Company has all requisite power and authority to enter into this Agreement and to sell
and deliver the Units to be sold by it to the Underwriters as provided herein. The Agreement has
been duly authorized, executed and delivered by the Company.
4. The Conveyance has been duly authorized, executed and delivered by the Company, and
constitutes a valid and binding agreement of the Company under the laws of State of Texas,
enforceable against the Company 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); the form of the Conveyance
to be filed is adequate and sufficient under the laws of the State of Texas to transfer title to
the Net Profits Interest to the Trust and complies with the laws of the State of Texas relating to
recording, filing and registration laws and regulations; the recording of the Conveyance in the
appropriate real property records in each county in the State of Texas where the Subject Interests
are located will cause the Conveyance to constitute a fully conveyed and vested real property
interest and is sufficient to provide the Trust the protections afforded under the recordation laws
of the State of Texas 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 Net Profits Interest; and the Conveyance and the
related Net Profits Interest and will not constitute executory contracts under the laws of the
State of Texas or under the federal bankruptcy code.
5. A beneficial owner of a Trust Unit will not be subject to personal liability under the laws
of the State of Texas by virtue of said ownership.
6. No consent of or with any Texas or federal court, governmental agency or body having
jurisdiction over the Trust, the Company, KEP or VOC Partners or their respective properties is
required in connection with (i) the issuance and sale of the Trust Units as described in the
Registration Statement, the Time of Sale Information and the Prospectus, (ii) the execution,
delivery and performance of this Agreement and the Operative Agreements by the Trust, the Company,
KEP or VOC Partners and (iii) the consummation of the Transactions and
D-1
any other transactions contemplated by this Agreement and the Operative Agreements, except (A)
for registration of the Trust 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, (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 Trust, the Company, KEP or VOC Partners to consummate the Transactions 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.
7. None of (i) the issuance and sale of the Trust Units as described in the Registration
Statement, Time of Sale Information and the Prospectus, (ii) the execution, delivery and
performance of the Agreement and the Operative Agreements by the Trust, the Company, KEP and VOC
Partners, or (iii) the consummation of the Transactions and any other transactions contemplated by
the Agreement and the Operative Agreements, (A) conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, the Certificate of Limited Partnership of the
Company or the Amended and Restated Agreement of Limited Partnership of the Company, (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
agreement or instrument filed as an exhibit to the Registration Statement, (C) violates or will
violate any federal, Delaware or Texas statute, law or regulation or any order, judgment, decree or
injunction known to such counsel of any federal, Delaware or Texas court or governmental agency or
body directed to any of the Trust, the Company, KEP or VOC Partners 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 (including, without limitation, the Subject Interests) or assets of the Trust, which
conflicts, breaches, violations, defaults, events 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 Trust, the Company, KEP or VOC Partners to consummate the
Transactions or any other transactions provided for in the Agreement or the Transaction Documents.
8. Each of the Trust Agreement and the Administrative Services Agreement has been duly
authorized, executed and delivered by the Company and, assuming the due authorization, execution
and delivery by the parties thereto other than the Company, constitutes a valid and legally binding
agreement of the 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).
9. The statements set forth in the Registration Statement, the Time of Sale Information and
the Prospectus under the captions “Prospectus summary,” “The trust,” and “Computation of Net
Proceeds,” “Description of the trust agreement,” “Description of the trust units,” “Federal Income
Tax Considerations,” and “ERISA considerations,” insofar as they purport to constitute summaries of
provisions of federal, Texas or Delaware statutes, rules and
D-2
regulations, or of any specific agreement or instrument, constitute complete and accurate
summaries thereof in all material respects; and the descriptions of the Units contained in the
Registration Statement, the Time of Sale Information and the Prospectus under the captions
“Prospectus Summary,” “The trust,” “Description of the trust agreement,” and “Description of the
trust units” constitute accurate summaries of the terms of the Units in all material respects.
10. To the knowledge of such counsel, 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 Units or other securities of the Trust.
11. To the knowledge of such counsel, there are no (i) legal or governmental proceedings
pending or threatened to which the Company, KEP 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.
12. 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.
13. The Registration Statement, on the Effective Date and on the Closing Date and any
Additional Closing Date, and the Prospectus, when filed with the Commission pursuant to Rule 424(b)
and on the Closing Date and any 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 contained in or omitted from the Registration Statement, the Time of Sale
Information or the Prospectus.
14. Neither the Company, KEP nor VOC Partners is, nor after giving effect to the offering and
sale of the Trust Units and the application of the 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” and the sale of the Trust Units to VOC Partners pursuant to the Trust Unit Purchase
Agreement, 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.
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15. Assuming that each Underwriter acquires its interest in the Units it has purchased from
the Company without notice of any adverse claim (within the meaning of Section 8-105 of
the UCC), each Underwriter that has purchased such Units, which have been delivered on the
Closing Date to The Depository Trust Company, by making payment therefor as provided in this
Agreement, and that has had such Units credited to the securities account or accounts of such
Underwriters maintained with The Depository Trust Company, will have acquired a security
entitlement (within the meaning of Section 8-102(a)(17) of the UCC) to such Units purchased by such
Underwriter, and no action based on an adverse claim (within the meaning of Section 8-105 of the
UCC) may be asserted against such Underwriter with respect to such Units.
16. 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.
In addition, such counsel shall state that they have reviewed the Registration Statement, the
Time of Sale Information and the Prospectus and have participated in conferences with officers and
other representatives of the Company and the Trust, the independent registered public accounting
firm of the Trust and 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 Effective Time, 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 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
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good standing of the Company, state that such opinion is based upon certificates provided by
the Secretary of State of Texas (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; (iv) state
that their opinion is limited to federal laws and the laws of the States of Texas, Delaware and New
York; 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 tax statutes to which the Company or the Trust
may be subject.
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EXHIBIT E
FORM OF OPINION OF XXXXXXX XXXXX 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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