1
EXHIBIT 4.3
================================================================================
FORM OF
AMENDED AND RESTATED
TRUST AGREEMENT
OF
APPALACHIAN NATURAL GAS TRUST
------------------
DATED AS OF SEPTEMBER 1, 1999
================================================================================
2
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions..................................................................................1
ARTICLE II
NAME AND PURPOSE OF THE TRUST; DECLARATION OF TRUST
SECTION 2.01 Name.........................................................................................6
SECTION 2.02 Purposes.....................................................................................7
SECTION 2.03 Transfer of Trust Property to the Trust; Closing Matters.....................................8
SECTION 2.04 Nature of the Trust..........................................................................9
SECTION 2.05 Principal Office and Delaware Trustee........................................................9
ARTICLE III
ADMINISTRATION OF THE TRUST AND POWERS OF THE TRUSTEE
AND THE DELAWARE TRUSTEE
SECTION 3.01 General Authority............................................................................9
SECTION 3.02 Limited Power of Disposition................................................................10
SECTION 3.03 No Power to Engage in Business or Make Investments..........................................11
SECTION 3.04 Interest on Cash on Hand....................................................................11
SECTION 3.05 Power to Settle Claims......................................................................12
SECTION 3.06 Power to Contract for Services; Transfer Agents and
Registrar...................................................................................12
SECTION 3.07 Payment of Liabilities of Trust.............................................................13
SECTION 3.08 Income and Principal........................................................................14
SECTION 3.09 Term of Contracts...........................................................................14
SECTION 3.10 Transactions With Entity Serving as the Trustee or the
Delaware Trustee............................................................................14
SECTION 3.11 No Security Required........................................................................15
SECTION 3.12 Divestiture of Units........................................................................15
SECTION 3.13 Filing of Registration Statements, Listing of Units.........................................16
SECTION 3.14 Reserve Report..............................................................................18
3
ARTICLE IV
TRUST UNITS AND BENEFICIAL INTEREST IN CERTIFICATES
SECTION 4.01 Creation and Distribution...................................................................18
SECTION 4.02 Rights of Unitholders; Limitation on Personal Liability of Unitholders......................18
SECTION 4.03 Execution of Certificates...................................................................19
SECTION 4.04 Registration and Transfer of Units; Lost and Destroyed Certificates.........................20
SECTION 4.05 Protection of Delaware Trustee and Trustee..................................................21
SECTION 4.06 Determination of Ownership..................................................................21
ARTICLE V
ACCOUNTING AND DISTRIBUTION; REPORTS
SECTION 5.01 Fiscal Year and Accounting Method...........................................................22
SECTION 5.02 Quarterly Distributions.....................................................................22
SECTION 5.03 Income Tax Reporting........................................................................23
SECTION 5.04 Reports to Unitholders and Others...........................................................23
SECTION 5.05 Information to be Supplied by Eastern States and Trustee....................................24
ARTICLE VI
LIABILITY OF DELAWARE TRUSTEE AND TRUSTEE AND METHOD OF
SUCCESSION
SECTION 6.01 Liability of Delaware Trustee and Trustee...................................................24
SECTION 6.02 Indemnification of Trustee and Delaware Trustee.............................................25
SECTION 6.03 Resignation of Delaware Trustee and Trustee.................................................27
SECTION 6.04 Removal of Delaware Trustee and Trustee.....................................................28
SECTION 6.05 Appointment of Successor Delaware Trustee or Trustee........................................28
SECTION 6.06 Laws of Other Jurisdictions.................................................................29
SECTION 6.07 Reliance on Experts.........................................................................30
SECTION 6.08 Failure of Action by Eastern States.........................................................30
SECTION 6.09 Force Majeure...............................................................................30
ii
4
ARTICLE VII
COMPENSATION OF THE TRUSTEE AND DELAWARE TRUSTEE
SECTION 7.01 Compensation of Trustee and Delaware Trustee................................................30
SECTION 7.02 Source of Funds.............................................................................31
SECTION 7.03 Ownership of Units by Eastern States, the Trustee and Delaware Trustee......................31
ARTICLE VIII
MEETINGS OF UNITHOLDERS
SECTION 8.01 Purpose of Meetings.........................................................................31
SECTION 8.02 Call and Notice of Meetings.................................................................31
SECTION 8.03 Method of Voting and Vote Required..........................................................32
SECTION 8.04 Conduct of Meetings.........................................................................32
SECTION 8.05 Unitholder Proposals........................................................................32
ARTICLE IX
DURATION, REVOCATION AND TERMINATION OF TRUST
SECTION 9.01 Revocation..................................................................................33
SECTION 9.02 Dissolution.................................................................................33
SECTION 9.03 Disposition and Distribution of Assets and Properties.......................................34
SECTION 9.04 Conditional Right of Repurchase.............................................................36
SECTION 9.05 Reorganization or Business Combination......................................................37
ARTICLE X
AMENDMENTS
SECTION 10.01 Prohibited Amendments.......................................................................38
SECTION 10.02 Permitted Amendments........................................................................39
iii
5
ARTICLE XI
ARBITRATION
ARTICLE XII
MISCELLANEOUS
SECTION 12.01 Inspection of Trustee'sBooks................................................................42
SECTION 12.02 Disability of a Unitholder..................................................................42
SECTION 12.03 Merger or Consolidation of Trustee or Delaware Trustee......................................42
SECTION 12.04 Change in Trust Name........................................................................42
SECTION 12.05 Filing of this Agreement....................................................................43
SECTION 12.06 Choice of Law...............................................................................43
SECTION 12.07 Severability................................................................................43
SECTION 12.08 Notices.....................................................................................43
SECTION 12.09 Counterparts................................................................................44
SECTION 12.10 Successors..................................................................................44
iv
6
TRUST AGREEMENT
OF
APPALACHIAN NATURAL GAS TRUST
This Amended and Restated Trust Agreement of Appalachian Natural Gas
Trust (the "Trust") is entered into effective as of the 1st day of September
1999, by and among Eastern States Oil & Gas, Inc., a Delaware corporation with
its principal office in Alexandria, Virginia ("Eastern States"), as sponsor, and
Bank One Delaware, Inc., a banking corporation organized under the laws of the
State of Delaware with its principal office in Wilmington, Delaware ("Bank One
Delaware"), and Bank One, Texas, N.A., a banking association organized under the
laws of the United States of America with its principal office in Fort Worth,
Texas (the "Bank"), as trustees.
R E C I T A L S:
WHEREAS, Eastern States is engaged in the development, production,
acquisition, marketing, gathering and transportation of natural gas and oil; and
WHEREAS, Eastern States has determined to convey to the Trust the
Royalty Interests (hereinafter defined) pursuant to the Conveyances (hereinafter
defined) in consideration for the issuance by the Trust of 10,500,000 Units
(hereinafter defined); and
WHEREAS, Eastern States and Bank One Delaware have previously formed
the Trust pursuant to the Organizational Trust Agreement (hereinafter defined)
in accordance with the provisions of the Business Act (hereinafter defined) and,
in connection therewith, Eastern States has previously delivered to the Bank, on
behalf of the trust, good and valuable consideration, which the Bank has
accepted, to have and to hold, in trust, such property and all other properties
that may hereafter be received, for purposes and subject to the terms and
conditions hereinafter provided;
NOW, THEREFORE, Eastern States, Bank One Delaware and the Bank hereby
amend and restate the Organizational Trust Agreement of Appalachian Basin
Royalty Trust in its entirety.
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions.
As used herein, the following terms have the meanings indicated:
"Advisor" shall have the meaning assigned to such term in Section 9.03
of this Agreement.
"Affiliate" of a Person means another Person controlled by, controlling
or under common control with such Person. As used herein, "control" (including
the terms "controlling", "controlled by" and "under common control with") means
the possession, directly or indirectly, of the power to
7
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Agreement" means this instrument, as originally executed, or, if
amended or supplemented, as so amended or supplemented.
"Bank" means Bank One Texas, N.A., its successors and assigns.
"Bank One Delaware" means Bank One Delaware, Inc., its successors and
assigns.
"Beneficial Interest" means the aggregate undivided beneficial interest
of all Unitholders in the Trust Estate, including, without limitation, the right
to receive distributions of proceeds from the conversion of the Royalty
Interests to cash, and the right to receive distributions of cash resulting from
such conversion of the Royalty Interests, which beneficial interest is expressed
in Units, but such beneficial interest does not include any ownership interest,
in or to the Royalty Interests, or any part thereof, or in or to any other asset
of the Trust Estate to the extent that an interest in such asset would cause the
interest of a Unitholder to be treated (other than for Federal income tax
purposes) as other than an intangible personal property interest.
"Best Efforts" means a Person's best efforts in accordance with
reasonable commercial practice and without the incurrence of unreasonable
expense.
"Business Act" means the Delaware Business Trust Act, Title 12, Chapter
38 of the Delaware Code, Sections 3801 et seq., as amended from time to time
during the term of this Agreement.
"Business Day" means any day that is not a Saturday, Sunday, a holiday
determined by the NYSE as "affecting 'ex' dates" or any other day on which
national banking institutions in Fort Worth, Texas are closed as authorized or
required by law.
"Certificate" means a certificate issued by the Trustee pursuant to
Article IV hereof evidencing the ownership of one or more Units.
"Closing" means the closing of the initial public offering contemplated
by the Securities Act Registration Statement.
"Code" means the Internal Revenue Code of 1986, a amended.
"Commission" means the Securities and Exchange Commission.
"Confirmation" means an entry made on the ownership ledger maintained
by the Trustee pursuant to Section 3.12 hereof.
2
8
"Conveyances" means the Net Overriding Royalty Conveyances effective as
of September 1, 1999 between Eastern States and the Trust, pursuant to which the
Royalty Interests are to be conveyed to the Trust.
"Delaware Trustee" means the Entity serving as a trustee hereunder
having its principal place of business in Delaware, in its fiduciary capacity.
Further, any benefit, indemnity, release or protection granted to the Delaware
Trustee herein shall extend to and shall be fully applicable and effective with
regard to any Entity serving as the Delaware Trustee, including, without
limitation, Bank One Delaware.
"Distribution Date" means the date of a distribution, which shall be on
or before the 25th day of the third calendar month following the end of a
calendar quarter.
"Effective Time" means 12:01 a.m. on September 1, 1999.
"Entity" means a corporation, partnership, limited liability company,
trust, estate or other organization.
"Environmental Laws" means all laws relating to pollution or protection
of the environment, including laws relating to emissions, discharges, releases
or threatened releases, treatment, storage or disposal of pollutants,
contaminants, hazardous substances or industrial or hazardous wastes into the
environment (including ambient air, surface water, groundwater, land surface or
subsurface strata), and also including laws relating to the protection,
preservation, or enhancement of endangered or threatened species, historic and
archaeological resources, or wetlands and tidelands, as well as codes, decrees,
injunctions, judgments, orders, rules or regulations issued, entered,
promulgated or approved thereunder pursuant to the requirements of applicable
administrative procedures acts and agency procedural rules.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Act Registration Statement" means the registration statement
pursuant to which the Units may be registered under Section 12 of the Exchange
Act.
"Indemnified Party" and "Indemnified Parties" shall have the meaning
assigned to such terms in Section 6.02(d) hereof.
"Indemnifying Party" shall have the meaning assigned to such term in
Section 6.02(d) hereof.
"Ineligible Holder" shall have the meaning assigned to such term in
Section 3.12 hereof.
"Notice" shall have the meaning assigned to such term in Section 3.12
of this Agreement.
"NYSE" means the New York Stock Exchange, Inc.
3
9
"Organizational Trust Agreement" means the Trust Agreement of
Appalachian Basin Royalty Trust, dated as of August 1, 1999, as amended on
October 1999 in order to change the name of the Trust to Appalachian Natural Gas
Trust, by and among Eastern States, as sponsor, Bank One Delaware, as trustee,
and Xxxxx X. Xxxxxxxx, as trustee.
"Person" means an individual or Entity.
"Quarterly Distribution Amount" means for each Quarterly Period an
amount determined by the Trustee pursuant to Section 5.02 hereof to be equal to
the excess, if any, of (a) the cash received by the Trust attributable to
production from the Royalty Interests during such Quarterly Period provided that
such cash attributable to such production is received by the Trust on or before
the 22nd calendar day of the third month following the end of the Quarterly
Period, plus other cash received by the Trust during such Quarterly Period, plus
any decrease during such Quarterly Period in any cash reserve theretofore
established by the Trustee for the payment of liabilities of the Trust, over (b)
the liabilities of the Trust paid during such Quarterly Period, plus the amount
of any cash used during such Quarterly Period by the Trustee to establish or
increase a cash reserve established for the payment of any liabilities of the
Trust. Without limiting the foregoing, the liabilities of the Trust to be paid
during the first Quarterly Period shall include liabilities incurred prior to
the Effective Time that relate to the formation of the Trust or for which the
Trust, the Trustee or the Delaware Trust is otherwise responsible for payment.
If the Quarterly Distribution Amount determined in accordance with the preceding
sentence shall for any Quarterly Period be a negative amount, then the Quarterly
Distribution Amount shall be zero, and such negative amount shall reduce the
next Quarterly Distribution Amount. Notwithstanding the foregoing, the Quarterly
Distribution Amount for any Quarterly Period shall not include any amount that
would have been required to be reported to any securities exchange on which the
Units are listed in connection with the establishment of an "ex" date in order
to be distributed to Unitholders who were such on the Quarterly Record Date for
such Quarterly Period but was not so reported unless the securities exchange
agrees to such amount being a part of that Quarterly Period's Quarterly
Distribution Amount or the Trustee receives an opinion of counsel, in a form
reasonably satisfactory to the Trustee, stating that none of the Trust, the
Trustee, the Delaware Trustee, or any owner of Units will be adversely affected
by such inclusion. An amount that pursuant to the preceding sentence is not
included in the Quarterly Distribution Amount for that Quarterly Period shall be
included in the Quarterly Distribution Amount for the next Quarterly Period
(unless it is reserved pursuant to Section 3.07 hereof).
"Quarterly Period" means, for the initial period, the period commencing
on the Effective Time and continuing through and including September 30, 1999,
and for succeeding periods, each of the three calendar month periods ending on
the last day of March, June, September and December of each year.
"Quarterly Record Date" means, for each Quarterly Period, the close of
business on the fifteenth day of the third calendar month following the end of
such Quarterly Period (or if not a Business Day, on the next Business Day
thereafter) unless the Trustee determines that another date
4
10
is required to comply with applicable law or the rules of any securities
exchange on which the Units may be listed for trading, in which event "Quarterly
Record Date" means such other date.
"Reserve Report" means a report of estimated proved reserves
attributable to the Royalty Interests and the present value thereof prepared on
the basis required by the Commission for inclusion in financial statements filed
with the Commission.
"Record Date Unitholders" shall have the meaning assigned to such term
in Section 8.02 of this Agreement.
"Remaining Royalty Interests" shall have the meaning set forth in
Section 9.03 of the Agreement.
"Royalty Interests" shall have the meaning set forth in Article I of
each of the Conveyances.
"Sales Proceeds Amount" means any cash paid to the Trust in
consideration for Royalty Interests pursuant to Sections 3.02(a), 3.02(b) or
9.03 hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Act Registration Statement" means the Registration
Statement on Form S-1 (Registration No. 333-85955) as it has been or as it may
be amended or supplemented from time to time, filed by Eastern States with the
Commission under the Securities Act to register the offering and sale of the
Units.
"Standardized Measure" means the present value of estimated future net
revenues computed by discounting estimated future net revenues at a rate of 10%
annually.
"Termination Date" means the date on which the Trust is terminated in
accordance with Section 9.02 hereof.
"Termination Present Value" means the discounted net present value of
estimated future net revenues from proved reserves attributable to the Royalty
Interests computed in accordance with the third sentence of Section 3.14 hereof.
"Transferee" means, as to any Unitholder or former Unitholder, any
Person succeeding to the interest of such Unitholder or former Unitholder in one
or more Units, whether as purchaser, donee, legatee or otherwise.
"Trust" means the trust created by and administered under the terms of
this Agreement. When used in reference to a payment, means a payment chargeable
against the Trust Estate, when used in reference to any type of actual or
asserted liability, means an actual or asserted liability as to which an Entity
serving as a trustee hereunder is liable and is entitled to indemnification
under
5
11
Section 6.02 of this Agreement, or which is otherwise satisfiable out of the
Trust Estate, when used in reference to receipts, means receipts that augment
the Trust Estate, and when used in reference to income and deductions, means
receipts and payments described above that constitute income and deductions for
accounting or tax purposes as applicable.
"Trust Estate" means the assets held under this Agreement.
"Trustee" means the Entity serving as a trustee (other than the
Delaware Trustee) under this Agreement, in its fiduciary capacity. Further, any
benefit, indemnity, release or protection granted to Trustee hereunder shall
extend to and be fully applicable and effective with regard to any Entity
serving as Trustee, including, without limitation, the Bank.
"Trustee Conveyance" means a conveyance executed by the Trustee and
Delaware Trustee pursuant to Section 3.02 of this Agreement covering that
portion of the Royalty Interests to be conveyed pursuant to said Section and in
such form as the Trustee is advised is sufficient to transfer the right, title
and interest of the Trust therein and to provide for payment to the Trustee of
all revenues attributable thereto through the effective date of such Trustee
Conveyance.
"Underlying Properties" means, collectively, the Existing Xxxxx and the
Subject Interests, as such terms are defined in Article I of each of the
Conveyances.
"Underwriting Agreement" shall have the meaning assigned to such term
in Section 2.03 of this Agreement.
"Unit" or "Units" means an undivided fractional interest in the
Beneficial Interest, determined as hereinafter provided.
"Unitholder" means the owner of one or more Units as reflected on the
ownership ledger of the Trustee maintained for such purpose.
ARTICLE II
NAME AND PURPOSE OF THE TRUST; DECLARATION OF TRUST
SECTION 2.01 Name.
The Trust shall be known as the Appalachian Natural Gas Trust, and the
Trustee may transact the Trust's affairs in that name. The Trust shall
constitute a Delaware business trust in accordance with the Business Act. The
organization and operation of the Trust shall be in accordance with this
Agreement, which shall constitute the governing instrument of the Trust within
the meaning of Section 3801(f) of the Business Act. Eastern States has caused a
Certificate of Trust, duly executed by the Trustee and the Delaware Trustee in
accordance with Section 3811 of the Business Act, to be filed on behalf of the
Trust in the office of the Secretary of State of Delaware in accordance with
6
12
Section 3810 of the Business Act. If either the Delaware Trustee or the Trustee
becomes aware that any statement contained or matter described in the
Certificate of Trust has changed making it false in any material respect, it
will notify the other trustee and the Trustee shall promptly file or cause to be
filed in the office of the Secretary of State of Delaware an amendment of same,
duly executed in accordance with Section 3811 of the Business Act, in order to
effect such change thereto as the Trustee determines in its sole discretion to
be necessary or appropriate, such filing to be in accordance with Section
3810(b) of the Business Act. Upon the termination of the Trust pursuant to
Section 9.02 hereof and the complete distribution of all of the Trust Estate,
the Trustee shall file or cause to be filed a certificate of cancellation, duly
executed in accordance with Section 3811 of the Business Act.
SECTION 2.02 Purposes.
The purposes of the Trust are, and the Trust shall have the power and
authority and is authorized:
(a) to protect and conserve, for the benefit of the Unitholders, the
Trust Estate;
(b) to receive and hold the Royalty Interests and other assets of the
Trust Estate;
(c) to convert the Royalty Interests to cash either by (1) retaining
the Royalty Interests and collecting the proceeds of production payable with
respect to the Royalty Interests until production has ceased or the Royalty
Interests have been sold or transferred or (2) selling or otherwise disposing of
all or a portion of the Royalty Interests in accordance with and subject to the
terms of this Agreement;
(d) to pay, or provide for the payment of, any liabilities incurred
in carrying out the purposes of the Trust, and thereafter to distribute the
remaining amounts of cash received by the Trust to the Unitholders pro rata
based on the number of Units owned;
(e) (i) to prepare and file with the Commission and to execute, in
the case of the Securities Act Registration Statement and the Exchange Act
Registration on behalf of the Trust (A) the Securities Act Registration
Statement, including all pre-effective and post-effective amendments thereto,
relating to registration under the Securities Act of the trust securities of the
Trust, (B) any preliminary prospectus or prospectus or supplement thereto
relating to the trust securities of the Trust required to be filed pursuant to
the Securities Act, and (C) the Exchange Act Registration Statement, including
all pre-effective and post-effective amendments thereto, relating to the
registration of the trust securities of the Trust under the Exchange Act; (ii)
to file to list the trust securities of the Trust with the NYSE, or other
exchange, or the National Association of Securities Dealers (the "NASD") and
execute on behalf of the Trust a listing application and all other applications,
statements, certificates, agreements and other instruments as shall be necessary
or desirable to cause the trust securities to be listed on the NYSE or such
other exchange, or the NASD's Nasdaq National Market; (iii) to file and execute
on behalf of the Trust, such applications,
7
13
reports, surety bonds, irrevocable consents, appointments of attorney for
service of process and other papers and documents that shall be necessary or
desirable to register the trust securities of the Trust under the securities or
"blue sky" laws of such jurisdictions as Eastern States, on behalf of the Trust
may deem necessary or desirable; (iv) to execute and deliver letters or
documents to, or instruments for filing with, a depository relating to the trust
securities of the Trust; (v) to execute, deliver and perform on behalf of the
Trust, one or more Conveyances; and to execute, deliver and perform on behalf of
the Trust the Underwriting Agreement;
(f) to enter into and perform its obligations under the
Conveyances, the Underwriting Agreement and such other agreements that the Trust
is a party to from time to time;
(g) subject to Section 3.03 of this Agreement, to engage in
such other activities as are necessary or convenient for the attainment of any
of the foregoing or are incident thereto and which may be engaged in or carried
on by a business trust under the Business Act.
SECTION 2.03 Transfer of Trust Property to the Trust; Closing Matters.
At or before (and subject to the occurrence of) the Closing, Eastern
States shall grant, bargain, sell, convey and assign the Royalty Interests to
the Trust for the uses and purposes provided herein, pursuant to the Conveyances
in consideration for 10,500,000 Units to be issued by the Trust to Eastern
States, which Units shall collectively represent the entire Beneficial Interest
in accordance with Section 4.01 of this Agreement. The Units to be issued by the
Trust to Eastern States in accordance with the preceding sentence shall be
evidenced by one or more Certificates (which may be temporary Certificates)
issued pursuant to Section 4.03 of this Agreement in such denominations and
otherwise in accordance with written instructions furnished to the Trustee. Upon
receipt of written transfer instructions from Eastern States, the Trustee shall
prepare Certificates (which may be temporary Certificates) in proper form duly
executed, countersigned and authenticated in accordance with Section 4.03 of
this Agreement in such names and in such denominations as Eastern States may
request in writing not less than two full Business Days before the Closing. For
the purpose of expediting the checking and packaging of the Certificates so
prepared by the Trustee pursuant to the preceding sentence, the Trustee shall
make such Certificates available for inspection by the representatives of the
several underwriters named in the Securities Act Registration Statement. The
Trustee shall deliver such Certificates to such location and at such time as is
stated in the written transfer instructions from Eastern States and shall
release such Certificates (a) upon the receipt from Eastern States of one or
more Certificates, duly endorsed for transfer, that evidence a number of Units
equal to or not less than the number of Units evidenced by the Certificates to
be so released and (b) in accordance with the instructions of Eastern States. At
the Closing, the Trustee and the Delaware Trustee shall receive the following
documents dated as of the date of the Closing: (i) opinions of Xxxxxxx & Xxxxx
L.L.P. and Xxxxxxxx, Xxxxxx & Finger, PA addressed to the Trustee and the
Delaware Trustee substantially in the forms of the respective opinions to be
delivered by such counsel at the Closing pursuant to the underwriting agreement
referred to in the Securities Act Registration Statement (the "Underwriting
Agreement"), (ii) opinions of Xxxxxxx & Xxxxxxx, LLP and Vorys, Xxxxx, Xxxxxxx
and Xxxxx L.L.P. addressed to the Trustee and the Delaware Trustee
8
14
substantially in the forms of the respective opinions to be delivered by such
counsel at the Closing pursuant to the Underwriting Agreement, (iii) a
certificate of Eastern States signed by its President or a Senior Vice President
certifying that the representations and warranties of Eastern States contained
in the Underwriting Agreement are true and correct as of the date of the Closing
and (iv) such other documents or certificates as the Trustee or the Delaware
Trustee may reasonably request; provided, that the opinions referred to in
clause (ii) and the representations and warranties referred to in clause (iii)
are not substantially different in effect, with respect to the interests of the
Trustee and the Delaware Trustee, from the opinions described and the
representations and warranties set forth in the form of Underwriting Agreement
filed as Exhibit 1.1 to Amendment No. 1 to the Securities Act Registration
Statement.
SECTION 2.04 Nature of the Trust.
Each of the Trustee and the Delaware Trustee declares that it shall
hold the Trust Estate in trust for the benefit of the Unitholders, upon the
terms and conditions set forth in this Agreement. It is the intention of Eastern
States to create a grantor trust for federal income tax purposes of which the
Unitholders are treated, for federal income tax purposes, as the owners of trust
income and corpus. As set forth above and amplified herein, the Trust is
intended to be a passive entity limited to the receipt of revenues attributable
to the Royalty Interests and the distribution of such revenues, after payment of
or provision for Trust expenses and liabilities, to the Unitholders. It is not
the intention of the parties hereto to create, and nothing in this Agreement
shall be construed as creating, for tax purposes, a partnership, joint venture,
joint stock company or similar business association, between or among
Unitholders, present or future, or between or among Unitholders, or any of them,
the Trustee, the Delaware Trustee or Eastern States.
SECTION 2.05 Principal Office and Delaware Trustee.
Unless and until changed by the Trustee, the address of the principal
office of the Trust is 000 Xxxxxxxxxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxx 00000.
Unless and until changed by the Delaware Trustee, the principal place of
business of the Delaware Trustee is Three Xxxxxxxxx Center, 000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000. The Trust may maintain offices at such other
place or places within or without the State of Delaware as the Trustee deems
advisable.
ARTICLE III
ADMINISTRATION OF THE TRUST AND POWERS OF THE
TRUSTEE AND THE DELAWARE TRUSTEE
SECTION 3.01 General Authority.
(a) The Trustee accepts the trust created hereby and agrees to
perform its duties with respect to such trust upon the terms of this Agreement.
Subject to the limitations set forth in this Agreement, the Trustee, acting
alone without the approval or consent of or notice to the
9
15
Delaware Trustee or any Unitholder, is authorized to take such action as in its
judgment is necessary, desirable or advisable to best achieve the purposes of
the Trust, including the authority to enter into the Conveyances, to agree to
amendments, ratifications, consents, waivers or settlements of the terms of any
of the Conveyances or to settle disputes with respect thereto, so long as (a)
such amendments, ratifications, consents, waivers or settlements do not alter
the nature of the Royalty Interests as a right to receive a share of the net
proceeds from production from the Underlying Properties in accordance with the
Conveyances which, with respect to the Trust, are free of any operating rights,
expenses or obligations and (b) such amendments, ratifications, consents,
waivers or settlements do not result in treatment of the Trust as an association
taxable as a corporation for federal income tax purposes. The Trustee shall not
dispose of any part of the Trust Estate except as provided in Sections 3.02,
3.07, 5.02 and 9.03 of this Agreement. Except as provided in this Section 3.01,
the Trustee shall not agree to any amendment or waiver of any provision of, give
any consent or release with respect to, or agree to the termination of the
Conveyances without the requisite consent of Unitholders, pursuant to Article
VIII of this Agreement.
(b) The Delaware Trustee accepts the trust created hereby and
agrees to perform its duties hereunder with respect to the trust upon the terms
of this Agreement. The Delaware Trustee is authorized to take only such actions,
and shall be required to perform only such duties and obligations, with respect
to the Trust as are specifically set forth in this Agreement, and no implied
duties or obligations shall be read into this Agreement against the Delaware
Trustee. The Delaware Trustee shall not otherwise manage or take part in the
business or affairs of the Trust in any manner. Notwithstanding any other
provision of this Agreement, unless specifically authorized in writing by the
Trustee and consented to by the Delaware Trustee, the Delaware Trustee shall not
participate in any decisions or possess any authority with respect to the
administration of the Trust, the investment of the Trust's property or the
payment of distributions of income or principal to the Unitholders. The Delaware
Trustee shall have the power and authority to and, as directed by the Trustee or
counsel to the Trust, shall execute, deliver, acknowledge and file all necessary
documents and to maintain all necessary records of the Trust as required by the
Business Act, and the Delaware Trustee shall provide prompt written notice to
the Trustee of its performance of any of the foregoing acts.
SECTION 3.02 Limited Power of Disposition.
(a) The Trustee may sell, at any time and from time to time,
(i) Royalty Interests of which the aggregate Standardized Measure as of the end
of the most recently completed calendar year does not exceed $30 million and
holders of Units representing a majority of Units present or represented at a
meeting held in accordance with Article VIII approve such sale and (ii) Royalty
Interests of which the aggregate Standardized Measure exceeds $30 million and
holders of Units representing at least 66 2/3% of the outstanding Units present
or represented at a meeting held in accordance with Article VIII approve such
sale. This Section 3.02(a) shall not be construed to require approval of the
Unitholders for any sale or other disposition of all or any part of the Royalty
Interests pursuant to Sections 3.02(b), 3.05, 3.09. or 9.03. The Trustee is
authorized to retain any of the Royalty Interests in the form in which such
property was transferred to the Trustee, without regard to any requirement to
diversify investments or other requirements.
10
16
(b) Eastern States may notify the Trustee, at any time and
from time to time, that it desires to sell for cash any of the Underlying
Properties to any Person not an Affiliate of Eastern States free of and
unburdened by the Royalty Interests if the net cash sales price payable to the
Trust for the Royalty Interests to be so sold pursuant to this Section 3.02(b)
does not exceed $3 million in any calendar year or $20 million on an aggregate
basis for the life of the Trust. Upon receipt of such notice the Trustee shall
be required to join in such sale and execute and deliver a partial release,
assignment or such other instrument as Eastern States may reasonably request to
evidence that such Underlying Properties are being sold free and unburdened by
the Royalty Interests. The net cash proceeds payable to the Trust from any sale
pursuant to this Section 3.02(b) shall be allocated to the Trust based on such
methodology as Eastern States determines to be fair and reasonable under the
circumstances taking into account, among other factors, the Standardized Measure
attributable to the Royalty Interests so sold in comparison to the aggregate
Standardized Measure of the Royalty Interests and the Underlying Properties so
sold.
SECTION 3.03 No Power to Engage in Business or Make Investments.
Neither the Trustee nor the Delaware Trustee shall cause the Trust to
acquire any asset other than the Royalty Interests and proceeds therefrom and
other amounts paid to the Trust as set forth herein, or engage in any business
or investment activity of any kind whatsoever, except for the activities
permitted herein. Neither the Trustee nor the Delaware Trustee shall have any
responsibility or authority relating to the operations of the Underlying
Properties or the marketing of any production therefrom. Neither the Trustee nor
the Delaware Trustee shall accept contributions to the Trust other than the
Royalty Interests and the initial cash deposit.
SECTION 3.04 Interest on Cash on Hand.
Cash being held by the Trustee as a reserve for the distribution of a
Quarterly Distribution Amount or for the payment of any liabilities of the
Trust, other than current routine administrative costs shall be placed by the
Trustee with one or more banks or financial institutions (which, to the extent
to which authorized pursuant to the Business Act and other applicable law, may
be or may include any bank serving as the Trustee or the Delaware Trustee) and
invested in (i) obligations issued by (or unconditionally guaranteed by) the
United States of America or any agency or instrumentality thereof (provided such
agency or instrumentality obligations are guaranteed by the full faith and
credit of the United States of America), (ii) repurchase agreements secured by
obligations qualifying under (i) above, (iii) money market mutual funds
(including One Group U.S. Treasury Securities Money Market Fund and other such
funds of the Trustee and its affiliates) registered under the Investment Company
Act of 1940, as amended, that have been rated AAAmg or AAAm by S&P and Aaa by
Xxxxx'x; provided that the portfolio of such money market mutual fund is limited
to obligations described in (i) above and to agreements to repurchase such
obligations, or (iv) a certificate of deposit of any bank having capital,
surplus and undivided profits in excess of $100,000,000 which, in the case of
(ii), (iii) and (iv) above, matures prior to the date on which such Quarterly
Distribution Amount is to be distributed or any such liability is to be paid.
Any government obligation, repurchase agreement or certificate of deposit held
by the Trustee shall
11
17
be held until maturity. The interest rate on reserves placed with any bank
serving as the Trustee or the Delaware Trustee shall be the interest rate that
such bank pays in the normal course of business on amounts placed with it,
taking into account the amount involved, the period held and other relevant
factors.
SECTION 3.05 Power to Settle Claims.
Subject to the limitations specified in Article XI, the Trustee is
authorized to prosecute or defend, and to settle by arbitration or otherwise,
any claim of or against the Trustee, the Trust or the Trust Estate, to waive or
release rights of any kind and to pay or satisfy any debt, tax or claim upon any
evidence by it deemed sufficient, without the joinder or consent of any
Unitholder. Such authority shall include, but not be limited to, the authority
to dispose of or relinquish title to any of the Royalty Interests that are the
subject of such a dispute upon receipt of such evidence. The Trustee agrees to
respond definitively to, and within a commercially reasonable time period
following its receipt of, any written request by Eastern States relating to any
such claim and complying with the last sentence of this Section 3.05, and the
failure of the Trustee so to respond definitively and timely shall conclusively
estop the Trustee from thereafter claiming a right that is inconsistent with the
stated intent as set forth in the notice and materially detrimental to Eastern
States or its Affiliates with respect to such requested matter. Any request made
by Eastern States intended to be governed by this Section 3.05 shall
specifically reference this Section.
SECTION 3.06 Power to Contract for Services; Transfer Agents and Registrar.
In the administration of the Trust, the Trustee is empowered to employ
oil and natural gas consultants, independent reservoir engineers, accountants
(who may be the same engineering or accounting firm who are engaged as outside
engineers or auditors for Eastern States, as the case may be), attorneys (who
may be counsel to Eastern States unless Eastern States otherwise notifies the
Trustee in writing) and other professional and expert persons, to employ or
contract for clerical and other administrative assistance (including assistance
from Eastern States and any of its Affiliates), to delegate to agents and
employees any matter, whether ministerial or discretionary, and to act through
such agents and employees, and to make payments of all fees for services or
expenses in any manner thus incurred out of the Trust Estate. Without limiting
the generality of the foregoing, the Trustee is specifically empowered to engage
one or more securities brokers, investment banking firms, or agents or other
experts experienced in the sale of oil and natural gas properties to assist in
the sale of the Royalty Interests pursuant to Sections 3.02(a) and 9.03 hereof
and, from time to time in its discretion, to appoint as a transfer agent and/or
registrar for the Units any Entity qualified to so serve as transfer agent
and/or registrar, delegating to such Entity the rights, powers and duties
incident thereto, whether ministerial or discretionary, and to remove such
appointee and appoint another or itself to perform such functions; provided that
in so appointing, delegating and removing, the Trustee shall be guided by the
goals of obtaining proper performance of such functions and reasonably
minimizing the costs incident thereto. The Trustee shall, on behalf of the
Trust, retain [EquiServe] as the initial transfer agent and registrar for the
Units.
12
18
In addition, the Trustee is specifically empowered to engage one or
more persons to furnish to the Trust accounting, bookkeeping and other
administrative services and reports (collectively, "Administrative Services")
necessary (a) to determine the Net Proceeds and any other amounts payable to the
Trust pursuant to the Conveyances, (b) to provide to the Trust information
required for the Trust to provide to the Unitholders financial statements and
other information with respect to Eastern States' interests in the Underlying
Properties in the manner described in the prospectus constituting a part of the
Securities Act Registration Statement under the caption "Available Information,"
and (c) to provide all information relating to the Royalty Interests and the
Underlying Properties as shall be necessary (i) to permit the Trustee to comply,
with respect to the Trust, with the reporting obligations of the Trust pursuant
to the Exchange Act (including, without limitation, such reporting obligations
with respect to required financial statements and supplementary financial
information), the requirements of any securities exchange or quotation system on
which the Units are listed or admitted for trading and the Trust Agreement, (ii)
to sell the Royalty Interests in accordance with the Trust Agreement and (iii)
for any other reasonable purpose of the Trust; provided, however, that
Administrative Services shall not include (A) furnishing information other than
with respect to the Royalty Interests or the Underlying Properties, (B)
preparing any filings on behalf of the Trust, (C) performing any services by or
at the direction of the Trustees on behalf of the Trust pursuant to the Trust
Agreement other than as contemplated herein or (D) the furnishing of any
information, data, documents or materials precluded by Section 3.14 and the
penultimate sentence of Section 5.05 of the Trust Agreement. The Trustee
initially engages Eastern States to provide such Administrative Services,
provided that none of Eastern States, its officers, directors, agents, employees
and Affiliates shall be liable to the Trust, the Trustee or Unitholders for
claims, demands, damages, losses, liabilities, costs or expenses (including,
without limitation, reasonable attorneys' fees and other costs and expenses
incident to any suit, proceeding or investigation of any claim) arising out of
the rendering of the Administrative Services by Eastern States hereunder except
that Eastern States shall be liable for gross negligence or willful misconduct
in the rendering of the Administrative Services.
SECTION 3.07 Payment of Liabilities of Trust.
Except as otherwise provided in this Agreement, the Trustee shall, to
the extent that funds of the Trust are available therefor (which shall not
include funds previously set aside for payment of a Quarterly Distribution
Amount), make payment or reimbursement of all liabilities of the Trust,
including, but without limiting the generality of the foregoing, all expenses,
taxes, liabilities incurred of all kinds, compensation to it for its services
hereunder, as provided for in Article VII, and compensation to such parties as
may be employed as provided for in Section 3.06 hereof. With respect to any
liability that is contingent or uncertain in amount or that otherwise is not
currently due and payable, the Trustee may, but is not obligated to, establish a
cash reserve for the payment of such liability. The Trustee shall not pay any
liability of the Trust with funds set aside pursuant to Section 5.02 of this
Agreement for the payment of a Quarterly Distribution Amount. If at any time the
cash on hand and to be received by the Trustee and available to pay liabilities
is not, or will not be, in the judgment of the Trustee, sufficient to pay
liabilities of the Trust as they become due, the Trustee is authorized to borrow
the funds required to pay such liabilities. In the event of such a borrowing, no
13
19
further distributions shall be made to Unitholders (except in respect of a
previously determined Quarterly Distribution Amount) until the indebtedness
created by such borrowings has been paid in full. Such funds may be borrowed
from any Person, including, without limitation, the Bank while serving as
Trustee or any other Entity serving as a fiduciary hereunder, on a secured or
unsecured basis, provided that neither the Bank nor any other Entity shall be
required to make any such loan. To secure payment of such indebtedness
(including any indebtedness to the Bank or any other Entity serving as a
fiduciary hereunder), the Trustee is authorized to (i) mortgage, pledge, grant
security interests in or otherwise encumber the Trust Estate, or any portion
thereof, including the Royalty Interests, (ii) carve out and convey production
payments from the Royalty Interests, (iii) include any and all terms, powers,
remedies, covenants and provisions deemed necessary or advisable in the
Trustee's discretion, including, without limitation, confession of judgment and
the power of sale with or without judicial proceedings and (iv) provide for the
exercise of those and other remedies available to a secured lender in the event
of a default on such loan. If such funds are loaned to the Trust by the Bank or
any other Entity while the Bank or such other Entity is serving as a fiduciary
hereunder, the terms of such indebtedness and security interest shall be similar
to the terms which the Bank or such other Entity would grant to a similarly
situated commercial customer with whom it did not have, directly or indirectly,
a fiduciary relationship, and the Bank or such other Entity shall be entitled to
enforce its rights with respect to any such indebtedness and security interest
as if it were not, directly or indirectly, and had never been, directly or
indirectly, Trustee or a fiduciary hereunder.
SECTION 3.08 Income and Principal.
The Trustee shall not be required to keep separate accounts or records
for income and principal or maintain any reserve for depletion of the Royalty
Interests. However, if the Trustee does keep such separate accounts or records,
then the Trustee is authorized to treat all or any part of the receipts from the
Royalty Interests as income or principal, without having to maintain any reserve
therefor, and in general to determine all questions as between income and
principal and to credit or charge to income or principal or to apportion between
them any receipt or gain and any charge, disbursement or loss as is deemed
advisable under the circumstances of each case.
SECTION 3.09 Term of Contracts.
In exercising the rights and powers granted hereunder, the Trustee is
authorized to make the term of any transaction or contract or other instrument
extend beyond the term of the Trust.
SECTION 3.10 Transactions With Entity Serving as the Trustee or the Delaware
Trustee.
To the extent such conduct may be authorized under applicable law and
except as otherwise provided herein, each of the Trustee and the Delaware
Trustee is authorized in exercising its powers under this Agreement to make
contracts and have dealings with itself, directly and indirectly, in any other
fiduciary or individual capacity.
14
20
SECTION 3.11 No Security Required.
No Entity serving as a trustee hereunder shall be required to furnish
any bond or security of any kind.
SECTION 3.12 Divestiture of Units.
If at any time (i) the Trust, the Trustee or the Delaware Trustee is
named a party in any judicial or administrative proceeding which seeks the
cancellation or forfeiture of any property in which the Trust has an interest or
asserting the invalidity of or otherwise challenging the Royalty Interests or
any portion thereof or (ii) the Trustee is notified by Eastern States or an
Affiliate of Eastern States in writing of any such proceeding to which Eastern
States or such Affiliate is made a party relating to the Underlying Properties,
in either case because of the nationality, citizenship or any other status, of
any one or more Unitholders, the following procedures shall be applicable:
(a) The Trustee shall promptly give written notice ("Notice")
to each Unitholder ("Ineligible Holder") whose nationality, citizenship or other
status is an issue in the proceeding as to the existence of such controversy.
The Notice shall contain a reasonable summary of such controversy, shall include
and shall constitute a demand to each Ineligible Holder that he dispose of his
Units to a Person which would not be an Ineligible Holder within 30 days after
the date of the Notice and shall advise such Ineligible Holder of the
consequences set forth in paragraphs (b) and (c) of this Section 3.12 if such
Ineligible Holder fails to dispose of his Units.
(b) If any Ineligible Holder fails to dispose of his Units
prior to the 90th day after the expiration of the 30-day period specified in the
Notice, the Trustee shall cancel all outstanding Certificates issued in the name
of such Ineligible Holder, effect a Confirmation reflecting the transfer of
Units evidenced by such cancelled Certificates to the Trust and issue a
Certificate in the name of the Trust evidencing such Units. Such Units shall be
held as treasury interests by the Trust and shall be deemed to be redeemed or
cancelled. Upon such issuance, the Trustee shall use Best Efforts to promptly
sell, to the extent permitted by law, such Units on a securities exchange or
other securities market where such Units are listed or otherwise traded. If the
Units are not at such time actively traded on a securities exchange or other
securities market, the Trustee shall use Best Efforts to effect a private sale
in any manner permitted by law. The Ineligible Holder shall be given notice of
any such cancellation and subsequent transfer at his address as shown on the
records of the Trustee in accordance with Section 11.08 hereof accompanied by a
request that such Ineligible Holder surrender to the Trustee the cancelled
Certificates. Upon receipt by the Trustee of the cancelled Certificates, the
Trustee shall pay the proceeds of any such sale (net of sales expenses) to the
Ineligible Holder. If the cancelled Certificates are not surrendered, the tender
is refused by the Ineligible Holder or if the Ineligible Holder cannot be
located after reasonable efforts, the above cash purchase price shall be held by
the Trustee in a non-interest bearing escrow account (which account shall not
constitute a part of the Trust Estate) for the benefit of such Ineligible
Holder, until proper claim for same has been made by such Ineligible Holder,
subject to applicable laws concerning unclaimed property.
15
21
Any Certificate previously evidencing Units transferred to the Trustee pursuant
to this Section 3.12 shall cease to represent any Units.
(c) If any Ineligible Holder fails to dispose of his Units
within 30 days after the date of the Notice, cash distributions in respect of
Units for Quarterly Record Dates following the expiration of such 30-day period
shall be suspended to such Ineligible Holder and paid into a non-interest
bearing escrow account (which account shall not constitute a part of the Trust
Estate) maintained by the Trustee in respect of such Units for so long as the
Ineligible Holder continues to own such Units. Upon the disposition of such
Units by the Ineligible Holder to a party who is not an Ineligible Holder or
upon cancellation of the Certificates evidencing such Units pursuant to
paragraph (b) above, all cash distributions then held in escrow in respect of
such transferred Units shall be distributed to such Ineligible Holder.
SECTION 3.13 Filing of Registration Statements, Listing of Units.
(a) The Trustee shall, upon the request of Eastern States or
its successors in interest, on behalf of the Trust, cooperate with Eastern
States and otherwise use Best Efforts to cause:
(i) one or more Securities Act Registration Statements to be
prepared, signed, filed and declared effective by the Commission;
(ii) the Exchange Act Registration Statement to be prepared,
signed, filed and become effective;
(iii) the Units to be qualified or exempted from
qualification under the securities or Blue Sky laws of the
several states; and
(iv) the Units to be listed for trading on the NYSE or
another national securities exchange, as Eastern States shall
select, or, if listing on a national securities exchange is not
feasible or is undesirable, to cause the Units to be admitted for
quotation on the National Association of Securities Dealers
Automated Quotation System National Market System (the "NASDAQ").
(b) Eastern States shall be obligated and entitled, at its own
expense except as otherwise herein provided, to take or cause to be taken all
steps customary or appropriate to the accomplishment of the objectives set forth
in this Section 3.13 including, without limitation, engaging counsel for itself
and approving special counsel for the Trust, engaging accountants for the Trust,
contracting for all printing and engraving services, making all filings and
applications necessary to the foregoing and paying all filing and application
fees associated therewith. The Trustee shall execute, by and on behalf of the
Trust, any documents incidental or related to the foregoing objectives as
reasonably requested by Eastern States. Notwithstanding anything in this Section
3.13 to the contrary, unless required by the Commission, the Trustee shall not
be required
16
22
to sign any Securities Act Registration Statement or Exchange Act Registration
Statement in connection with the initial public offering or any subsequent
offering of the Units. If the Trustee does not sign any Securities Act
Registration Statement or Exchange Act Registration Statement on behalf of the
Trust in connection with the initial public offering or any subsequent offering
of the Units by Eastern States, then Eastern States may sign on behalf of the
Trust.
(c) The reasonable fees, charges, expenses, disbursements and
other costs incurred by the Trustee or Delaware Trustee in connection with the
discharge of its duties pursuant to this Agreement including, without
limitation, trustee fees, engineering, audit and legal fees, printing and
mailing costs and amounts reimbursed or paid to Eastern States pursuant to
Section 3.06 hereof, shall be paid out of the Trust Estate as an administrative
expense of the Trust, provided that the organizational expenses of the Trust
shall be paid by Eastern States, except that the cost of legal counsel for the
Trustee, the Delaware Trustee, and the Trust (including legal fees incurred by
the Trustee or the Delaware Trustee in connection with the formation of the
Trust and issuance of Units) shall be paid out of the Trust Estate.
(d) After the registration of the Units pursuant to the
Exchange Act and/or the listing of the Units on the NYSE or another national
securities exchange or the quotation of the Units on the NASDAQ, the Trustee, on
behalf of the Trust, shall cause the Trust to comply with all of the rules,
orders and regulations of the Commission, such exchange or the National
Association of Securities Dealers, Inc., related to such registration, listing
or quotation, as the case may be, and take all such other reasonable actions
necessary for the Units to remain so registered, listed or quoted until the
Trust is terminated.
(e) The Trustee shall be empowered to, in connection with the
initial public offering of the Units or such other public offering of Units,
upon the request of Eastern States, in the name and on behalf of the Trust,
enter into any underwriting agreement for the purpose of causing the Trust to
provide certain warranties and agreement, including, without limitation,
providing, jointly and severally with Eastern States, indemnification in favor
of the underwriters and their control persons for material misstatements and
omissions made in connection with the public offering (and related contribution
agreements), and in connection therewith the Trustee shall upon the request of
Eastern States, provide certificates and other documents (provided that in no
event shall the Trustee be required to sign any registration statement under the
Securities Act or Exchange Act unless required to do so by the Commission) and
engage legal counsel to provide opinions of counsel reasonably requested by the
underwriters under such agreements; provided that the warranties and agreements
or obligations of the Trust under this paragraph (e) shall be limited solely to
the assets of the Trust and shall not result in the incurrence of any liability
by the Trustee or any Unitholder. In the event the Trustee does not sign such
underwriting agreement, Eastern States may sign on behalf of the Trust.
17
23
SECTION 3.14 Reserve Report.
If a Reserve Report for the Royalty Interests is not provided by
Eastern States pursuant to Section 4.08 of the Conveyances, the Trustee shall
cause a Reserve Report for the Royalty Interests to be prepared by a firm of
independent petroleum engineers selected by the Trustee as of December 31 of
each year, in accordance with criteria established by the Commission showing
estimated proved oil and natural gas reserves attributable to the Royalty
Interests as of December 31 of such year and other reserve information required
in order for the Trustee to furnish the information required in Sections 5.03
and 5.04 of this Agreement. Such Reserve Report shall also show estimated future
net revenues and the net present value (discounted at 10 percent or such other
rate required by the Commission) of the estimated future net revenues
(calculated in accordance with criteria established by the Commission) of proved
reserves attributable to the Royalty Interests. The costs of such Reserve
Reports, whether provided by Eastern States or obtained by the Trustee, shall
constitute an administrative expense of the Trust payable out of the Trust
Estate pursuant to Section 3.07. Eastern States shall assist the Trustee in the
preparation of the Reserve Reports by furnishing all current and existing
reserve, production and geophysical data in its possession relating to the
Royalty Interests reasonably requested by or on behalf of the independent
petroleum engineers selected by the Trustee as necessary to prepare such Reserve
Reports; provided, that Eastern States shall not be required to disclose or
produce any information, documents or other materials which (a) were generated
for analysis or discussion purposes or contain interpretative data or (b) are
subject to the attorney-client or attorney-work product privileges, or any other
privileges to which Eastern States may be entitled pursuant to applicable law.
ARTICLE IV
TRUST UNITS AND BENEFICIAL INTEREST IN CERTIFICATES
SECTION 4.01 Creation and Distribution.
Ownership of the entire Beneficial Interest shall be divided into
10,500,000 Units. Except as otherwise provided in Section 3.12 hereof, the
ownership of the Units shall be evidenced by Certificates in the form attached
as Exhibit A hereto and evidenced by entry of a notation in an ownership ledger
maintained for such purpose by the Trustee. The Certificates issued by the
Trustee from time to time after the Closing may contain such changes of form,
but not substance, from the Certificates issued by the Trustee at Closing as the
Trustee, from time to time, deems necessary or desirable. Upon issuance in
accordance with this Agreement, the Units shall be validly issued, fully paid
and nonassessable. No Unit shall be entitled to preemptive or other similar
rights. The Unitholders shall be bound by the terms of the Agreement.
SECTION 4.02 Rights of Unitholders; Limitation on Personal Liability of
Unitholders.
Each Unit shall represent a pro rata undivided ownership of the
Beneficial Interest and shall entitle its holder to participate pro rata in the
rights and benefits of Unitholders under this
18
24
Agreement. A Unitholder (whether by assignment or otherwise) shall take and
hold each Unit subject to all the terms and provisions of this Agreement and
the Conveyances, which shall be binding upon and inure to the benefit of the
successors, assigns, legatees, heirs and personal representatives of such
Unitholder. By an assignment or transfer of one or more Units, the assignor
thereby shall, with respect to such assigned or transferred Unit or Units, part
with, except as provided in Section 4.04 of this Agreement in the case of a
transfer after a Quarterly Record Date and prior to the corresponding payment
date, (i) all of his right, title and interest in and to such Unit or Units,
and (ii) all interests, rights and benefits of a Unitholder under the Trust and
this Agreement that are attributable to such Unit or Units as against all other
Unitholders, the Trust and the Trustee, including, without limiting the
generality of the foregoing, any and all rights to any Quarterly Distribution
Amounts, or any portion thereof, for any Quarterly Period or Quarterly Periods
subsequent to the Quarterly Period which relates to the last Quarterly Record
Date on which the assignor owned such Units. The Trust Units and the rights,
benefits and interests evidenced thereby are and, for all purposes (except for
tax purposes), shall be construed to be in all respects intangible personal
property, and the Trust Units shall be bequeathed, assigned, disposed of and
distributed as intangible personal property. No Unitholder as such shall have
any title, legal or equitable, in or to any real property interest or tangible
personal property interest that may be considered a part of the Trust Estate,
including, without limiting the foregoing, the Royalty Interests or any part
thereof, or in or to any asset of the Trust Estate to the extent that an
interest in such asset would cause the interest of a Unitholder to be treated
as other than an intangible personal property interest, but the sole interest
of each Unitholder shall be his ownership in the Beneficial Interest and the
obligation of the Trustee to hold, manage and dispose of the Trust Estate and
to account for the same as provided in this Agreement. No Unitholder shall have
the right to call for or demand or secure any partition or distribution of the
Royalty Interests or any other asset of the Trust Estate or any accounting
during the continuance of the Trust or during the period of liquidation and
winding up under Section 9.03 of this Agreement. Pursuant to Section 3803(a) of
the Business Act, the Unitholders shall be entitled, to the fullest extent
permitted by law, to the same limitation on personal liability as is extended
under the Delaware General Corporation Law to stockholders of private
corporations for profit.
SECTION 4.03 Execution of Certificates.
(a) Except as provided in (d) below, all Certificates shall be
signed by a duly authorized officer of the Trustee. Certificates may be signed
on behalf of the Trustee by such person who, as at the actual date of the
signing of such Certificates, is the proper officer of the Trustee, although at
the nominal date of such Certificates any such person was not such officer of
the Trustee. Any such signature may be the manual or facsimile signature (to the
extent permitted by law or the rules or regulations of any stock exchange on
which the Units are listed or admitted for trading) of such officers and may be
affixed, imprinted or otherwise reproduced on the Certificate.
(b) Pending the preparation of definitive Certificates, the
Trustee shall execute, and the transfer agent and registrar for the Units
appointed in accordance with Section 3.06 of this Agreement shall sign and
register, temporary Certificates, as directed in a certificate of an officer of
19
25
Eastern States. Temporary Certificates may contain such references to any
provisions of this Agreement as may be appropriate. Every temporary Certificate
shall be executed by the Trustee and signed and registered upon the same
conditions and in substantially the same manner, and with like effect as the
definitive Certificates.
(c) As promptly as practicable, the Trustee shall execute and
furnish definitive Certificates and thereupon temporary Certificates may be
surrendered in exchange therefor without charge to the Unitholders at the
principal office of the transfer agent at which Certificates may be presented
for transfer pursuant to Section 4.04 hereof, and the Trustee (or the transfer
agent and registrar if an Entity other than the Trustee is serving in such
capacities) shall sign and register in exchange for such temporary Certificates
a like aggregate amount of definitive Certificates. Until so exchanged, the
temporary Certificates shall be entitled to the same benefits under this
Agreement as definitive Certificates.
(d) If Eastern States or the Trustee elects to issue Units in
global form through a depositary, the transfer agent is authorized to issue and
register the Units in accordance with the procedures of the depositary. Units
issued in global form shall be validly issued upon the receipt from the transfer
agent of a certificate stating that the Units have been duly issued and
registered in accordance with the directions of Eastern States or the Trustee.
SECTION 4.04 Registration and Transfer of Units; Lost and Destroyed
Certificates.
The Units shall be transferable as against the Trustee as provided
herein, and then only on the records of the Trustee and, except as provided in
Section 3.12 hereof, upon the surrender of Certificates, if any, and compliance
with such reasonable regulations as it may prescribe. No service charge shall be
made to the transferor or Transferee for any transfer of a Unit (or recordation
or registration thereof), but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto. Until any such registration of transfer is completed the
Trustee may treat the owner of any Unit as shown on its ownership ledger as the
owner of the Unit for all purposes and shall not be charged with notice of any
claim or demand respecting such Unit or the interest represented thereby by any
other party. Any such transfer of a Unit shall, as to the Trustee, transfer to
the Transferee as of the close of business on the date of transfer all of the
undivided right, title and interest of the transferor in and to the Beneficial
Interest in respect of such Unit, provided that a transfer of a Unit after any
Quarterly Record Date shall not transfer to the Transferee the right of any
transferor to any sum payable to him as the holder of the Unit of record on such
Quarterly Record Date. As to matters affecting the title, ownership, warranty or
transfer of Trust Units, Article 8 of the Uniform Commercial Code, the Uniform
Act for Simplification of Fiduciary Transfers and other statutes and rules with
respect to the transfer of securities, each as is adopted and then in force in
the State of Delaware, shall govern and apply. The death of any Unitholder shall
not entitle the Transferee of such Unitholder to an accounting or valuation for
any purpose, but such Transferee shall succeed to all rights of the deceased
Unitholder under this Agreement upon proper proof of title, satisfactory to the
Trustee.
20
26
If any Certificate should become lost, stolen, destroyed or mutilated,
the Trustee, in its discretion and upon proof satisfactory to the Trustee,
together with a surety bond sufficient in the opinion of the Trustee to
indemnify the Trustee, the Delaware Trustee, and the Trust against all loss or
expenses in the premises, and, in the case of a mutilated Certificate, surrender
of the mutilated Certificate, may issue a new Certificate to the holder of such
lost, stolen, destroyed or mutilated Certificate as shown by the records of the
Trustee, upon payment of a reasonable charge of the Trustee and any reasonable
expenses incurred by it in connection therewith.
SECTION 4.05 Protection of Delaware Trustee and Trustee.
Each of the Delaware Trustee and the Trustee, and each Entity serving
in any such fiduciary capacity, shall be protected in acting or relying upon any
notice, certificate, assignment, opinion of counsel, report of certified public
accountant or any petroleum engineer or auditor or other expert, credential, or
any other document or instrument. Each of the Delaware Trustee and the Trustee,
and each Entity serving in any such fiduciary capacity, is specifically
authorized to rely upon the application of Article 8 of the Uniform Commercial
Code, the Uniform Act for Simplification of Fiduciary Security Transfers, and
the application of other statutes and rules with respect to the transfer of
securities, each as is adopted and then in force in the State of Delaware, as to
all matters affecting title, ownership, warranty or transfer of the Certificates
and Units, without any personal liability for such reliance, and the indemnity
granted under Section 6.02 of this Agreement shall specifically extend to any
matters arising as a result thereof. Further, and without limiting the
foregoing, each of the Delaware Trustee, the Trustee and each Entity serving in
either such capacity is specifically authorized and directed to rely upon the
validity of the Conveyance and the title held by the Trust in the Royalty
Interests pursuant thereto, and is further specifically authorized and directed
to rely upon opinions of counsel in each of the states in which the Underlying
Properties are located, without any liability in any capacity for such reliance.
SECTION 4.06 Determination of Ownership.
In the event of any disagreement between Persons claiming to be
Transferees of any Unit, the Trustee shall be entitled, in addition to other
rights which it may have under applicable law, at its option to refuse to
recognize any such claim so long as such disagreement shall continue. In so
refusing, the Trustee, and any Entity serving in such capacity, may elect to
make no disposition of the interest represented by the Unit involved, or any
part thereof, or of any sum or sums of money accrued or accruing thereunder,
and, in so doing, the Trustee shall not be or become liable to any Person for
the failure or refusal of the Trustee to comply with such conflicting claims,
and shall be entitled to continue so to refrain and refuse so to act, until:
(a) the rights of the adverse claimants have been adjudicated
by arbitration (pursuant to Article XI) or by a final nonappealable judgment of
a court assuming and having jurisdiction of the parties and the interest and
money involved, or
21
27
(b) all differences have been resolved by valid agreement
between said parties and the Trustee shall have been notified thereof in writing
signed by all of the interested parties.
ARTICLE V
ACCOUNTING AND DISTRIBUTION; REPORTS
SECTION 5.01 Fiscal Year and Accounting Method.
The Trustee shall adopt for the Trust the calendar year as its fiscal
year. The Trustee shall maintain its books in accordance with generally accepted
accounting principles or such other method as will provide appropriate financial
data responsive to the needs of the Unitholders and which shall comply with
Section 5.03 and 5.04.
SECTION 5.02 Quarterly Distributions.
At least 12 calendar days prior to each Quarterly Record Date, Eastern
States shall notify the Trustee of Eastern States estimate of the cash to be
received by the Trust attributable to the Royalty Interests during the Quarterly
Period to which such Quarterly Record Date pertains. At least 10 calendar days
(or such longer period of time as may be required by the rules of any securities
exchange on which the Units are listed or admitted to trading), prior to each
Quarterly Record Date the Trustee shall communicate to the Unitholders its
determination of the Quarterly Distribution Amount for the relevant Quarterly
Period, assuming that the amount of cash estimated by Eastern States to be
received by the Trust attributable to the Royalty Interests is actually received
by the Trust in a timely fashion and including the amount of interest estimated
by the Trustee to be earned on such cash proceeds during the period held by the
Trust. Any excess of interest actually earned on such Quarterly Distribution
Amount over the interest expected to be earned thereon shall be included in the
next computed Quarterly Distribution Amount. Any deficit in interest actually
earned compared to interest expected to be earned shall be made up from other
assets of the Trust, and the cost of so doing shall be treated as an
administrative expense of the Trust for the Quarterly Period in which the
deficit is realized. The Trustee shall request from the Transfer Agent its list
of Unitholders as of the close of business on each Quarterly Record Date for the
purpose of determining the Unitholders entitled to receive the Quarterly
Distribution Amount in respect of such Quarterly Period. On or prior to the 25th
day of the third calendar month after the end of each Quarterly Period during
the term of the Trust, the Trustee shall, subject to Section 3.12 hereof,
distribute to the Unitholders pro rata the Quarterly Distribution Amount with
respect to such Quarterly Period, together with an amount previously determined
by the Trustee pursuant to this Section 5.02 as that amount of interest expected
to be earned on each such amount from the date of receipt thereof by the Trustee
to the payment date, to Unitholders of record on the Quarterly Record Date for
such Quarterly Period.
22
28
SECTION 5.03 Income Tax Reporting.
For federal or state income tax purposes, the Trustee shall file for
the Trust such returns and statements as the Trustee is advised are required to
comply with applicable provisions of (i) the Code or any successor statute or
statutes and the regulations thereunder and (ii) any applicable state laws or
regulations thereunder, in either case to permit each Unitholder to make all
calculations reasonably necessary for tax purposes. The Trustee is authorized
and directed to treat all income, credits and deductions of the Trust for each
Quarterly Period as having been realized on the Quarterly Record Date for such
Quarterly Period unless otherwise advised by counsel or the Internal Revenue
Service.
SECTION 5.04 Reports to Unitholders and Others.
(a) Within 120 days following the end of each fiscal year or
such shorter period of time as may be required by the rules of any securities
exchange on which the Units are listed for trading, the Trustee shall mail to
each Person who was a Unitholder of record on a date to be selected by the
Trustee an annual report, containing financial statements audited by a
nationally recognized firm of independent public accountants selected by the
Trustee, and such annual reserve information regarding the Royalty Interests as
may be required by any regulatory authority having jurisdiction.
(b) Promptly after receipt of the requisite information and no
later than the 15th day of February in each calendar year, the Trustee shall
prepare and mail to Unitholders of record on each of the four preceding
Quarterly Record Dates occurring during the prior calendar year, such report or
reports as may be necessary to permit each Unitholder to make all calculations
reasonably necessary for federal and state tax purposes for the preceding
calendar year or any Quarterly Period thereof, including depletion.
(c) The Trustee is authorized to make and shall take all
reasonable actions necessary to make all Exchange Act filings on behalf of the
Trust with the Commission. It is the intention of Eastern States that the Units
be listed for trading on the NYSE, Inc. and, in this regard, Eastern States
shall advise the Trustee of any actions (consistent with the purposes of the
Trust) that the Trustee should take in connection with the effectuation of such
listing. If listing is accomplished, the Trustee shall take all reasonable
actions necessary to maintain such listing including compliance with the stock
exchange's rules and the filing of any reports required by the stock exchange.
Eastern States shall prepare and file all filings and reports required under the
Securities Act or state securities or Blue Sky laws.
(d) In addition, the Trustee is authorized to make, and the
Trustee shall take, all reasonable action to prepare and mail to the Unitholders
any reports, press releases or statements, financial or otherwise, that Eastern
States notifies the Trustee are required to be provided by the Trustee to
Unitholders by law or governmental regulation or the requirements of any
securities exchange on which the Units are listed or admitted to trading.
23
29
(e) Notwithstanding any time limit imposed by paragraph (a) or
(b) of this Section 5.04, if, due to a delay in receipt by the Trustee of
information necessary for preparation of a report or reports required by such
paragraphs, the Trustee shall be unable to prepare and mail such report or
reports within such time limit, the Trustee shall prepare and mail such report
or reports as soon thereafter as practicable.
SECTION 5.05 Information to be Supplied by Eastern States and Trustee.
Eastern States shall provide, or cause to be provided, to the Trustee
on a timely basis such information as is not known to the Trustee or is
otherwise more easily available to Eastern States than to the Trustee concerning
the Royalty Interests (including information with respect to the Underlying
Properties owned by Eastern States or any of its affiliates) and related matters
as shall be necessary to permit the Trustee to comply with respect to the Trust
with the reporting obligations of the Trust pursuant to the Exchange Act, the
requirements of any securities exchange on which the Units are listed or
admitted to trading and this Agreement and for any other reasonable purpose of
the Trust. The Trustee shall provide to Eastern States, within 15 days after the
end of each calendar quarter, a written itemized report showing each
administrative cost of the Trust paid or payable for such quarter (including,
but not limited to, each out-of-pocket expenditure, all trustee compensation and
the administrative services fee paid to Eastern States). In addition, Eastern
States shall provide to the Trustee, for use in connection with the Trust's Form
10-K annual report, a "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
ARTICLE VI
LIABILITY OF DELAWARE TRUSTEE AND TRUSTEE AND
METHOD OF SUCCESSION
SECTION 6.01 Liability of Delaware Trustee and Trustee.
(a) Notwithstanding any other provision of this Agreement,
each of the Delaware Trustee and the Trustee, in carrying out its powers and
performing its duties, may act in its discretion, at the expense of the Trust,
through agents or attorneys pursuant to agreements entered into with any such
Entity. Each Entity serving in such capacity shall be personally or individually
liable only for fraud or acts or omissions in bad faith or which constitute
gross negligence and shall not otherwise be individually or personally liable
for any act or omission of any agent or employee unless acting in bad faith or
with gross negligence in the selection and retention of such agent or employee.
No Entity serving as Trustee or Delaware Trustee shall be individually liable by
reason of any act or omission of any other Entity serving as Trustee or Delaware
Trustee.
(b) If the Trustee enters into a contract on behalf of the
Trust or Trust Estate without ensuring that any liability arising out of such
contract shall be satisfiable only out of the Trust Estate and shall not in any
event, including the exhaustion of the Trust Estate, be satisfiable out of
amounts at any time distributed to any Unitholder or out of any other assets
owned by any
24
30
Unitholder, then the Trustee vis-a-vis the Unitholders, shall be fully and
exclusively liable for such liability, but shall have the right to be
indemnified and reimbursed from the Trust Estate to the extent provided in
Section 6.02.
SECTION 6.02 Indemnification of Trustee and Delaware Trustee..
(a) Each Entity serving as the Delaware Trustee or the
Trustee, as well as each of their officers, directors, employees and agents
(including Eastern States and any of its Affiliates when acting as agents),
shall be indemnified and held harmless by, and receive reimbursement from, the
Trust Estate against and from any and all liabilities, expenses, claims, damages
or losses incurred by it, individually and as trustee, in the administration of
the Trust and the Trust Estate or any part or parts thereof, or in the doing of
any act done or performed, or in any omission occurring, on account of its being
trustee, except such liabilities, expenses, claims, damages or losses as to
which it is liable under Section 6.01 of this Agreement (it being understood
that each Entity serving as the Delaware Trustee or the Trustee shall be
indemnified and held harmless by, and receive reimbursement from, the Trust
Estate against such Entity's own negligence which does not constitute gross
negligence). Each Entity serving as the Delaware Trustee or the Trustee shall
have a first lien upon the Trust Estate to secure it for such indemnification
and reimbursement and for compensation to be paid to such Entity. Neither the
Delaware Trustee nor the Trustee nor any Entity serving in either of such
capacities, nor any agent or employee thereof shall be entitled to any
reimbursement or indemnification from any Unitholder for any liabilities,
expenses, claims, damages or losses incurred by the Delaware Trustee or the
Trustee or any such Entity, agent or employee, except as provided in the second
paragraph of Section 4.04 of this Agreement, their right of reimbursement and
indemnification, if any, being limited solely to the Trust Estate, whether or
not the Trust Estate is exhausted without full reimbursement or indemnification.
All legal or other expenses reasonably incurred by the Trustee or Delaware
Trustee in connection with the investigation or defense of any loss, claim,
damage, liability or action in which such trustee is entitled to indemnity under
this Section 6.02(a) shall be paid out of the Trust Estate. This Section 6.02(a)
is in addition to any right(s) to indemnification available under Section
3.13(f).
(b) Eastern States shall indemnify and hold harmless each of
the Delaware Trustee and the Trustee, individually and as trustee, against any
losses, claims, damages or liabilities, to which such trustee may become
subject, under or with respect to the Securities Act, the Exchange Act, any
other federal or state securities law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of, are
based upon or are connected with an untrue statement or alleged untrue statement
of a material fact contained in, or an omission or alleged omission of a
material fact from, (i) the Securities Act Registration Statement, any
preliminary prospectus, the final prospectus, or any amendment or supplement
thereto, or (ii) any other filing, report or other action taken in respect to
the Securities Act, the Exchange Act or any other federal or state securities
law, the listing of the Units on the NYSE or another national securities
exchange or the quotation of the Units on NASDAQ; provided, however, that
Eastern States shall not be liable to the Trustee or Delaware Trustee,
individually or as trustees, in any such case under the preceding clause (i) of
this Section 6.02(b) to the extent that any such loss, claim, damage or
liability arises out
25
31
of, is based upon or is connected with information furnished by the Trustee or
the Delaware Trustee expressly for use in the Securities Act Registration
Statement, any preliminary prospectus, the final prospectus or any amendment or
supplement thereto; and provided, further, however, that Eastern States shall
not be liable to the Trustee or the Delaware Trustee, individually or as
trustees, in any such case under the preceding clause (ii) of this Section
6.02(b) to the extent that any such loss, claim, damage or liability arises out
of, is based upon or is connected with information prepared or furnished by the
Trustee or the Delaware Trustee if the Trustee and the Delaware Trustee have
been adjudicated by a final nonappealable judgment of a court of competent
jurisdiction to have acted in bad faith or with gross negligence. Subject to
Section 6.02(d) hereof, Eastern States shall reimburse the Trustee and the
Delaware Trustee for any legal or other expenses reasonably incurred by such
trustee in connection with the investigation or defense of any loss, claim,
damage, liability or action in which such trustee is entitled to indemnity by
Eastern States hereunder.
(c) Eastern States shall indemnify and hold harmless each of
the Trustee and the Delaware Trustee, individually and as trustee, against any
losses, claims, damages or liabilities to which such trustee may become subject,
under or with respect to any of the Environmental Laws, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of, are
in connection with, or are based upon the Underlying Properties, except for
losses, claims, damages or liabilities arising from any acts of such trustee not
contemplated hereunder. The obligations of Eastern States hereunder may be
assigned or transferred to any Entity acquiring the Underlying Property to which
each loss, claim, damage or liability relates provided such Entity (or any
Entity guaranteeing the obligations hereunder of such Entity) unconditionally
agrees in writing, reasonably satisfactory to the Trustee, to assume Eastern
States' obligations under this Section 6.02(c). In the event Eastern States
assigns its obligations hereunder as permitted above, the provisions of Section
6.02(d) of this Agreement shall govern the indemnification obligation of the
transferee. Subject to Section 6.02(d) hereof, Eastern States shall reimburse
the Trustee and the Delaware Trustee for any legal or other expenses reasonably
incurred by such trustee in connection with the investigation or defense of any
loss, claim, damage, liability or action for which such trustee is entitled to
indemnity by Eastern States hereunder.
(d) If any action or proceeding shall be brought or asserted
against the Trustee or Delaware Trustee (each referred to as an "Indemnified
Party" and, collectively, the "Indemnified Parties") in respect of which
indemnity may be sought from Eastern States (herein referred to as the
"Indemnifying Party") pursuant to Section 6.02(b) or Section 6.02(c) hereof, of
which the Indemnified Party shall have received notice, the Indemnified Party
shall promptly notify the Indemnifying Party in writing, and the Indemnifying
Party shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of all
expenses. The Indemnified Party shall have the right to employ separate counsel
in any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of the Indemnified Party unless
(i) the Indemnifying Party has agreed to pay such fees and expenses; (ii) the
Indemnifying Party shall have failed to assume the defense of such action or
proceeding and employ counsel reasonably satisfactory to the Indemnified Party
on any such action or proceeding; or (iii) the named parties to any such action
or proceeding include both
26
32
the Indemnified Party and the Indemnifying Party, and the Indemnified Party
shall have been advised by counsel that there may be one or more legal defenses
available to such trustee that are different from or additional to those
available to the Indemnifying Party (in which case, if the Indemnified Party
notifies the Indemnifying Party in writing that it elects to employ separate
counsel at the expense of the Indemnifying Party, the Indemnifying Party shall
not have the right to assume the defense of such action or proceeding on behalf
of the Indemnified Party and the Indemnified Party may employ such counsel for
the defense of such action or proceeding as is reasonably satisfactory to the
Indemnifying Party; it being understood, however, that the Indemnifying Party
shall not, in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys for the
Indemnified Parties at any time). The Indemnifying Party shall not be liable for
any settlement of any such action or proceeding effected without the written
consent of the Indemnifying Party, but, if settled with such written consent, or
if there be a final judgment for the plaintiff in any such action or proceeding,
the Indemnifying Party agrees (to the extent stated above) to indemnify and hold
harmless the Indemnified Party from and against any loss or liability by reason
of such settlement or judgment.
(e) Any losses, claims, damages or liabilities for which any
Entity serving as the Trustee or the Delaware Trustee may be entitled to
indemnification under this Section 6.02 shall be first satisfied out of the
Trust Estate pursuant to Section 6.02(a) prior to any indemnification from
Eastern States, except for environmental liabilities arising out of or relating
to activities occurring on, or in connection with, or conditions existing on or
under, the Underlying Properties before September 1, 1999 which, pursuant to the
terms of the Conveyances, are required to be borne by Eastern States and not the
Trust; provided, Eastern States shall be required to provide such
indemnification at any time and from time to time that cash in the Trust Estate
or cash reasonably anticipated to be available is inadequate to satisfy and
discharge such claims, damages or liabilities.
(f) The obligations of the Trust and Eastern States under this
Section shall survive the resignation or removal of the Trustee or the Delaware
Trustee and, in the case of Eastern States, the termination of the Trust and
this Agreement. SECTION 6.03 Resignation of Delaware Trustee and Trustee.
SECTION 6.03 Resignation of Delaware Trustee and Trustee
Any Entity serving as the Delaware Trustee or the Trustee may resign,
as such, with or without cause, at any time by written notice to Eastern States,
to any other Entity serving as the Delaware Trustee or the Trustee, and to each
of the then Unitholders of record in accordance with Section 11.08 of this
Agreement. Such notice shall specify a date when such resignation shall take
effect, which shall be a Business Day not less than 60 days after the date such
notice is mailed; provided, however, that in no event shall any resignation of
the Trustee be effective until a successor Trustee has accepted its appointment
as Trustee pursuant to the terms hereof; and provided, further, that in no event
shall any resignation of the Delaware Trustee be effective until a successor
Delaware Trustee has accepted its appointment as Delaware Trustee pursuant to
the terms hereof.
27
33
SECTION 6.04 Removal of Delaware Trustee and Trustee.
(a) Each Entity serving as the Delaware Trustee or the Trustee
may be removed as trustee hereunder, with or without cause, at a meeting held in
accordance with the requirements of Article VIII, provided that any removal of
the Delaware Trustee shall be effective only at such time as a successor
Delaware Trustee, fulfilling the requirements of Section 3807(a) of the Business
Act, has been appointed and has accepted such appointment, and provided,
further, that any removal of the Trustee shall be effective only at such time as
a successor Trustee has been appointed and has accepted such appointment.
(b) The Trustee may be removed as trustee hereunder by Eastern
States, in its sole discretion, in the event that the Trustee fails for two
years in any three year period to prepare and mail to Unitholders of record on
each of the four preceding Quarterly Record Dates occurring during the prior
calendar year, such reports as are required by Section 5.04(b), provided that
any removal shall be effective only at such time as Easter States, in its sole
discretion, has appointed a successor Trustee and such successor Trustee has
accepted such appointment.
SECTION 6.05 Appointment of Successor Delaware Trustee or Trustee.
In the event of the resignation or removal of the Entity serving as the
Delaware Trustee or the Trustee or if any such Entity has given notice of its
intention to resign as the Delaware Trustee or the Trustee, the Unitholders
represented at a meeting held in accordance with the requirements of Article
VIII may appoint a successor trustee. Nominees for appointment may be made by
(i) the resigned, resigning or removed trustee or (ii) any Unitholder or
Unitholders owning (beneficially or of record) at least 15% of the then
outstanding Units. Any successor of the Trustee shall be a bank or trust company
having capital, surplus and undivided profits of at least $100,000,000. Any
successor to the Delaware Trustee shall be a bank or trust company having its
principal place of business in the State of Delaware and having capital,
surplus, and undivided profits of at least $20,000,000. If a vacancy in the
position of either the Trustee or the Delaware Trustee continues for 60 days
after the notice of resignation or occurrence of a vacancy, a successor may be
appointed by any State or Federal District Court having jurisdiction in New
Castle County, Delaware, upon the application of any Unitholder, Eastern States
or the Entity tendering its resignation as either the Trustee or the Delaware
Trustee filed with such court, and in the event any such application is filed,
such court may appoint a temporary Trustee or Delaware Trustee at any time after
such application is filed, which shall, pending the final appointment of a
Trustee or Delaware Trustee, have such powers and duties as the court appointing
such temporary Trustee or Delaware Trustee shall provide in its order of
appointment, consistent with the provisions of this Agreement. Any such
temporary Trustee or Delaware Trustee need not meet the minimum standards of
capital, surplus and undivided profits otherwise required of a successor Trustee
or Delaware Trustee under this Section 6.05. Nothing herein shall prevent the
same Entity from serving as both the Delaware Trustee and the Trustee if it
meets the qualifications thereof.
28
34
Immediately upon the appointment of any successor Trustee or Delaware
Trustee, any rights, titles, duties, powers and authority of the succeeded
Trustee or Delaware Trustee hereunder (except to the rights to amounts payable
under Article VII hereof accruing through the appointment of such successor
Trustee or Delaware Trustee) shall be vested in and undertaken by the successor
Trustee or Delaware Trustee, which shall be entitled to receive from its
predecessor all of the Trust Estate held by it hereunder and all records and
files of its predecessor necessary in connection therewith. Any resigning or
removed Trustee or Delaware Trustee shall account to its successor for its
administration of the Trust. All successor trustees shall be fully protected in
relying upon such accounting and no successor Trustee or Delaware Trustee shall
be obligated to examine or seek alteration of any account of any preceding
Trustee or Delaware Trustee, nor shall any successor Trustee or Delaware Trustee
be liable personally for failing to do so or for any act or omission of any
preceding Trustee or Delaware Trustee. The preceding sentence shall not prevent
any successor Trustee or Delaware Trustee or anyone else from taking any action
otherwise permissible in connection with any such account.
SECTION 6.06 Laws of Other Jurisdictions.
If, notwithstanding the other provisions of this Agreement (including,
without limitation, Section 11.06 hereof), the laws of jurisdictions other than
the State of Delaware (each being referred to below as "such jurisdiction")
apply to the administration of properties under this Agreement, the following
provisions shall apply. If it is necessary or advisable for a trustee to serve
in such jurisdiction and if the Trustee is disqualified from serving in such
jurisdiction or for any other reason fails or ceases to serve there, the
ancillary trustee in such jurisdiction shall be such Entity, which need not meet
the requirements set forth in the third sentence of Section 6.05 of this
Agreement, as shall be designated in writing by the Trustee. To the extent
permitted under the laws of such jurisdiction, the Trustee may remove the
trustee in such jurisdiction, without cause and without necessity of court
proceeding, and may or may not appoint a successor trustee in such jurisdiction
from time to time. The trustee serving in such jurisdiction shall, to the extent
not prohibited under the laws of such jurisdiction, appoint the Trustee to
handle the details of administration in such jurisdiction. The trustee in such
jurisdiction shall have all rights, powers, discretions, responsibilities and
duties as are delegated in writing by the Trustee, subject to such limitations
and directions as shall be specified by the Trustee in the instrument evidencing
such appointment. Any trustee in such jurisdiction shall be responsible to the
Trustee for all assets with respect to which such trustee is empowered to act.
To the extent the provisions of this Agreement and Delaware law cannot be made
applicable to the administration in such jurisdiction, the rights, powers,
duties and liabilities of the trustee in such jurisdiction shall be the same (or
as near the same as permitted under the laws of such jurisdiction if applicable)
as if governed by Delaware law. In all events, the administration in such
jurisdiction shall be as free and independent of court control and supervision
as permitted under the laws of such jurisdiction. The fees and expenses of any
ancillary trustee shall constitute an administrative expense of the Trust
payable from the Trust Estate. Whenever the term "Trustee" is applied in this
Agreement to the administration in such jurisdiction, it shall refer only to the
trustee then serving in such jurisdiction.
29
35
SECTION 6.07 Reliance on Experts.
The Trustee and the Delaware Trustee may, but shall not be required to,
consult with counsel (who may be counsel to Eastern States unless Eastern States
otherwise notifies the Trustee or Delaware Trustee in writing), accountants,
geologists, engineers and other parties deemed by the Trustee or the Delaware
Trustee to be qualified as experts on the matters submitted to them, and the
opinion of any such party on any matter submitted to it by the Trustee or the
Delaware Trustee shall be full and complete authorization and protection in
respect of any action taken or suffered by the Trustee or the Delaware Trustee
hereunder in good faith in reliance upon and in accordance with the opinion of
any such party. Each of the Trustee and Delaware Trustee is authorized to make
payments of all reasonable fees for services or expenses thus incurred out of
the Trust Estate.
SECTION 6.08 Failure of Action by Eastern States.
In the event that Eastern States shall fail or be unable to take any
action as required under any provision of this Agreement, the Trustee is
empowered to take such action.
SECTION 6.09 Force Majeure.
The Trustee and the Delaware Trustee shall not incur any liability to
any holder of a Unit if, by reason of any current or future law or regulation
thereunder of the federal government or any other governmental authority, or by
reason of any act of God, war or other circumstance beyond its control, the
Trustee or the Delaware Trustee is prevented or forbidden from doing or
performing any act or thing required by the terms hereof to be done or
performed; nor shall the Trustee or the Delaware Trustee incur any liability to
any holder of a Unit by reason of any nonperformance or delay caused as
aforesaid in the performance of any act or thing required by the terms hereof to
be done or performed, or by reason of any exercise of, or failure to exercise,
any discretion provided for herein.
ARTICLE VII
COMPENSATION OF THE TRUSTEE AND DELAWARE TRUSTEE
SECTION 7.01 Compensation of Trustee and Delaware Trustee.
The Bank, in its capacity as the initial Trustee, and Bank One
Delaware, in its capacity as the initial Delaware Trustee, shall be compensated
for their services in accordance with the terms of a separate agreement.
Entities serving as the Trustee and Delaware Trustee hereunder shall be
reimbursed for all actual expenditures made in connection with administration of
the Trust, including those made on account of any unusual duties in connection
with matters pertaining to the Trust. Any unusual or extraordinary services
rendered by the Entity serving as Trustee or by the Entity serving as Delaware
Trustee in connection with the administration of the Trust shall be treated as
trustee administrative services for purpose of computing the respective
administrative fee to be paid to each Entity serving as trustee hereunder.
30
36
SECTION 7.02 Source of Funds.
All compensation, reimbursements and other charges owing to any Entity
as a result of its service as trustee hereunder shall be payable by the Trust
out of the Trust Estate and such Entity shall have a first lien on the Trust
Estate for payment of such compensation, reimbursements and other charges.
SECTION 7.03 Ownership of Units by Eastern States, the Trustee and Delaware
Trustee.
Each of the Trustee and the Delaware Trustee, in its individual or
other capacity, may become the owner or pledgee of Units with the same rights it
would have if it were not a trustee hereunder. Eastern States and each of its
Affiliates may become the owner of Units with the same rights and entitled to
the same benefits as any other Unitholder.
ARTICLE VIII
MEETINGS OF UNITHOLDERS
SECTION 8.01 Purpose of Meetings.
A meeting of the Unitholders may be called at any time and from time to
time pursuant to the provisions of this Article VIII to transact any matter that
the Unitholders may be authorized to transact.
SECTION 8.02 Call and Notice of Meetings.
Any meeting of the Unitholders may be called by the Trustee or by
Unitholders owning of record not less than 15% in number of the then outstanding
Units. The Delaware Trustee may call such a meeting but only for the purpose of
appointing a successor to it upon its resignation. All such meetings shall be
held at such time and at such place in Fort Worth, Texas, as the notice of any
such meeting may designate. Except as may be otherwise required by applicable
law or by any securities exchange on which the Units are listed for trading,
written notice of every meeting of the Unitholders signed by the Trustee or the
Unitholders calling the meeting (or the Delaware Trustee if calling the
meeting), setting forth the time and place of the meeting and in general terms
the matters proposed to be acted upon at such meeting, shall be given in person,
by mail or electronic publication not more than 60 nor less than 20 days before
such meeting is to be held to all of the Unitholders of record on a record date
selected by the Trustee (the "Record Date Unitholders") which shall be not more
than 60 days before the date of such mailing. If such notice is given to any
Unitholder by mail, it shall be directed to him at his last address as shown by
the ownership ledger of the Trustee and shall be deemed duly given when so
addressed and deposited in the United States mail, postage paid. No matter other
than that stated in the notice shall be acted upon at any meeting. Only
Unitholders of record at the close of business on the record date selected by
the Trustee for such meeting shall be entitled to notice of and to exercise
rights at or in connection with the meeting.
31
37
SECTION 8.03 Method of Voting and Vote Required.
Each Record Date Unitholder shall be entitled to one vote for each Unit
owned by him, and any Record Date Unitholder may vote in person, by duly
executed written proxy, electronic publication or by written consent. At any
such meeting, the presence in person or by proxy of Record Date Unitholders
holding a majority of the Units held by all Record Date Unitholders shall
constitute a quorum, and, except as otherwise provided herein, any matter shall
be deemed to have been approved by the Record Date Unitholders (including, but
not limited to, appointment of a successor trustee) if it is approved by the
vote of Record Date Unitholders holding more than 50% of the Units represented
at the meeting, although less than a majority of all of the Units at the time
outstanding, except that the affirmative vote by Record Date Unitholders of
66 2/3% or more of all the Units then outstanding shall be required to:
(a) approve any amendment to or affecting this Agreement other
than (i) amendments prohibited by Section 10.01, (ii) amendments to Section 9.02
or 9.03 (which shall require the written consent of Eastern States and the
affirmative vote by the Unitholders of not less than 66 2/3% of all then
outstanding Units), and (iii) any amendment to or affecting this Agreement to
the extent permitted pursuant to Section 10.02 of this Agreement (which shall
not require Unitholder approval);
(b) approve or authorize the sale of Royalty Interests of which
the aggregate standardized measure exceeds $30 million in accordance with
Section 3.02(a) (excluding sales or dispositions made in accordance with
Sections 3.02(b), 3.05, 3.09 or 9.03);
(c) remove the Delaware Trustee or the Trustee; or
(d) dissolve the Trust.
SECTION 8.04 Conduct of Meetings.
The Trustee may make such reasonable regulations consistent with the
provisions hereof as it may deem advisable for any meeting of the Unitholders,
for electronic or other means of voting, for the appointment of proxies, and in
regard to the appointment and duties of inspectors of votes, the submission and
examination of proxies, Certificates and other evidence of the right to vote,
the preparation and use at the meeting of a list certified by or on behalf of
the Trustee of the Unitholders entitled to vote at the meeting and such other
matters concerning the conduct of the meeting as it shall deem advisable.
SECTION 8.05 Unitholder Proposals.
In the event a meeting of Unitholders is called for any purpose at the
request of any Unitholder or Unitholders pursuant to the provisions of this
Article VIII, the Unitholder or Unitholders requesting such meeting shall be
required to prepare and file a proxy statement with the
32
38
Commission and the NYSE regarding such meeting in satisfaction of all applicable
Commission and NYSE rules and regulations and at the expense of such requesting
Unitholder or Unitholders. The Unitholder or Unitholders requesting such meeting
shall bear the expense of distributing to Unitholders the notice of meeting and
the proxy statement related thereto. The Trustee shall cooperate in the
preparation of any such proxy statement and any related materials and shall
provide such information for inclusion therein as and to the extent reasonably
necessary at the expense of the Trust.
ARTICLE IX
DURATION, REVOCATION AND TERMINATION OF TRUST
SECTION 9.01 Revocation.
Subject to the third sentence of this Section 9.01, the Trust is and
shall be irrevocable and Eastern States, as trustor, after Closing, retains no
power to alter, amend or terminate the Trust except as set forth herein and in
Section 10.02 of this Agreement. The Trust shall be terminable only as provided
in Section 9.02 of this Agreement, and shall continue until so terminated. Prior
to the Closing, Eastern States may revoke the Trust by written notice to the
Trustee in which event the Trustee shall reconvey, the Trust Estate, less any
expenses or liabilities of the Trust, to Eastern States.
SECTION 9.02 Dissolution.
The Trust shall dissolve upon the first to occur of the following
events:
(a) the disposition by the Trust of all Royalty Interests
pursuant to this Agreement;
(b) following an affirmative vote in favor of dissolution of the
Trust by the holders of record of not less than 66 2/3% of the then outstanding
Units at a meeting duly called and held in accordance with the requirements of
Article VIII hereof;
(c) such time as (i) the annual Net Proceeds paid to the Trust in
respect of the Conveyance burdening the Underlying Properties located in West
Virginia are less than $3.5 million for each of two consecutive calendar years
after the year 2000 or (ii) the annual Net Proceeds paid to the Trust in respect
of the Conveyance burdening the Underlying Properties located in Kentucky are
less than $3.5 million for each of the two consecutive calendar years such
consecutive calendar years occur after calendar year 2000;
(d) Eastern States exercises its conditional right of repurchase
pursuant to Section 9.04 hereof; and
33
39
(e) a judicial dissolution of the Trust occurs.
SECTION 9.03 Disposition and Distribution of Assets and Properties.
(a) Notwithstanding the dissolution of the Trust pursuant to
Section 9.02 of this Agreement, the Delaware Trustee and the Trustee shall
continue to act as the trustees of the Trust Estate and as such shall exercise
the powers granted under this Agreement until their duties have been fully
performed and the Trust Estate finally distributed so that the affairs of the
Trust may be liquidated and wound up in accordance with this Agreement and
Section 3808 of the Business Act. Following the completion of winding-up of the
Trust, the Trustee shall file a Certificate of Cancellation in accordance with
Section 3810(d) of the Business Act and thereupon the Trust shall terminate.
(b) Within 5 Business Days following the Termination Date, the
Trustee shall provide Eastern States and the Delaware Trustee with written
notice of dissolution of the Trust and shall engage an investment banking firm
(the "Advisor"), on behalf of the Trust, to assist the Trustee in selling the
remaining Royalty Interests then owned by the Trust (the "Remaining Royalty
Interests"), which assistance shall include, but not be limited to (i) valuing
the Remaining Royalty Interests owned by the Trust, (ii) evaluating offers to
purchase the Remaining Royalty Interests, (iii) seeking buyers for the Remaining
Royalty Interests, and (iv) rendering the fairness opinions required by this
Section 9.03 and otherwise as may be requested by the Trustee.
(c) As promptly as practicable after the engagement by the Trust
of the Advisor, the Trustee, based on the advice and with the assistance of the
Advisor, shall use its Best Efforts to sell the Remaining Royalty Interests and
to obtain offers for the Remaining Royalty Interests. Such sale shall be
conducted in such manner and in accordance with such procedures as the Trustee
concludes, based upon the advice of the Advisor, are most likely to produce the
highest aggregate value to the Trust for the Remaining Royalty Interests.
Eastern States shall have the right, but not the obligation, to participate in
such sale as a bidder for any or all of the Remaining Royalty Interests (or any
part or parcel thereof). The Trustee's evaluation of each offer for the
Remaining Royalty Interests (or any portion thereof) shall be based on an
evaluation of such offer by the Advisor, and the Trustee shall accept the offer
or offers therefor that, based on the evaluation thereof by the Advisor,
constitute the highest offer or offers and are likely to be consummated within a
time period determined by the Advisor to be reasonable. If acceptable offers are
not received for all of the Remaining Royalty Interests, the Trustee may request
Eastern States to submit an offer for the Remaining Royalty Interests (or the
portion or portions thereof for which acceptable offers were not received) for
consideration by the Trustee. If Eastern States makes such an offer and the
Trustee accepts it, such acceptance shall be conditioned upon receipt, prior to
closing of the sale, of an opinion of the Advisor, in form satisfactory to the
Trustee, of the fairness of the offer to the Trust and Unitholders from a
financial point of view. The Trustee shall each use its Best Efforts to close
the purchase or purchases of the Remaining Royalty Interests within 30 days
after a definitive purchase agreement for same is executed with each successful
bidder (or as promptly thereafter as practicable).
34
40
(d) Any Person purchasing the Remaining Royalty Interests,
pursuant to the procedures set forth in Section 9.03(c) hereof, regardless of
the date of closing of the purchase, shall be entitled to all proceeds of
production attributable to the Remaining Royalty Interests after the Termination
Date and neither the Trust nor the Unitholders shall be entitled to any such
proceeds. Eastern States shall deposit all proceeds of production following the
Termination Date payable to the Trust pursuant to the Conveyance into a
non-interest bearing account and, upon closing of the sale of the Remaining
Royalty Interests, shall pay all deposited amounts to the buyer of the Remaining
Royalty Interests.
(e) If all Remaining Royalty Interests are not, for any reason,
sold or a definitive agreement for sale thereof entered into prior to the 150th
day following the Termination Date, Eastern States shall pay all amounts
deposited in the account established pursuant to Section 9.03(d) hereof to the
Trust and all amounts thereafter payable to the Trust pursuant to the
Conveyances shall be paid to the Trust in accordance with the provisions of the
Conveyances and such amounts shall be distributed to Unitholders in accordance
with the provisions hereof. The Trustee may accept any offer (including offers,
if any, made by Eastern States for all or any part of the Remaining Royalty
Interests as it deems to be in the best interests of the Trust and Unitholders
(provided the Remaining Royalty Interests shall not be sold in more than _____
parts) and may continue for up to one calendar year after the Termination Date
to seek a buyer or buyers of any remaining assets and properties, free and clear
of any Eastern States purchase rights, in an orderly fashion not involving a
public auction. If any assets or property constituting the Trust Estate have not
been sold, or a definitive agreement for sale thereof has not been entered into,
by the end of one calendar year following the Termination Date, the Trustee
shall cause such property to be sold at public auction to the highest cash
bidder (which may be Eastern States or any of its Affiliates). Notice of any
such sale by auction shall be mailed at least 30 days prior to such sale to each
Unitholder at his address as it appears upon the ownership ledger of the
Trustee.
(f) The Trustee shall not be required to obtain approval of the
Unitholders prior to selling any asset or property of the Trust Estate pursuant
to this Section 9.03. Information provided to any prospective buyer of the
Royalty Interests shall include the impact, if any, of capital expenditures on
future amounts payable with respect to the Royalty Interests and the effect of
termination of the Trust on payment of operating costs under the Conveyances.
Upon making final distribution to the Unitholders and termination of the Trust
in accordance with Section 3808 of the Business Act, neither the Trustee, the
Delaware Trustee, nor any Entity serving in such capacity shall be under further
liability. Eastern States, for purposes of this Section 9.03, shall include all
of Eastern States' successors in interests and assigns, and, upon written notice
to the Trustee, Eastern States' rights under this Section 9.03 shall be fully
assignable by Eastern States to any Person and an assignment upon such
references herein to Eastern States shall constitute references to such Person.
35
41
SECTION 9.04 Conditional Right of Repurchase.
(a) Notwithstanding any provision in this Agreement to the
contrary, Eastern States is hereby granted the right to repurchase all (but not
less than all) outstanding Units at any time that 15% or less of the then
outstanding Units are owned by Persons other than Eastern States and its
Affiliates. Any such repurchase shall be at a price equal to the greater of (i)
the highest price at which Eastern States or any of its Affiliates acquired
Units during the 90 days immediately preceding the date (the "Determination
Date") which is three NYSE trading days prior to the date on which notice of
such exercise is delivered to the Unitholders and (ii) the average closing price
of the Units on the NYSE, or if not listed for trading on the NYSE, on such
other national securities exchange or NASDAQ, in any case for the 30 trading
days immediately preceding the Determination Date (the "Average Closing Price").
If Eastern States or any of its Affiliates acquires Units from Persons other
than Eastern States or its Affiliates during the period which is three NYSE
trading days following the Determination Date at a price per Unit greater than
that at which Eastern States or any of its Affiliates acquired Units during the
90 days immediately preceding the Determination Date, then for purposes of
clause (i) of this Section 9.04(a) the highest price shall be such greater
price.
(b) If Eastern States elects to repurchase all Units pursuant to
Section 9.04(a) of this Agreement, Eastern States and the Trustee shall, prior
to the fixed date for purchase, give all Unitholders of record not less than 15
days nor more than 60 days written notice pursuant to Section 12.08 of this
Agreement specifying the time and place of such repurchase, calling upon each
such Unitholder to surrender to Eastern States on the repurchase date at the
place designated in such notice its Certificate or Certificates representing the
number of Units specified in such notice of repurchase. On or after the
repurchase date, each holder of Units to be repurchased shall present and
surrender its Certificates for such Units to Eastern States at the place
designated in such notice and thereupon the purchase price of such Units shall
be paid to or on the order of the Person whose name appears on such Certificate
or Certificates as the owner thereof. In no event may fewer than all of the
outstanding Units represented by the Certificates be repurchased (except with
respect to any such Units held by Eastern States or any of its Affiliates).
(c) If a notice of repurchase has been given by Eastern States
and the Trustee pursuant to Section 9.04(b) of this Agreement and if, on or
before the date fixed for repurchase, the funds necessary for such repurchase
shall have been set aside by Eastern States, separate and apart from its other
funds, in trust for the pro rata benefit of the holders of the Units so noticed
for repurchase then, notwithstanding that any Certificate or Certificates for
such Units have not been surrendered, at the close of business on the repurchase
date the holders of such Units shall cease to be Unitholders and shall have no
interest in or claims against Eastern States, the Trust, the Delaware Trustee or
the Trustee by virtue thereof and shall have no voting or other rights with
respect to such Units, except the right to receive the purchase price payable
upon such repurchase (which purchase price shall not include any sums for
Quarterly Distribution Amounts made or to be made to Unitholders on Quarterly
Record Dates occurring after the date of written notice of such repurchase),
without interest thereon, upon surrender (and endorsement, if required by
Eastern States) of their Certificates, and the Units evidenced thereby shall no
longer be held of record in the names of such
36
42
Unitholders. Subject to applicable escheat laws, any monies so set aside by
Eastern States and unclaimed at the end of two years from the repurchase date
shall revert to the general funds of Eastern States, after which reversion the
holders of such Units so noticed for repurchase shall look only to the general
funds of Eastern States for the payment of the purchase price. Any interest
accrued on funds so deposited shall be paid to Eastern States from time to time
as requested by Eastern States.
(d) If Eastern States exercises and consummates its right of
repurchase granted pursuant to this Section 9.04, then at the option of Eastern
States it may cause the Trust to be terminated by providing written notice
thereof to the Trustee and the Delaware Trustee. Subject to the rights of the
Unitholders with respect to distributions, within 30 days following written
notice of Eastern States' election to terminate the Trust pursuant to this
Section 9.04(d), the Trustee shall, subject to a reasonable reserve determined
by the Trustee to be necessary in connection with the winding up of the Trust,
cause all Remaining Royalty Interests (and all proceeds of production
attributable to the Remaining Royalty Interests) and any other assets of the
Trust to be conveyed to Eastern States or its assignee.
(e) Eastern States, for purposes of this Section 9.04, shall
include all of Eastern States' successors in interest and Affiliates and, upon
written notice to the Trustee, Eastern States' rights under this Section 9.04
shall be fully assignable by Eastern States to any of its Affiliates or to any
Person to whom it sells or transfers all or substantially all of the Underlying
Properties, and, from and after any such assignment, references in this Section
9.04 to Eastern States shall constitute references to such assignee.
SECTION 9.05 Reorganization or Business Combination.
(a) The Trust may convert into or merge or consolidate with or
into one or more limited partnerships, general partnerships, corporations,
business trusts, limited liability companies, or associations, or unincorporated
businesses if such transaction (i) is agreed to by the Trustee and by the
affirmative vote of Unitholders owning more than 66 2/3% of the then outstanding
Units at a meeting duly called and held in accordance with Article VIII, and
(ii) is permitted under the Business Act and any other applicable law.
(b) Upon the effective date of a certificate of merger duly
filed in accordance with the Business Act the following shall be deemed to
occur, in addition to such effects as may be specified under the Business Act as
then in effect:
(i) all of the rights, privileges and powers of each
of the business entities that has merged or consolidated, and all
property, real, personal and mixed, and all debts due to any of those
business entities and all other things and causes of action belonging
to each of those business entities shall be vested in the surviving
business entity and, after the merger or consolidation, shall be the
property of the surviving business entity to the extent they were part
of each constituent business entity;
37
43
(ii) the title to any real property vested by deed or
otherwise in any of those constituent business entities shall not
revert and shall not be in any way impaired because of the merger or
consolidation;
(iii) all rights of creditors and all liens on or
security interest in property of any of those constituent business
entities shall be preserved unimpaired;
(iv) all debts, liabilities and duties of those
constituent business entities shall attach to the surviving business
entity, and may be enforced against it to the same extent as if the
debts, liabilities and duties had been incurred or contracted by it;
and
(v) if the Trust is the surviving or resulting
entity, the governing instrument of the Trust shall be amended or a new
governing instrument adopted as set forth in the certificate of merger.
(c) A merger or consolidation effected pursuant to this Section
9.05 shall not be deemed to result in a transfer or assignment of assets or
liabilities from one entity to another having occurred.
(d) The Trust may convert into another entity in accordance with
Section 3821 of the Business Act.
ARTICLE X
AMENDMENTS
SECTION 10.01 Prohibited Amendments.
No amendment may be made to any provision of this Agreement that would:
(a) alter the purpose of the Trust or permit the Trustee or the
Delaware Trustee to engage in any business activities or authority activity
substantially different from that specified herein;
(b) alter the rights of the Unitholders vis-a-vis each other; or
(c) permit the Trustee or the Delaware Trustee to distribute the
Royalty Interests in kind either during the continuation of the Trust or during
the period of liquidation or winding up under Section 9.03.
38
44
SECTION 10.02 Permitted Amendments.
The Delaware Trustee, the Trustee and Eastern States may, jointly, from
time to time supplement or amend this Agreement without the approval of
Unitholders, in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, or to change the name of the Trust, provided that such
supplement or amendment does not adversely affect the interests of the
Unitholders, and provided, further, that any amendment to this Agreement made to
change the name of the Trust in accordance with Section 11.04 hereof or
otherwise shall be conclusively deemed not to adversely affect the interests of
the Unitholders. All other permitted amendments to the provisions of this
Agreement may be made only by a vote of the Unitholders represented at a meeting
held in accordance with the requirements of Article VIII. No amendment that
increases the obligations, duties or liabilities or affects the rights of the
Delaware Trustee or the Trustee or any Entity serving in any such capacity shall
be effective without the express written approval of such trustee or Entity.
Prior to the execution of any amendment to this Agreement, the Trustee
and the Delaware Trustee shall be entitled to receive and rely upon an opinion
of counsel stating that the execution of such amendment is authorized or
permitted by this Agreement.
ARTICLE XI
ARBITRATION
TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES TO THIS AGREEMENT
AGREE THAT ANY DISPUTE, CONTROVERSY OR CLAIM THAT MAY ARISE BETWEEN OR AMONG
EASTERN STATES (ON THE ONE HAND) AND THE TRUST, THE TRUSTEE OR THE DELAWARE
TRUSTEE (ON THE OTHER HAND) IN CONNECTION WITH OR OTHERWISE RELATING TO THIS
AGREEMENT OR THE CONVEYANCES OR THE APPLICATION, IMPLEMENTATION, VALIDITY OR
BREACH OF THIS AGREEMENT OR THE CONVEYANCES OR ANY PROVISION OF THIS AGREEMENT
OR THE CONVEYANCES (INCLUDING, WITHOUT LIMITATION, CLAIMS BASED ON CONTRACT,
TORT OR STATUTE), SHALL BE FINALLY, CONCLUSIVELY AND EXCLUSIVELY SETTLED BY
BINDING ARBITRATION IN [FORT WORTH, TEXAS] IN ACCORDANCE WITH THE COMMERCIAL
ARBITRATION RULES (THE "RULES") OF THE AMERICAN ARBITRATION ASSOCIATION OR ANY
SUCCESSOR THERETO ("AAA") THEN IN EFFECT. TO THE FULLEST EXTENT PERMITTED BY
LAW, THE PARTIES TO THIS AGREEMENT (AND ON BEHALF OF THE TRUST) HEREBY EXPRESSLY
WAIVE THEIR RIGHT TO SEEK REMEDIES IN COURT, INCLUDING, WITHOUT LIMITATION, THE
RIGHT TO TRIAL BY JURY, WITH RESPECT TO ANY MATTER SUBJECT TO ARBITRATION
PURSUANT TO THIS ARTICLE XI. ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION,
INCLUDING, WITHOUT LIMITATION, A SUMMARY OR EXPEDITED PROCEEDING, IN ANY COURT
HAVING JURISDICTION, TO COMPEL ARBITRATION OF ANY DISPUTE, CONTROVERSY OR CLAIM
TO WHICH THIS ARTICLE XI APPLIES.
39
45
EXCEPT WITH RESPECT TO THE FOLLOWING PROVISIONS (THE "SPECIAL PROVISIONS") WHICH
SHALL APPLY WITH RESPECT TO ANY ARBITRATION PURSUANT TO THIS ARTICLE XI, THE
INITIATION AND CONDUCT OF ARBITRATION SHALL BE AS SET FORTH IN THE RULES, WHICH
RULES ARE INCORPORATED IN THIS AGREEMENT BY REFERENCE WITH THE SAME EFFECT AS IF
THEY WERE SET FORTH IN THIS AGREEMENT.
(a) In the event of any inconsistency between the Rules and
the Special Provisions, the Special Provisions shall control. References in the
Rules to a sole arbitrator shall be deemed to refer to the tribunal of
arbitrators provided for under subparagraph (c) below in this Article XI.
(b) The arbitration shall be administered by AAA.
(c) The arbitration shall be conducted by a tribunal of three
arbitrators. Within 10 days after arbitration is initiated pursuant to the
Rules, the initiating party or parties (the "Claimant") shall send written
notice to the other party or parties (the "Respondent"), with a copy to the
Dallas office of AAA, designating the first arbitrator (who shall not be a
representative or agent of any party but may or may not be an AAA panel member
and, in any case, shall be reasonably believed by the Claimant to possess the
requisite experience, education and expertise in respect of the matters to which
the claim relates to enable such person to completely perform arbitral duties).
Within 10 days after receipt of such notice, the Respondent shall send written
notice to the Claimant, with a copy to the Dallas office of AAA and to the first
arbitrator, designating the second arbitrator (who shall not be a representative
or agent of any party, but may or may not be an AAA panel member and, in any
case, shall be reasonably believed by the Respondent to possess the requisite
experience, education and expertise in respect of the matters to which the claim
relates to enable such person to competently perform arbitral duties). Within 10
days after such notice from the Respondent is received by the Claimant, the
Respondent and the Claimant shall cause their respective designated arbitrators
to select any mutually agreeable AAA panel member as the third arbitrator. If
the respective designated arbitrators of the Respondent and the Claimant cannot
so agree within said 10 day period, then the third arbitrator will be determined
pursuant to the Rules. For purposes of this Article XI, Eastern States (on the
one hand) and the Trust, the Trustee and the Delaware Trustee (on the other
hand) shall each be entitled to the selection of one arbitrator. Prior to
commencement of the arbitration proceeding, each arbitrator shall have provided
the parties with a resume outlining such arbitrator's background and
qualifications and shall certify that such arbitrator is not a representative or
agent of any of the parties. If any arbitrator shall die, fail to act, resign,
become disqualified or otherwise cease to act, then the arbitration proceeding
shall be delayed for 15 days and the party by or on behalf of whom such
arbitrator was appointed shall be entitled to appoint a substitute arbitrator
(meeting the qualifications set forth in this Article XI) within such 15 day
period; provided, however, that if the party by or on behalf of whom such
arbitrator was appointed shall fail to appoint a substitute arbitrator within
such 15 day period, the substitute arbitrator shall be a neutral arbitrator
appointed by the AAA arbitrator within 15 days thereafter.
40
46
(d) All arbitration hearings shall be commenced within 120
days after arbitration is initiated pursuant to the Rules, unless, upon a
showing of good cause by a party to the arbitration, the tribunal of arbitrators
permits the extension of the commencement of such hearing; provided, however,
that any such extension shall not be longer than 60 days.
(e) All claims presented for arbitration shall be particularly
identified and the parties to the arbitration shall each prepare a statement of
their position with recommended courses of action. These statements of position
and recommended courses of action shall be submitted to the tribunal of
arbitrators chosen as provided hereinabove for binding decision. The tribunal of
arbitrators shall not be empowered to make decisions beyond the scope of the
position papers.
(f) The arbitration proceeding will be governed by the
substantive laws of the State of Delaware (as provided in Section 12.06) and
will be conducted in accordance with such procedures as shall be fixed for such
purpose by the tribunal of arbitrators, except that (i) discovery in connection
with any arbitration proceeding shall be conducted in accordance with the
Federal Rules of Civil Procedure and applicable case law, (ii) the tribunal of
arbitrators shall have the power to compel discovery and (iii) unless the
parties otherwise agree and except as may be provided in this Article XI, the
arbitration shall be governed by the United States Arbitration Act, 9 U.S.C.
xx.xx. 1-16, to the exclusion of any provision of state law or other applicable
law or procedure inconsistent therewith or which would produce a different
result. The parties shall preserve their right to assert and to avail themselves
of the attorney-client and attorney-work product privileges, and any other
privileges to, which they may be entitled pursuant to applicable law. No party
to the arbitration or any arbitrator may compel or require mediation and/or
settlement conferences without the prior written consent of all such parties and
the tribunal of arbitrators.
(g) The tribunal of arbitrators shall make an arbitration
award as soon as possible after the later of the close of evidence or the
submission of final briefs, and in all cases the award shall be made not later
than 30 days following submission of the matter. The finding and decision of a
majority of the arbitrators shall be final and shall be binding upon the
parties. Judgment upon the arbitration award or decision may be entered in any
court having jurisdiction thereof or application may be made to any such court
for a judicial acceptance of the award and an order of enforcement, as the case
may be. The tribunal of arbitrators shall have the authority to assess liability
for pre-award and post-award interest on the claims, attorneys' fees, expert
witness fees and all other expenses of arbitration as such arbitrators shall
deem appropriate based on the outcome of the claims arbitrated. Unless otherwise
agreed by the parties to the arbitration in writing, the arbitration award shall
include findings of fact and conclusions of law.
(h) Nothing in this Article XI shall be deemed to (i) limit
the applicability of any otherwise applicable statute of limitations or repose
or any waivers contained in this Agreement, (ii) constitute a waiver by any
party hereto of the protections afforded by 12 U.S.C. ss. 91 or any successor
statute thereto or any substantially equivalent state law, or (iii) restrict the
right of the Trustee to make application to any state or federal district court
having jurisdiction in Tarrant County, Texas, or Delaware (state or federal
courts) to appoint a successor Trustee or to request
41
47
instructions with regard to any provision in this Agreement when the Trustee is
unsure of its obligations thereunder.
(i) To the fullest extent permitted by law, this Article XI
shall preclude participation by the Trust in any class action brought against
Eastern States by any Person who is not a Unitholder and the Trustee shall opt
out of any such class action in which the Trust is a purported class member.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01 Inspection of Trustee's Books.
Each Unitholder and his duly authorized agents and attorneys shall have
the right, at his own expense and during reasonable business hours, to examine
and inspect the records (including, without limitation, the ownership ledger) of
the Trust and the Trustee in reference thereto.
SECTION 12.02 Disability of a Unitholder.
Any payment or distribution to a Unitholder may be made by check of the
Trustee drawn to the order of the Unitholder, regardless of whether or not the
Unitholder is a minor or under other legal disability, without the Trustee
having further responsibility with respect to such payment or distribution. This
Section 12.02 shall not be deemed to prevent the Trustee from making any payment
or distribution by any other method that is appropriate under law.
SECTION 12.03 Merger or Consolidation of Trustee or Delaware Trustee.
Neither a change of name of either the Trustee or the Delaware Trustee
nor any merger or consolidation of its corporate powers with another bank or
with a trust company nor the sale or transfer of all or substantially all of its
trust operations to a separate corporation shall affect its right or capacity to
act hereunder; provided, however, the Delaware Trustee or any successor thereto
shall maintain its principal place of business in the State of Delaware.
SECTION 12.04 Change in Trust Name.
Upon the request of Eastern States submitted to the Trustee and the
Delaware Trustee, the Trustee shall, without the vote or consent of any
Unitholders, take all action necessary to change the name of the Trust to a name
mutually agreeable to the Trustee and Eastern States and, upon effecting such
name change, the Delaware Trustee shall amend the Certificate of Trust on file
in the office of the Secretary of State of Delaware to reflect such name change.
42
48
SECTION 12.05 Filing of this Agreement.
Neither this Agreement nor any executed copy hereof need be filed in
any county in which any of the Trust Estate is located, but the same may be
filed for record in any county by the Trustee. In order to avoid the necessity
of filing this Agreement for record, each of the Delaware Trustee and the
Trustee agrees that for the purpose of vesting the record title to the Trust
Estate in any successor trustee, the succeeded trustee shall, upon appointment
of any successor trustee, execute and deliver to such successor trustee
appropriate assignments or conveyances.
SECTION 12.06 Choice of Law.
This Agreement and the Trust shall be governed by the laws of the State
of Delaware (without regard to the conflict of laws principles thereof) in
effect at any applicable time in all matters, including the validity,
construction and administration of this Agreement and the Trust, the
enforceability of the provisions of this Agreement under Article XI, all rights
and remedies hereunder, and the services of the Delaware Trustee and Trustee
hereunder. Furthermore, except as otherwise provided in this Agreement, the
rights, powers, duties and liabilities of the Delaware Trustee and the Trustee
and the Unitholders shall be as provided under the Business Act and other
applicable laws of the State of Delaware and the United States of America in
effect at any applicable time; provided, however, that there shall not be
applicable to the Trustee, the Delaware Trustee, the Unitholders, the Trust or
this Agreement (i) the provisions of Section 3450 of Title 12 of the Delaware
Code or (ii) any provisions of the laws (statutory or common) of the State of
Delaware (other than the Business Act) pertaining to trusts which are
inconsistent with the rights, duties, powers, limitations or liabilities of the
Trustee, the Delaware Trustee, or the Unitholders set forth or referenced in
this Agreement.
SECTION 12.07 Severability.
If any provision of this Agreement or the application thereof to any
Person or circumstances shall be finally determined by a court of proper
jurisdiction to be illegal, invalid or unenforceable to any extent, the
remainder of this Agreement or the application of such provision to Persons or
circumstances other than those as to which it is held illegal, invalid or
unenforceable shall not be affected thereby, and every provision of this
Agreement shall be valid and enforced to the fullest extent permitted by law.
SECTION 12.08 Notices.
Any notice or demand which by any provision of this Agreement is
required or permitted to be given or served upon the Trustee or any Entity
serving in such capacity by any party hereto or any Unitholder may be given or
served by being deposited, postage prepaid, and by registered or certified mail,
in a post office or letter box addressed (until another address is designated by
notice to the parties hereto and the Unitholders) to the Trustee at 000
Xxxxxxxxxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxx 00000, Attention: Corporate Trust
Department, Appalachian Natural Gas Trust, and such notice or
43
49
demand shall be deemed to be given only upon receipt thereof by the Trustee. Any
notice or demand which by any provision of this Agreement is required or
permitted to be given or served upon the Delaware Trustee or any Entity serving
in such capacity by any party hereto or any Unitholder may be given or served by
being deposited, postage prepaid, and by registered or certified mail, in a post
office or letter box addressed (until another address is designated by notice to
the parties hereto and the Unitholders) to the Delaware Trustee at Three
Xxxxxxxxx Center, 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000,
Attention: Corporate Trust Department, and such notice or demand shall be deemed
to be given only upon receipt thereof by the Delaware Trustee. Any notice or
other communication by the Trustee or the Delaware Trustee to any party hereto
or any Unitholder shall be deemed to have been sufficiently given, for all
purposes, when deposited, postage prepaid, in the United States mail addressed
to said holder at his last address as shown on the ownership ledger of the
Trustee or other method of notice. Any notice or demand which by any provision
of this Agreement is required or permitted to be given or served upon Eastern
States, may be given or served by being deposited, postage prepaid, and by
registered or certified mail, in a post office or letter box addressed (until
another address is designated by notice to the Trustee and Delaware Trustee) to
Eastern States Oil & Gas, Inc., 0000 Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000, Attention: Xxxxxxx X. Xxxxxxxxx and such notice shall be deemed to be
given only upon receipt thereof by Eastern States.
SECTION 12.09 Counterparts.
This Agreement may be executed in a number of counterparts, each of
which shall constitute an original, but such counterparts shall together
constitute but one and the same instrument.
SECTION 12.10 Successors.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective.
44
50
IN WITNESS WHEREOF, Eastern States has caused this Agreement to be
executed by a duly authorized President or Senior Vice President and attested by
a duly authorized Secretary or Assistant Secretary of Eastern States, the
Trustee has caused this Agreement to be executed by its duly authorized Senior
Vice President-Trust, and attested by its duly authorized Trust Officer, and the
Delaware Trustee has caused this Agreement to be executed by its duly authorized
Senior Trust Officer and attested by its duly authorized Secretary or Assistant
Secretary, as of the day and year first above written.
ATTEST: EASTERN STATES OIL & GAS, INC.
---------------------------------------- By: --------------------------------
Name: Name:
Title: Title:
ATTEST: BANK ONE, TEXAS, N.A.
---------------------------------------- By: --------------------------------
Name: Name:
Title: Title:
ATTEST: BANK ONE DELAWARE, INC.
---------------------------------------- By: --------------------------------
Name: Name:
Title: Title:
45
51
ACKNOWLEDGMENT
STATE OF )
) SS:
COUNTY OF )
On the ______ day of ___________ 1999, before me personally came
____________ __________________, known to me to be ____________________ of
Eastern States Oil & Gas, Inc., the corporation that executed the foregoing
instrument, who, being duly sworn, acknowledged that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by the order of the Board of Directors of said
corporation; and that he signed his name thereto by like order.
---------------------------------
Notary Public
My commission expires:
-----------
46
52
EXHIBIT A
FORM OF TRUST UNIT CERTIFICATE
[Face of Certificate]
Number Units
---
Organized Under the Laws of the State of Delaware Total Units of Beneficial
Interest Created By, Issued Under and Subject to the Amended and Restated Trust
Agreement dated as of _________, 1999 for the Appalachian Natural Gas Trust
See Reverse for Mandatory Divestiture
Provisions and Certain Definitions
CUSIP NO.
----------
Certificate for Units of Beneficial Interest in
Appalachian Natural Gas Trust
This certifies that
is the owner of
Fully Paid Units of Beneficial Interest ("Units") in that
certain Trust known and designated as the Appalachian Natural Gas Trust, created
and established under the terms of the above referenced Amended and Restated
Trust Agreement (the "Trust Agreement") between Eastern States Oil & Gas, Inc.,
a Delaware corporation ("Eastern States"), Bank One, Texas, N.A., as Trustee,
and Bank One Delaware, Inc., as Delaware Trustee, a duplicate original of which
Trust Agreement is for the information of all concerned, held by said Trustee at
its trust office in Fort Worth, Texas. Said Trust Agreement is hereby referred
to and incorporated as a part of this Certificate for all purposes, and the
owner of this Certificate by accepting same consents to, and becomes bound by,
all the terms and provisions of said Trust Agreement and the provisions herein.
The Units represented by this Certificate are transferable on the books of the
Trustee by the holder hereof in person, or by duly authorized attorney, upon
surrender of this Certificate, properly endorsed, to the Trustee. This
Certificate shall not be valid until countersigned and registered by the
Transfer Agent and Registrar.
Witness the seal of the Trustee and the signature of the duly authorized officer
of the Trustee.
[Seal of Bank One, Texas, N.A.]
A-1
53
Dated:
Countersigned and Registered:
EQUISERVE BANK ONE, TEXAS, N.A.
Transfer Agent and Registrar As Trustee
By: By:
---------------------------------- --------------------------
Authorized Signature Authorized Officer
A-2
54
[Reverse Side of Certificate]
Pursuant to Section 3.12 of the Trust Agreement, the Trustee may require
mandatory divestiture of a Unitholder's Trust Units in the Trust in the event
that the Trust or the Trustee is named in certain proceedings which seek the
cancellation or forfeiture of any property in which the Trust has an interest
because of the nationality or other status of such Unitholder. See Section 3.12
of the Trust Agreement for complete details.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and not as tenants
in common
UNIF GIFT MIN ACT -- ________. . . Custodian . . ________. . . under Uniform
(Cust) (minor)
Gifts to Minors Act . . ._______________
(State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
For Value Received _______________________________ hereby sell, assign and
transfer unto
(Please insert social security or other identifying number of assignee)
--------------------------------------------------------------------------------
Please print or typewrite name and address of assignee
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
_________________ Units of Beneficial Interest represented by the within
Certificate, and do hereby constitute and appoint irrevocably ______________
Attorney to transfer the said Units on the books of the within named Trustee,
with full power of substitution in the premises.
Dated:
-----------------------------
Signature
Notice: The signature(s) to this Assignment must correspond with the Name(s) as
written upon the face of the certificate exactly, without any change whatsoever.
-----------------------------
Signature
A-3
55
Signature(s) must be guaranteed by
a participant in a recognized
signature guaranty medallion
program.
The holder of this certificate has acquired an interest in the Appalachian
Natural Gas Trust. The address of the Trust is 000 Xxxxxxxxxxxx, Xxxxx 000, Xxxx
Xxxxx, Xxxxx 00000 and its taxpayer identification number is 00-0000000.
The Trust's tax shelter registration number is __________. The holder must
report this registration number to the Internal Revenue Service if the holder
claims any deduction, loss, credit or other tax benefit or reports any income by
reason of his investment in the Trust. The holder must report this registration
number (as well as the name and taxpayer identification number of the Trust) on
Form 8271. FORM 8271 MUST BE ATTACHED TO THE RETURN ON WHICH YOU CLAIM THE
DEDUCTION, LOSS, CREDIT OR OTHER TAX BENEFIT OR REPORT ANY INCOME.
ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS INVESTMENT OR THE
CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR APPROVED BY THE INTERNAL
REVENUE SERVICE.
If the holder of this certificate transfers an interest in the Trust to another
person, he is required by the Internal Revenue Service to keep a list containing
that person's name, address, taxpayer identification number, the date on which
he transferred the interest and in the name, address, and tax shelter
registration number of the Trust. If the holder of this certificate does not
wish to keep such a list, the holder must (i) send the information specified
above to the Trustee at the above address, which will keep the list on behalf of
the holder and (ii) give a copy of this notice to the person to whom his
interest was transferred.
A-4
