conflicts of interest under the heading Item 13. Certain Relationships and Related Transactions, and Director Independence, a copy of which is filed as Exhibit 99.1(e)(5) to this
Statement and incorporated herein by reference.
The information contained in Item 4. The Solicitation or Recommendation is
incorporated herein by reference.
Item 4.
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The Solicitation or Recommendation.
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The Trust is an express trust created under the laws of Texas pursuant to the Hugoton Royalty Trust Indenture entered into on December 1,
1998 (as amended and restated on March 24, 1999, the Trust Indenture) between Offeror (formerly known as Cross Timbers Oil Company), as grantor, and NationsBank, N.A., as trustee. On January 9, 2014, the successor of
NationsBank, N.A., U.S. Trust, Bank of America Private Wealth Management, a division of Bank of America, N.A., gave notice to holders of the Units (the Unitholders) that it would resign as trustee of the Trust. At a special meeting of
the Trusts Unitholders, the Unitholders of the Trust voted to approve the proposal to appoint Southwest Bank as successor trustee of the Trust effective May 30, 2014. Effective October 19, 2017, Simmons First National Corporation
(SFNC) completed its acquisition of First Texas BHC, Inc., the parent company of Southwest Bank. SFNC is the parent of Simmons Bank. SFNC merged Southwest Bank with Simmons Bank effective February 20, 2018, and Simmons Bank is now
the Trustee of the Trust.
Effective December 1, 1998, the Offeror conveyed to the Trust net profits interests in certain long-lived,
principally natural gas, properties in Kansas, Oklahoma and Wyoming under three separate conveyances (collectively, the Conveyances). The net profits interests are the only assets of the Trust, other than cash being held for the payment
of expenses and liabilities. The net profits interests entitle the Trust to receive 80% of the net proceeds (as defined in the Conveyances) from the sales of oil and gas produced from the underlying properties, and are collectively referred to
herein as the Net Profits Interests. In connection with the Conveyances, the Offeror is party to the Trust Indenture. The Net Profits Interests are the sole non-cash asset of the Trust other than
certain short-term investments. The Offeror owns the properties underlying the Net Profits Interests and operates approximately 83% of the producing wells. In connection with such ownership and operation, the Offeror regularly interacts and
communicates with the Trust and the Trustee regarding the Net Profits Interests. The Offeror also provides the annual audited statements of revenues and direct operating expenses and unaudited quarterly statements of revenues and direct operating
expenses for the Trust, and together with the Trustee, prepares the Trusts annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other Securities and Exchange Commission (SEC) filings and the Offerors parent company, ExxonMobil, co-signs, together with the Trustee, the SEC
filings of the Trust.
The 2019 Form 10-K contains a description of the Trust, a description
of the Units, information regarding the Net Profits Interests and the other information required to be included in such report as filed with the Securities and Exchange Commission, a copy of which is filed as Exhibit 99.1(e)(5) to this Statement and
incorporated herein by reference. A copy of the 2019 Form 10-K (excluding exhibits) was included in the 2019 Annual Report of the Trust to Unitholders, which was posted to the Trusts website in April of
2020. The provisions governing the Trust are complex and extensive and no attempt has been made herein or was made in the 2019 Form 10-K to describe or reference all such provisions. The 2019 Form 10-K contains a general description of the basic framework of the Trust and a summary of the material terms of the Trust Indenture, and detailed provisions concerning the Trust may be found in the Trust Indenture,
which is filed as Exhibit 99.1(e)(1) to this Statement and incorporated herein by reference.
Under the Trust Indenture, the Trustee has
certain powers to take such action as in its judgment is necessary or advisable to achieve the purposes of the Trust, including the authority to enter into the Conveyances, to agree to modifications or settlements of the terms of the Conveyances or
to settle disputes with respect thereto. If Trustee determines that it is in the best interest of the Unitholders to sell all or any part of any of the Net
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