WHEREAS, BP
Prudhoe Bay Royalty Trust (the “Trust”) is a statutory
trust under the Delaware Statutory Trust Act, having The Bank of
New York Mellon, formerly known as The Bank of New York, as Trustee
(the “Trustee”) under the BP Prudhoe Bay Royalty Trust
Agreement (the “Trust Agreement”), dated
February 28, 1989, by and among (a) BP Exploration
(Alaska) Inc. (“BPXA”), (b) The Standard Oil
Company (“SOC”), (c) the Trustee and (d) The
Bank of New York (Delaware), now known as BNY Mellon Trust of
Delaware, as Co-Trustee (the “Co-Trustee”);
WHEREAS, BPXA
and/or SOC are parties to the following agreements (together, the
“Agreements”):
(a) Overriding
Royalty Conveyance, between BPXA and SOC, dated February 27,
1989; and
(b) Trust
Conveyance, between SOC and the Trust, dated February 28,
1989; and
(c) Support
Agreement, between BPXA, SOC, BP p.l.c. and the Trust, dated
February 28, 1989; and
WHEREAS, BPXA and
SOC are subsidiaries of BP p.l.c.; and
WHEREAS, pursuant
to the Trust Conveyance, the Trust holds a Royalty Interest, as
defined in Section 2.1 of the Overriding Royalty Conveyance,
in production from certain oil fields located in Prudhoe Bay,
Alaska, that are operated by BPXA; and
WHEREAS, pursuant
to Section 3.01 of the Trust Agreement, the Royalty Interest
of the Trust is divided into Units; and
WHEREAS, Unit
Holders are the owners of one or more Units of the Trust as defined
in Section 1.35 of the Trust Agreement; and
WHEREAS, BPXA and
SOC, in the Agreements, have undertaken certain obligations to the
Trust; and
WHEREAS, on
August 7, 2006, BPXA announced a temporary shutdown of the
Prudhoe Bay oil field following oil spills on March 2, 2006
and August 6, 2006; and
WHEREAS,
Section 6.01 of the Trust Agreement provides that the Trustee
“is authorized to and shall take such actions as in its
judgment are necessary, desirable or advisable to achieve the
purposes of the Trust, including . . . the taking of appropriate
action to enforce the terms” of the Agreements;
and
WHEREAS, the
Trustee has undertaken an investigation to determine whether the
Trust should take any action pursuant to Section 6.01 of the
Trust Agreement; and
WHEREAS, the
Trustee and BP p.l.c. and its subsidiaries have entered into five
tolling agreements (“Tolling Agreement Number 1,”
“Tolling Agreement Number 2,” “Tolling Agreement
Number 3,” “Tolling Agreement Number 4” and
“Tolling Agreement Number 5”), dated May 16, 2007,
September 18, 2007, March 13, 2008, September 12, 2008,
and March 16, 2009, respectively, to toll statutes of
limitations while the Trustee conducted its investigation;
and
WHEREAS, BPXA has
cooperated with the Trustee’s investigation by, among other
things, producing documents and information requested by the
Trustee; and
WHEREAS, pursuant
to Section 6.08 of the Trust Agreement, the Trustee “is
authorized to . . . settle by arbitration or otherwise, any claim
of . . . 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 Unit Holder;” and
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WHEREAS, in two
actions brought on behalf of Unit Holders against BPXA, the courts
have held that the claims asserted in those actions can be
prosecuted only by the Trust, not by individual Unit Holders;
and
WHEREAS, the
Trustee and BPXA now wish to compromise any claims that the Trust
and its past, present, and future Unit Holders may have relating to
conduct by BPXA that may have resulted in a reduction of the
royalty payments received by the Trust in 2006, 2007, and
2008;
NOW, THEREFORE, IT
IS HEREBY AGREED by and between the Trustee, the Co-Trustee and
BPXA, for good and valuable consideration, as follows:
(a) The
Settlement Amount is $29,469,080.92.
(b) BPXA
shall pay the Settlement Amount to the Trust in accordance with
Paragraph 4 below.
(a) Subject
to the provisions of Paragraphs 2(b) and 2(c) below, and effective
upon the receipt by the Trust, pursuant to Paragraph 4(b) below, of
the Settlement Plus Interest Amount (as defined in Paragraph 4(b)
below), the Trustee and the C o-Trustee, on behalf of the Trust and
all past, present, and future Unit Holders, hereby release and
discharge BPXA and its divisions, subdivisions, subsidiaries,
affiliates, predecessors, successors, and parents, including,
without limitation, BP p.l.c., BP America Inc. and SOC, as well as
all present or former officers, directors, trustees, agents,
representatives, employees and all other persons or entities acting
or purporting to act on their behalf, of and from any and all
claims, demands, rights, liabilities and causes of action of every
nature and description whatsoever, known or unknown, suspected or
unsuspected, contingent or absolute, matured or unmatured, whether
or not concealed or hidden,
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that have been
asserted or that could have been asserted on behalf of the Trust
and its past, present, and future Unit Holders against BPXA and its
divisions, subdivisions, subsidiaries, affiliates, predecessors,
successors, and parents, including, without limitation, BP p.l.c.,
BP America Inc. and SOC, as well as all present or former officers,
directors, trustees, agents, representatives, employees and all
other persons or entities acting or purporting to act on their
behalf, arising out of, based upon or related in any way to any
conduct by BPXA that may have resulted in a reduction of the
royalty payments received by the Trust in 2006, 2007, and
2008.
(b) This
Release is not intended to, and does not, release any claims,
demands, rights, liabilities or causes of action arising out of,
based upon or related in any way to any conduct by BPXA to the
extent that such conduct may result or has resulted in damage to
the Trust in 2009 or any subsequent year, including a reduction of
the royalty payments received or to be received by the Trust in
2009 or any subsequent y
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