EXHIBIT 10.2

GULF COAST ULTRA DEEP ROYALTY TRUST

AMENDED AND RESTATED ROYALTY TRUST AGREEMENT

June 3, 2013

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ARTICLE I. DEFINITIONS

     2   

Section 1.1. Defined Terms

     2   

Section 1.2. Rules of Construction

     7   

ARTICLE II. NAME AND PURPOSE OF THE TRUST

     8   

Section 2.1. Name

     8   

Section 2.2. Purposes

     9   

Section 2.3. Nature of the Trust

     10   

Section 2.4. Transfer of Trust Property to the Trust

     10   

Section 2.5. Issuance of Units

     12   

Section 2.6. Principal Offices

     12   

ARTICLE III. ADMINISTRATION OF THE TRUST

     12   

Section 3.1. General

     12   

Section 3.2. Limited Power to Dispose of Royalties

     14   

Section 3.3. No Power to Engage in Business, Make Investments or Enter into
Certain Contracts

     15   

Section 3.4. Interest on Cash on Hand

     16   

Section 3.5. Power to Settle Claims

     16   

Section 3.6. Power to Contract for Services

     17   

Section 3.7. Payment of Liabilities of Trust; Depositor Funding Obligation

     17   

Section 3.8. Establishment of Reserves

     17   

Section 3.9. Limited Power to Borrow

     17   

Section 3.10. Income and Principal

     18   

Section 3.11. [Reserved]

     18   

Section 3.12. Transactions between Related Parties

     19   

Section 3.13. No Bond Required

     19   

Section 3.14. Timing of Trust Income and Expenses

     19   

Section 3.15. Divestiture of Units

     19   

Section 3.16. Filing of Securities Act Registration Statement, Exchange Act
Registration Statement and Other Reports, Listing of Trust Units, etc.; Certain
Fees and Expenses

     21   

Section 3.17. Reserve Reports

     24   

Section 3.18. [Reserved]

     24   

Section 3.19. Unitholders

     24   

Section 3.20. Call Rights

     25   

ARTICLE IV. BENEFICIAL SHARES

     29   

Section 4.1. Creation and Distribution

     29   

Section 4.2. Beneficial Interest of Unitholders; Limitation on Personal
Liability of Trust Unitholders

     29   

 

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Section 4.3. [Reserved]

     29   

Section 4.4. Registration and Transfer of Units

     30   

Section 4.5. [Reserved]

     30   

Section 4.6. Protection of Trustee

     30   

Section 4.7. Determination of Ownership of Units

     31   

Section 4.8. Transfer Agent

     31   

ARTICLE V. ACCOUNTING AND DISTRIBUTION; REPORTS

     31   

Section 5.1. Fiscal Year and Accounting Method

     31   

Section 5.2. Distributions

     31   

Section 5.3. Income Tax Reporting

     32   

Section 5.4. Reports to Unitholders

     32   

Section 5.5. Filings

     33   

Section 5.6. Information to be Supplied by Grantor, Depositor and Trust

     33   

Section 5.7. Reliance on Information

     34   

ARTICLE VI. LIABILITY OF TRUSTEE, INDEMNIFICATION AND METHOD OF SUCCESSION

     34   

Section 6.1. Liability of Trustee and Delaware Trustee

     34   

Section 6.2. Indemnification of Trustee and Delaware Trustee

     35   

Section 6.3. Priority and Continuity of Indemnification Obligations

     36   

Section 6.4. Contribution

     36   

Section 6.5. Indemnification Procedures

     37   

Section 6.6. Resignation of Trustee

     38   

Section 6.7. Removal of Trustee

     39   

Section 6.8. Appointment of Successor Trustee

     39   

Section 6.9. Laws of Other Jurisdictions

     40   

Section 6.10. Force Majeure

     40   

Section 6.11. Failure of Action by Grantor or Depositor

     41   

ARTICLE VII. COMPENSATION OF THE TRUSTEE

     41   

Section 7.1. Compensation of Trustee and Delaware Trustee

     41   

Section 7.2. Expenses

     41   

Section 7.3. Other Services

     41   

Section 7.4. Payment

     41   

Section 7.5. Depositor Loans

     42   

Section 7.6. Ownership of Units

     42   

ARTICLE VIII. MEETINGS OF UNITHOLDERS

     42   

Section 8.1. Purpose of Meetings

     42   

Section 8.2. Call and Notice of Meetings

     42   

 

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Section 8.3. Voting

     43   

Section 8.4. Conduct of Meetings

     44   

Section 8.5. Unitholder Proposals

     44   

Section 8.6. Action Without Meeting

     45   

Section 8.7. Units Beneficially Owned by Depositor or its Affiliates Deemed Not
Outstanding

     45   

ARTICLE IX. DURATION, REVOCATION AND TERMINATION OF TRUST

     46   

Section 9.1. Revocation

     46   

Section 9.2. Termination

     46   

Section 9.3. Disposition and Distribution of Properties

     46   

ARTICLE X. AMENDMENTS

     48   

Section 10.1. Prohibited

     48   

Section 10.2. Permitted

     48   

ARTICLE XI. ARBITRATION AND RELATED MATTERS

     49   

Section 11.1. Arbitration; Trustee’s Consent Required

     49   

Section 11.2. Litigation, Forum Selection; Venue; Waiver of Jury Trial

     51   

ARTICLE XII. MISCELLANEOUS

     52   

Section 12.1. Inspection of Books

     52   

Section 12.2. Trustee’s Employment of Experts

     52   

Section 12.3. Merger or Consolidation of Trustee or Delaware Trustee

     52   

Section 12.4. Filing of this Agreement

     53   

Section 12.5. Severability

     53   

Section 12.6. Notices

     53   

Section 12.7. Counterparts

     55   

Section 12.8. Successors

     55   

Section 12.9. Governing Law

     55   

Section 12.10. Confidentiality

     55   

Section 12.11. Stand-by Reserve Account or Letter of Credit

     56   

Section 12.12. Conveyances

     56   

Section 12.13. Waiver of Damages

     57   

 

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GULF COAST ULTRA DEEP ROYALTY TRUST

AMENDED AND RESTATED ROYALTY TRUST AGREEMENT

This Amended and Restated Royalty Trust Agreement (“Agreement”) of Gulf Coast
Ultra Deep Royalty Trust (the “Trust”) is entered into as of June 3, 2013,
between Freeport-McMoRan Copper & Gold Inc., a Delaware corporation
(“Depositor”), McMoRan Oil & Gas LLC, a Delaware limited liability company and a
wholly owned subsidiary of the Company (“Grantor”), The Bank of New York Mellon
Trust Company, N.A., a national banking association (the “Bank”), as trustee
(the “Trustee”), and BNY Mellon Trust of Delaware, as Delaware trustee (the
“Delaware Trustee”).

WHEREAS, McMoRan Exploration Co., a Delaware corporation (“Company”), is engaged
in the business of exploration, development and production of oil and natural
gas in the shallow waters (less than 500 feet of water) of the Gulf of Mexico
and onshore in the Gulf Coast area of the United States;

WHEREAS, Depositor, INAVN Corp., a Delaware corporation (“Merger Sub”), and
Company are parties to an Agreement and Plan of Merger dated December 5, 2012
(the “Merger Agreement”) pursuant to which, and subject to satisfaction of the
conditions precedent thereto, Merger Sub will merge with and into Company, with
the result that Company shall become a wholly owned subsidiary of Depositor;

WHEREAS, pursuant to the Merger Agreement and the Conveyances (hereinafter
defined), Depositor has agreed to convey, or cause to be conveyed the Royalties
(hereinafter defined) to the Trust pursuant to the Conveyances in consideration
for the issuance by the Trust of 230,172,696 Units, the aggregate of all such
Units representing the ownership of the entire Beneficial Interest (hereinafter
defined) in the assets of the Trust, with 129,210,542 Units being credited to
the Exchange Agent (as defined in the Merger Agreement) for distribution to the
holders of the Company Common Stock (as defined in the Merger Agreement), and
100,962,154 of such Units (including 38,805,688 Company Convertible Units as
hereinafter defined) being credited as directed by the Depositor;

WHEREAS, as of December 18, 2012, certain individuals, as Regular Trustees (the
“Regular Trustees”) and Wilmington Trust, National Association (“Wilmington”
and, together with the Regular Trustees, the “Original Trustees”) and Depositor
entered into a Trust Agreement (the “Original Trust Agreement”) pursuant to
which the Trust was formed under the terms and conditions set forth therein;

WHEREAS, the Original Trustees filed the Certificate of Trust for the Trust, as
amended from time to time (the “Certificate of Trust”) in the Office of the
Secretary of State of the State of Delaware (the “Delaware Secretary of State”)
to form the Trust as a statutory trust under the Delaware Trust Act (as defined
below) on December 18, 2012, which Certificate of Trust was amended by the
filing of a Certificate of Amendment with the Delaware Secretary of State on
June 3, 2013, to reflect the substitution of BNY Mellon Trust of Delaware as the
Delaware Trustee;

WHEREAS, the merger transaction contemplated by the Merger Agreement is expected
to be consummated on the date hereof;

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WHEREAS, each of the Regular Trustees under the Original Trust Agreement and
Wilmington has resigned his position as Trustee or Delaware Trustee, as
applicable, for the Trust and the Bank has been appointed and has agreed to act
as the new Trustee of the Trust, and BNY Mellon Trust of Delaware has been
appointed and has agreed to act as the Delaware Trustee of the Trust;

WHEREAS, Depositor has registered the offer and sale of the Units as
contemplated by the Merger Agreement under the Securities Act (as defined below)
and has taken all action necessary under state securities laws; and

WHEREAS, the Bank and Depositor desire to amend and restate the Original Trust
Agreement in its entirety.

NOW, THEREFORE, in furtherance of forming the Trust, Depositor has heretofore
delivered to the Original Trustees Ten Dollars ($10.00) upon execution of the
Original Trust Agreement, which the Bank now accepts and agrees to hold in
trust, together with the Royalties to be received hereunder, for the purposes,
and in accordance with the duties, terms and conditions hereof.

ARTICLE I.

DEFINITIONS

Section 1.1. Defined Terms. In addition to certain other terms defined elsewhere
in this Agreement, as used herein, the following terms are used with the
meanings indicated:

“AAA” has the meaning set forth in Article XI.

“Accrued Production Amount” has the meaning set forth in Section 3.20(d).

“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 direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.

“Agent” means, with respect to a Person, any agent, employee, officer, director,
custodian, nominee or attorney of such Person.

“Agreement” means this instrument, as originally executed, or, if amended or
supplemented, as so amended or supplemented.

“Article VI Expenses” has the meaning set forth in Section 6.2.

“Bank” has the meaning set forth in the introductory paragraph of this
Agreement.

“Beneficial Interest” means the aggregate undivided beneficial ownership
interest of the Unitholders in the Trust Estate (including without limitation
the proceeds from the conversion of Royalties to cash, and in the right to cash
resulting from such conversion of the Royalties, which

 

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beneficial interest is expressed in Units, but such beneficial interest does not
include any direct ownership interest in or to the Royalties, or any part
thereof, or in or to any asset of the Trust Estate) as expressly set out in this
Agreement and all other rights of beneficiaries of express trusts created under
the Delaware Trust Act, subject to the limitations set forth in this Agreement.

“Book-Entry Units” has the meaning set forth in Section 2.5.

“Business Day” means any day that is not a Saturday, Sunday or other day on
which national banking institutions in the City of Austin, Texas, are closed as
authorized or required by law.

“Call Termination Time” has the meaning set forth in Section 3.20(b).

“Certificate of Trust” has the meaning set forth in the recitals.

“Claimant” has the meaning set forth in Article XI.

“Closing” has the meaning given thereto in the Merger Agreement.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” has the meaning set forth in the recitals of this Agreement.

“Company Common Stock” has the meaning given thereto in the Merger Agreement.

“Company Convertible Securities” has the meaning given thereto in the Merger
Agreement.

“Company Convertible Units” means the Units issued to and held by the Depositor
or a subsidiary thereof, and reserved for delivery to holders of the Company
Convertible Securities until such Units are either (a) distributed to such
holders in accordance with the respective terms of the underlying agreements of
the Company Convertible Securities and the Merger Agreement or (b) cease to be
reserved for issuance to holders of the Company Convertible Securities, in which
case such Units shall be retained by Depositor or a subsidiary thereof.

“Conveyances” means, collectively, the Master Conveyance and each Recordable
Conveyance.

“Delaware Secretary of State” has the meaning set forth in the recitals.

“Delaware Trust Act” means the Delaware Statutory Trust Act, Title 12, Chapter
38 of the Delaware Code, 12 Del. C. §§ 3801 et seq.

“Delaware Trustee” means the Person set forth as “Delaware Trustee” in the
introductory paragraph of this Agreement and its successors and assigns, not in
its individual capacity but solely in its capacity as Delaware trustee.

“Depositor” has the meaning set forth in the introductory paragraph of this
Agreement.

 

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“Depositor Annual Expense Cap” has the meaning set forth in Section 3.7.

“Depositor Loans” has the meaning set forth in Section 7.5(a) of this Agreement.

“Dissolution Date” has the meaning set forth in Section 9.2.

“Distribution Date” means the date of a distribution, which shall be on or
before ten (10) Business Days after the Quarterly Record Date.

“Effective Time” has the meaning given thereto in the Merger Agreement.

“Environmental Laws” means all applicable federal, state and local laws,
regulations, ordinances, rules, orders, permits and governmental restrictions
relating to the environment, the effect of the environment on human health or
safety, pollutants, contaminants, hazardous substances, or hazardous waste, in
effect on the date of this Agreement, and all binding judicial and
administrative interpretations thereof.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exchange Act Registration Statement” means the registration statement by which
the Units may be registered under Section 12 of the Exchange Act.

“Expenses” has the meaning set forth in Section 3.16(e) of this Agreement.

“GAAP” has the meaning set forth in Section 5.1.

“Grantor” has the meaning set forth in the introductory paragraph of this
Agreement.

“High-Value Call Option” has the meaning set forth in Section 3.20(a).

“HV Call Notice” has the meaning set forth in Section 3.20(a).

“HV Call Record Date” has the meaning set forth in Section 3.20(a).

“HV Termination Time” has the meaning set forth in Section 3.20(a).

“IH Purchase Cap” has the meaning set forth in Section 3.15(b).

“Ineligible Holder” has the meaning set forth in Section 3.15(a).

“Low-Value Call Option” has the meaning set forth in Section 3.20(b).

“LV Call Notice” has the meaning set forth in Section 3.20(b).

“LV Call Record Date” has the meaning set forth in Section 3.20(b).

“LV Termination Time” has the meaning set forth in Section 3.20(b).

 

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“Master Conveyance” means the non-recordable Master Conveyance of Overriding
Royalty Interest between Company and/or its Affiliates, on the one hand, and the
Trust, on the other, pursuant to which the Royalties are to be conveyed to the
Trust.

“Merger Agreement” has the meaning set forth in the recitals of this Agreement.

“Merger Sub” has the meaning set forth in the recitals of this Agreement.

“MPC” has the meaning set forth in Section 3.16(c).

“Nine-Month Period” has the meaning set forth in Section 3.20(b).

“NYSE” has the meaning set forth in Section 3.16(c).

“Original Trustees” has the meaning set forth in the recitals of this Agreement.

“Original Trust Agreement” has the meaning set forth in the recitals of this
Agreement.

“ORRI Transfer” has the meaning given thereto in the Master Conveyance.

“OTCQX” has the meaning set forth in Section 3.16(c).

“Person” means an individual, a corporation, partnership, limited liability
company, trust, estate or other organization.

“Production” has the meaning given thereto in the Master Conveyance.

“Quarter” means, for the initial period, the period which commences on the
Effective Time and continues through and includes the Quarterly Record Date for
the applicable calendar quarter during which the Effective Time occurs, and for
succeeding periods the period which commences on the day following a Quarterly
Record Date and continues through and includes the next succeeding Quarterly
Record Date.

“Quarterly Distribution Amount” means for each Quarter an amount determined by
the Trustee (pursuant to Section 5.2 hereof) to be equal to the excess, if any,
of (a) the cash received by the Trustee during the Quarter attributable to the
Royalties, plus any cash available for distribution as a result of the reduction
or elimination during the Quarter of any existing cash reserve created pursuant
to Section 3.8 hereof to provide for the payment of liabilities of the Trust,
plus any other cash receipts of the Trust during the Quarter including without
limitation any cash received from interest earned pursuant to Section 3.4 or
pursuant to sales of the interests in the Royalty or other assets of the Trust,
other than interest earned on deposits of the Quarterly Distribution Amount for
any prior Quarter pending distribution of such amount, over (b) the liabilities
of the Trust paid during the Quarter, plus the amount of any cash used pursuant
to Section 3.8 hereof in the Quarter to establish or increase a cash reserve for
the payment of any accrued, future or contingent liabilities of the Trust. If
the Quarterly Distribution Amount determined in accordance with the preceding
sentence shall for any Quarter be a negative amount, then the Quarterly
Distribution Amount shall be zero, and such negative amount shall reduce the
next Quarterly Distribution Amount.

 

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“Quarterly Record Date” for each calendar quarter means the close of business on
the 30th day following the end of such calendar quarter or such other date as
may be established by the Trustee in order to comply with applicable law or the
rules of any securities exchange or quotation system on which the Trust Units
may be listed or admitted to trading, in which event “Quarterly Record Date”
means such other date.

“Recordable Conveyance” means each recordable Conveyance of Overriding Royalty
Interests between Company and/or its Affiliates and the Trust contemplated by
the Master Conveyance pursuant to which Royalties are to be conveyed to the
Trust.

“Record Date Unitholders” has the meaning set forth in Section 8.2 of this
Agreement.

“Regular Trustees” has the meaning set forth in the recitals.

“Reserve Report” means a report of estimated proved reserves attributable to the
Royalties and the present value thereof prepared on the basis required by the
SEC for inclusion in financial statements filed with the SEC.

“Respondent” has the meaning set forth in Article XI.

“Responsible Officer” means (a) with respect to the Delaware Trustee, any
officer in the office of the Delaware Trustee having direct responsibility for
the administration of this Agreement, and with respect to a particular corporate
trust matter, any officer of the Delaware Trustee to whom such matter is
referred because of his or her knowledge of and familiarity with the particular
subject, and (b) with respect to the Trustee, any officer in the office of the
Trustee having direct responsibility for the administration of this Agreement,
and with respect to a particular corporate trust matter, any officer of the
Trustee to whom such matter is referred because of his or her knowledge of and
familiarity with the particular subject.

“Royalties” means the overriding royalty interests conveyed to the Trust
pursuant to the Conveyances.

“Rules” has the meaning set forth in Article XI.

“Sales Proceeds Amounts” means any cash paid to the Trust upon the sale of
Royalties or other assets of the Trust pursuant to Section 3.2 or Section 9.3
after deduction of Trust expenses related to such sale or the establishment by
the Trustee of cash reserves in such amounts as the Trustee in its sole
discretion deems appropriate for claims and obligations of the Trust, including
contingent, conditional and unmatured claims and obligations in accordance with
Section 3808 of the Delaware Trust Act or otherwise.

“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002, as amended.

“SEC” means the Securities and Exchange Commission and any agency which may
succeed to its responsibilities and functions after the date hereof.

“Securities Act” means the Securities Act of 1933, as amended.

 

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“Securities Act Registration Statement” means the registration statement on Form
S-4, which has been filed by the Trust with and declared effective by the SEC to
register the offering and sale of the Units under the Securities Act.

“Special Provisions” has the meaning set forth in Article XI.

“Subject Interests” has the meaning set forth in the Conveyances.

“Termination Time” has the meaning set forth in the Recordable Conveyance.

“Transaction Documents” means this Agreement and the Conveyances.

“Transferee” as to any Unitholder or former Unitholder, means any Person
succeeding to the interest of such Unitholder or former Unitholder in one or
more Units of the Trust, whether as purchaser, donee, legatee or otherwise.

“Trust” means the statutory trust created hereby which shall be held and
administered as provided herein and in accordance with the terms and provisions
(not inconsistent with any terms and provisions hereof) of the Delaware Trust
Act.

“Trust Estate” means the assets held by the Trust (or the Trustee on its behalf)
under this Agreement, and shall include both income and principal if separate
accounts or records are kept therefor.

“Trust Obligations” has the meaning set forth in Section 3.7 of this Agreement.

“Trustee” means the trustee (other than the Delaware Trustee) designated in the
introductory paragraph of this Agreement, or any successor, during the period it
is so serving in such capacity.

“Unit” 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 books of
the Trust pursuant to Article IV.

“VWAP” means the market price of one Unit from the open of trading on the
relevant trading day until the close of trading on the relevant trading day
determined, using a volume-weighted average method. If the VWAP of the Unit
cannot be determined, the closing price of the Unit for the relevant trading
day, on the market or system that the Units are most commonly quoted or traded,
will be substituted for the VWAP.

“Wilmington” has the meaning set forth in the recitals.

Section 1.2. Rules of Construction. Article, Section, subsection, Schedule and
Annex references in this Agreement are references to the corresponding Article,
Section, subsection, Schedule and Annex to this Agreement, unless otherwise
specified. All Schedules and Annexes attached to this Agreement constitute a
part of this Agreement and are incorporated herein for all

 

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purposes. If a term is defined as one part of speech (such as a noun), it shall
have a corresponding meaning when used as another part of speech (such as a
verb). Unless the context of this Agreement clearly requires otherwise, the
singular shall include the plural and the plural shall include the singular
wherever and as often as may be appropriate. All references to instruments,
documents, contracts and agreements are references to such instruments,
documents, contracts and agreements as the same may be amended, supplemented and
otherwise modified from time to time, unless otherwise specified. The words
“includes” or “including” shall mean “including but not limited to” and shall
not be construed to limit any general statement that it follows to the specific
or similar items or matters immediately following it. Any reference in this
Agreement to “$” or “dollars” shall mean the lawful currency of the United
States of America. When calculating the period of time before which, within
which or following which any act is to be done or step taken pursuant to this
Agreement, the date that is the reference date in calculating such period shall
be excluded. If the last day of such period is not a Business Day, the period in
question shall end on the next succeeding Business Day. The words “hereof,”
“hereby,” “herein,” “hereinafter,” “hereof,” “hereunder” and similar terms refer
to this Agreement as a whole and not merely to a subdivision in which such words
appear unless the context otherwise requires. The provision of a table of
contents and the division of this Agreement into Articles, Sections and other
subdivisions are for convenience of reference only and shall not affect or be
utilized in construing or interpreting this Agreement. To the extent that
provisions of this Agreement provide any protection, indemnification,
exculpation, reduction of liability, or other agreement for the benefit of the
Trustee or Delaware Trustee (collectively, the “Protective Provisions”), the
Trustee and Delaware Trustee shall be entitled to the benefit of each and every
one of the Protective Provisions, and shall not be required to elect among
Protective Provisions; it being hereby agreed that the intent and agreement of
the parties to this Agreement are to provide the maximum possible cumulative
protective benefit of the Protective Provisions to the Trustee and Delaware
Trustee.

ARTICLE II.

NAME AND PURPOSE OF THE TRUST

Section 2.1. Name. The Trust continued by this Agreement shall remain a Delaware
statutory trust under the Delaware Trust Act. The Trust shall continue to be
known as the Gulf Coast Ultra Deep Royalty Trust, and the Trustee may transact
the Trust’s affairs in that name. The continuation 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
Delaware Trust Act. In the event that a Responsible Officer of either the
Delaware Trustee or the Trustee becomes aware that any statement contained or
matter described in the Trust’s 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 at the written direction of the Trustee, duly
executed in accordance with Section 3811 of the Delaware Trust Act, in order to
effect such change thereto, such filing to be in accordance with Section 3810(b)
of the Delaware Trust Act.

 

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Section 2.2. Purposes. The purposes of the Trust are, and the Trust (and the
Trustee on behalf of the Trust) shall have the power and authority and is hereby
authorized:

(a) to acquire, receive, hold, protect and conserve, for the benefit of the
Unitholders, the Trust Estate;

(b) to issue the Units in accordance with Section 2.5 and act as transfer agent;

(c) to receive payments with respect to the Royalties as provided in the
Conveyances;

(d) to convert the Royalties to cash either (i) by retaining them and collecting
the proceeds from production payable with respect thereto until production has
ceased or the Royalties have otherwise terminated or (ii) by selling or
otherwise disposing of all or a part of the Royalties in accordance with and
subject to the terms of this Agreement and the Conveyances;

(e) to pay, or provide for the payment of, any costs and 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;

(f) to cause to be prepared and file (i) reports required to be filed under the
Exchange Act, (ii) any reports required by the rules of any securities exchange
or quotation system on which the Units are listed or admitted to trading, and
(iii) any reports, forms or returns required to be filed pursuant to tax laws
and any other applicable laws and regulations;

(g) to incur indebtedness in order to pay the liabilities of the Trust as they
become due, if necessary, any such indebtedness to be unsecured except as
provided in in Section 3.9(b), Section 6.2, Section 7.5 or elsewhere in this
Agreement;

(h) to establish, evaluate and maintain a system of disclosure controls and
procedures and internal control over financial reporting in compliance with the
requirements of Section 404 of the Sarbanes Oxley Act or any successor
requirement;

(i) subject to the terms of the Master Conveyance and Section 9.3 of this
Agreement, to sell and dispose of the Trust Estate as permitted hereby and
dissolve the Trust pursuant to Article IX;

(j) to elect to take the Royalty in-kind pursuant to Section 2.02 of the
Recordable Conveyance; provided, however, that the Trust shall have no
obligation to do so under any circumstances;

(k) to enter into and perform each and all of its obligations under the
Transaction Documents; and

(l) subject to Section 3.3, 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 statutory trust under the
Delaware Trust Act.

 

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Depositor and Grantor hereby authorize the Trustee on behalf of the Trust to
execute and deliver, and to cause the Trust to perform its obligations under the
Transaction Documents and the activities contemplated therein.

Section 2.3. Nature of the Trust. It is the intention and agreement of
Depositor, Grantor, the Trustee and the Delaware Trustee to continue the Trust
as a statutory trust within the meaning of Section 3801(f) of the Delaware Trust
Act, for the benefit of the Unitholders, and as a grantor trust for federal
income tax purposes. 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 Royalties and the distribution of such revenues, after payment of or
provision for Trust expenses and liabilities, including expenses and liabilities
that may be contingent or otherwise uncertain, to the Unitholders. It is neither
the purpose nor the intention of the parties hereto to create, and nothing in
this Trust Agreement shall be construed as creating, a partnership, joint
venture, joint stock company or business association between or among
Unitholders, present or future, or among or between Unitholders, or any of them,
and any one or more of the Trustee, the Delaware Trustee, Depositor or Grantor.
Neither the Trustee nor the Delaware Trustee, in its individual capacity or
otherwise, makes any representation as to the validity or sufficiency of this
Agreement or the Units. Neither the Trustee nor the Delaware Trustee has had any
access to any information regarding the Royalties or the Subject Interests and
neither the Trustee nor the Delaware Trustee makes any representation or
warranty or other statement regarding any potential payments to be received by
the Trust or the Unitholders or the value, if any, of the Conveyances or the
Units or any other matter regarding any estimate of value that may be ascribed
to the Units by any Person.

Section 2.4. Transfer of Trust Property to the Trust.

(a) Depositor has paid to the Original Trustees, in trust, and concurrently with
the execution and delivery of this Agreement the Original Trustees have
transferred to the Trustee, and the Trustee has accepted and agreed to hold in
trust, for the uses and purposes provided herein, the sum of Ten Dollars
($10.00). Pursuant to the Merger Agreement, Depositor has agreed to cause
Company and/or its Affiliates to enter into the Master Conveyance and to grant,
bargain, sell, convey and assign the Royalties to the Trust as provided for in
the Master Conveyance, for the uses and purposes provided herein and for the
benefit of the Unitholders, pursuant to the Conveyances.

(b) In accordance with the terms of the Master Conveyance (including
Section 2.1(h) and Section 5.2 thereof), Grantor may at any time or from time to
time, without the consent of the Unitholders, sell a divided or undivided
portion of its interest in the Subject Interests, provided, however, that except
as provided in Section 2.1(h) of the Master Conveyance, such sale shall be
subject to and burdened by the Royalties that burden such portion of the
interest held by Grantor or any of its Affiliates. Promptly after completion of
any such sale, Grantor shall so notify the Trustee in writing. Any purchaser of
such interest shall be the assignee of Grantor to the extent of the interest
sold and shall be bound by the obligations of Grantor under this Agreement and
the Conveyances to such extent. Notwithstanding any such sale, Grantor shall
remain responsible for the performance of, and no such sale shall relieve
Grantor of its responsibilities with respect to, its obligations to provide
information and reporting to the Trust and Trustee pursuant to this Agreement.

 

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(c) Concurrently with the execution and delivery of this Agreement, counsel to
Depositor and Grantor are delivering legal opinions to the Trust and Trustee in
form and substance acceptable to the Trustee.

Section 2.5. Issuance of Units.

(a) As of the execution and delivery of this Agreement, the Trust hereby issues
129,210,542 Units to the Exchange Agent for distribution to the holders of the
Company Common Stock and 100,962,154 Units to the Depositor (including
38,805,658 Company Convertible Units). The Units to be credited to the Exchange
Agent and the Depositor, as applicable, shall be uncertificated and ownership
thereof evidenced by entry of a notation in an ownership ledger maintained for
such purpose by the Trustee or a transfer agent designated by the Trustee
(“Book-Entry Units”). The Unitholders (including the Depositor for so long as
any Units are registered in Depositor’s name) shall be the sole beneficial
owners of the Trust Estate and the Trust. Upon the surrender and exchange of the
shares of Company Common Stock in accordance with the Merger Agreement or the
distribution of the Company Convertible Units to the holders of the Company
Convertible Securities in accordance with the respective terms of the underlying
governing documents of the Company Convertible Securities and the Merger
Agreement, the Exchange Agent or Depositor, as applicable shall notify the
Trustee or a transfer agent designated by the Trustee and the ownership of such
Units so exchanged or distributed shall be reflected in the ledger maintained
for such purpose by the Trustee or transfer agent designated by the Trustee.

(b) If the Units have not satisfied the MPC for the NYSE or NASDAQ within nine
(9) months of the Closing, then Depositor shall use its commercially reasonable
best efforts to direct the Trustee to cause a vote of Unitholders to be held
within (i) if there is not an SEC review of the proxy materials, eleven
(11) months of the Closing or (ii) if there is an SEC review of the proxy
materials, sixty (60) days following the conclusion of such review, and in each
case in accordance with Section 8.3 hereof, to approve any subdivision, split or
combination of Units, the effect of which shall be in accordance with
Section 3.20(k) hereof and would be expected to result in a price per Unit
following such subdivision, split or combination that exceeds the MPC for the
NYSE or NASDAQ, as applicable. If such subdivision, split or combination of
Units is approved by the Unitholders in accordance with Section 8.3, the
Depositor shall use its commercially reasonable best efforts (as such term is
defined in Section 3.16(c)) to fulfill its obligations pursuant to
Section 3.16(c). For the avoidance of doubt, any Units owned by Depositor or its
Affiliates shall be deemed outstanding for all purposes, including the right to
vote such Units, and shall be entitled to vote such Units in any vote to approve
any subdivision, split or combination of Units (and shall vote such Units in
favor of approving any such subdivision, split or combination proposed by
Depositor in connection with this Section 2.5(b)), and no such vote shall be
deemed to present a material conflict of interest between Depositor or its
Affiliates, on the one hand, and the Unitholders other than Depositor or its
Affiliates, on the other hand. The Trust is hereby authorized to issue such
additional number of Units as is required from time to time in connection with
any such subdivision, split or combination.

 

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Section 2.6. Principal Offices. Unless and until changed by the Trustee, the
address of the principal office of the Trustee is 919 Congress Avenue, Suite
500, Austin, Texas 78701. Unless and until changed by the Delaware Trustee, the
address of the principal office of the Delaware Trustee is BNY Mellon Trust of
Delaware, 100 White Clay Center, Suite 102, Newark, Delaware 19711. The
principal office of the Trust shall be in care of the Trustee. The Trust also
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

Section 3.1. General.

(a) The Trustee accepts the Trust created by this Agreement and agrees to
perform its duties in accordance with 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 Delaware Trustee or any
Unitholder, is authorized (as Trustee or in the name of or on behalf of the
Trust) to take such action as in its judgment is necessary, desirable or
advisable best 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, so long as
such modifications or settlements do not alter the nature of the Royalties as
rights to receive a share of the proceeds of oil and gas produced from the
properties burdened by such Royalties free of any obligation for drilling,
development or operating expenses and as rights which do not possess any
operating rights or obligations. In accordance with the terms of the Master
Conveyance, the Trustee may only sell or otherwise dispose of all or any portion
of the Royalties as described in Section 3.2. Except to the extent otherwise
expressly provided in this Agreement, the Trustee shall perform all obligations
and duties of a trustee of the Trust other than fulfilling the Trust’s
obligations pursuant to Section 3807(a) of the Delaware Trust Act. The Trustee
shall only have the duties set forth in this Amended and Restated Trust
Agreement. The Trustee does not have any additional duties that would be imposed
on a trustee under the Louisiana Trust Code or any other applicable Louisiana
law.

(b) Notwithstanding any other provision hereof to the contrary, the parties
hereto agree to the following:

 

  (i) BNY Mellon Trust of Delaware is appointed to serve as the trustee of the
Trust in the State of Delaware for the sole purpose of satisfying the
requirement of Section 3807(a) of the Delaware Trust Act that the Trust have at
least one trustee with a principal place of business in the State of Delaware.
It is understood and agreed by the parties hereto that the Delaware Trustee
shall not be the “Trustee” hereunder and shall have none of the duties or
liabilities of the Trustee.

 

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  (ii) The duties of the Delaware Trustee shall be limited strictly to
(1) accepting legal process served on the Trust in the State of Delaware and
(2) the execution of any certificates required to be filed with the Delaware
Secretary of State which the Delaware Trustee is required to execute under
Section 3811 of the Delaware Trust Act. To the extent that, at law or in equity,
the Delaware Trustee has duties (including fiduciary duties) and liabilities
relating thereto to the Trust, Depositor, Grantor or the Unitholders, it is
hereby understood and agreed by the parties hereto that such duties and
liabilities are replaced by the duties and liabilities of the Delaware Trustee
expressly set forth in this Agreement. The Delaware Trustee shall have no
liability for the acts or omissions of any Trustee.

 

  (iii) The Delaware Trustee may resign, and such resignation shall be
effective, upon thirty (30) days prior written notice to the Depositor and the
Trustee; provided, that any resignation of the Delaware Trustee shall only be
effective at such time as a qualified successor Delaware Trustee has been
appointed and accepted its appointment in accordance with Section 6.8.

 

  (iv) The Delaware Trustee shall not be personally liable under any
circumstances, except for its own willful misconduct, bad faith or gross
negligence. The Delaware Trustee shall not be personally liable for any error of
judgment made in good faith. The Delaware Trustee shall not be personally
responsible for or in respect of the validity or sufficiency of this Agreement
or for the due execution hereof.

 

  (v) No provision of this Agreement shall require the Delaware Trustee to
expend or risk its personal funds or otherwise incur any financial liability in
the performance of its rights or powers hereunder.

 

  (vi) Under no circumstances shall the Delaware Trustee be personally liable
for any representation, warranty, covenant, agreement, or indebtedness of the
Trust.

 

  (vii) As to any fact or matter the manner of ascertainment of which is not
specifically prescribed herein, the Delaware Trustee may for all purposes hereof
rely on a certificate, signed by the Trustee, Grantor or Depositor, as to such
fact or matter, and such certificate shall constitute full protection to the
Delaware Trustee for any action taken or omitted to be taken by it in good faith
in reliance thereon.

 

  (viii) In accepting and performing its duties hereunder the Delaware Trustee
acts not in its individual capacity, and all persons having any claim against
the Delaware Trustee by reason of the transactions contemplated by this
Agreement or any other Trust related document or agreement shall look only to
the Trust’s property for payment or satisfaction thereof.

(c) The Delaware Trustee accepts the Trust created by this Agreement and agrees
to perform its duties in accordance with the terms of this Agreement. The
Trustee shall reasonably keep the Delaware Trustee informed of any material
action taken by the Trustee with respect to the Trust.

 

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(d) Notwithstanding any other provision hereof to the contrary, and in addition
to the other Protective Provisions regarding the Trustee contained elsewhere in
this Agreement, the parties hereto agree to the following:

 

  (i) The Trustee may consult with counsel, who, with Depositor’s consent, may
be counsel to Depositor, and may rely on and act in accordance with the advice
of counsel without liability for any action taken or not taken in connection
therewith;

 

  (ii) The Trustee shall not be liable to any Unitholder or to Depositor or to
Grantor or to any other Person for errors in judgment made in good faith;

 

  (iii) The Trustee may take any action approved by the Unitholders in
accordance with this Agreement and shall not incur any liability to any
Unitholder or to Depositor or to Grantor or to any other Person for doing so;

 

  (iv) The Trustee shall be deemed not to have notice of any fact, including any
fact that would constitute a breach of this Agreement or a default by Depositor
or Grantor under this Agreement unless the trust officer of the Trustee
responsible for the administration of the Trust has actual written notice of
such fact;

 

  (v) Except for reports and other written information addressed to the Trustee,
the delivery to the Trustee of reports and other written information by itself
shall not constitute actual or constructive notice to the Trustee of the
information contained therein.

 

  (vi) None of (x) any independent registered public accounting firm that may be
engaged by or on behalf of the Trust, (y) the Trust or (z) the Trustee shall
have any liability for any claims, liabilities or Expenses relating to such
firm’s engagement or any report issued by such firm in connection with such
engagement other than fees and expenses approved by the Trustee. Any
dissemination or publication of any report issued by any such firm shall be
subject to the consent of such firm; and

 

  (vii) The Trustee shall not be required to risk or expend its own funds under
any circumstances in connection with the performance of its duties under this
Agreement.

Section 3.2. Limited Power to Dispose of Royalties.

(a) Subject to, and in accordance with, the terms of the Master Conveyance, the
Trustee may only sell or otherwise dispose of all or any portion of the
Royalties as permitted under Section 3.5, Section 3.9(b), Section 6.6(b) and
Section 9.3 of this Agreement and as permitted or required under Section 2.1(g),
Section 2.1(h), Section 3.1, Section 5.1, Section 5.4, Section 5.5 and
Section 8.2 of the Master Conveyance.

 

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(b) The Trustee shall use reasonable efforts to effect any sale directed by the
Unitholders in accordance with Article VIII; provided, however, that
notwithstanding any other provision of this Agreement, the Trustee shall incur
no liability to any Unitholder or to any other person for (i) any failure to
effect any such sale, regardless of any approval thereof by the Unitholders, or
(ii) the terms of any such sale or any other matter relating thereto, unless
such liability arises out of, or is based upon, any fraudulent
misrepresentation, gross negligence, or willful misconduct of the Trustee or for
acts or omissions in bad faith as adjudicated by arbitration (subject to the
Trustee’s consent to such arbitration in accordance with Article XI) or a final,
nonappealable judgment of a court of competent jurisdiction; it being agreed
that the Trustee shall have no responsibility or liability to any Unitholder or
to any other person in connection with any sale or other disposition of all or
any part of the Royalties or the failure of any such sale to occur.

(c) This Section 3.2 shall not be construed to require approval of the
Unitholders, and no approval of the Unitholders shall be required, for any
relinquishment, sale or other disposition of all or any part of the Royalties
pursuant to Section 3.5, Section 3.9, Section 6.6(b) or Section 9.3 of this
Agreement or as required or permitted under Section 2.1(g), Section 2.1(h),
Section 3.1, Section 5.1, Section 5.4, Section 5.5 or Section 8.2 of the Master
Conveyance. The Trustee is authorized to retain any of the Royalties in the form
in which such property was transferred to the Trust, without regard to any
requirement to diversify investments or other requirements.

(d) At least thirty (30) days prior to the closing of an ORRI Transfer, Trustee
shall notify Depositor and Depositor shall deliver or cause to be delivered to
each record holder of the Company Convertible Securities written notice of such
ORRI Transfer. If any such holder of the Company Convertible Securities converts
such Company Convertible Securities in accordance with the respective terms of
the applicable underlying agreements prior to the closing of the ORRI Transfer,
then such holder shall be deemed to hold the number of Units that would be
distributed to such holder upon such conversion (whether or not such Units have
been distributed to such holder).

Section 3.3. No Power to Engage in Business, Make Investments or Enter into
Certain Contracts. Neither the Trustee nor the Delaware Trustee shall, in its
capacity as Trustee or Delaware Trustee, as applicable, under the Trust, engage
in any business or commercial activity of any kind whatsoever and shall not,
under any circumstances, use any portion of the Trust Estate to acquire any oil
and gas lease, royalty or other mineral interest other than the Royalties and
the proceeds thereof, or, except as permitted in this Agreement, acquire any
other asset. Neither the Trustee nor the Delaware Trustee shall have any right
or duty to operate the Subject Interests, to market any production therefrom, or
to exercise any authority or oversight over any aspect of the operation of the
Subject Interests or the marketing of any production therefrom. The Trustee
shall not accept contributions to the Trust other than the Royalties and the
initial cash deposit and any amounts to be contributed by Depositor or its
Affiliates pursuant to this Agreement, including any amounts to be contributed
pursuant to Sections 3.7, 3.16(b), 3.20(e) or

 

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7.5(c). Whether or not the Trustee expressly so provides in any contract or
undertaking of the Trust or in its capacity as Trustee under the Trust, to the
fullest extent permitted by law, (a) any liability of the Trust arising out of
such contract shall be satisfiable only out of the Trust Estate, (b) in any
event, including the exhaustion of the Trust Estate, such liability shall not be
satisfiable out of any amounts at any time distributed to any Unitholder or out
of any other assets of any Unitholder, and (c) in any event, including the
exhaustion of the Trust Estate, such liability shall not be satisfiable out of
any asset of the Trustee.

Section 3.4. Interest on Cash on Hand. Cash being held by the Trustee as a
reserve for liabilities (other than cash being held for the payment of
administrative costs payable pursuant to Article VII and other than cash being
held for distribution at the next Distribution Date, all of which may be held in
one or more non-interest bearing account(s) with the Bank or any other financial
institution selected by the Trustee) shall be placed by the Trustee with one or
more banks or financial institutions (which may be, or may include, any bank
serving as Trustee) and invested (in the Trustee’s discretion) in: (a) a money
market or similar account payable on demand without penalty; (b) obligations
issued (or unconditionally guaranteed) by the United States of America or any
agency or instrumentality thereof (provided such agency or instrumentality
obligations are secured by the full faith and credit of the United States of
America); (c) repurchase agreements secured by obligations qualifying under
subparagraph (b) above; (d) certificates of deposit of any bank having capital,
surplus and undivided profits in excess of $100,000,000; or (e) money market
mutual funds comprised solely of securities described in clauses (b) and (c).
The interest rate on reserves placed with any bank or financial institution
serving as Trustee shall be the interest rate that such bank or financial
institution pays in the normal course of business on amounts placed with it,
taking into account the amounts involved, the period held and other factors
deemed relevant by the Trustee. Any such government obligations, repurchase
agreements or certificates of deposit representing funds to be distributed at
the next Distribution Date must mature on or before the next succeeding
Distribution Date and must be held to maturity. To the extent not prohibited by
the Delaware Trust Act, any such cash may be placed with the Bank or any
successor bank serving as Trustee. In lieu of exercising discretion over the
selection of the investment of cash pursuant to this Section 3.4, the Trustee
may request instructions from Depositor regarding the investment of any such
amounts, and Depositor shall provide such instructions to the Trustee. The
Trustee shall be fully protected and shall incur no liability for acting in
accordance with any such instructions. Notwithstanding any other provision
hereof, the Trustee shall not be liable for its selection of permitted
investments or for any investment losses result from such investments.
Notwithstanding anything contained herein to the contrary, the Delaware Trustee
shall not be obligated to accept any cash or other assets for investment or
otherwise.

Section 3.5. Power to Settle Claims. Subject to the limitations specified in
this Agreement, the Trustee is authorized to prosecute or defend, or 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 deemed sufficient by the Trustee in its
sole discretion, without the joinder or consent of any Unitholder. The
Unitholders shall have no power to prosecute any claim of the Trust or the Trust
Estate against any Person other than to prosecute a claim to compel performance
by the Trustee on behalf of the Trust or the Trust Estate.

 

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Section 3.6. Power to Contract for Services. In the administration of the Trust,
the Trustee is empowered to employ oil and gas consultants (who may also be
engaged as consultants for Grantor), independent reserve or reservoir engineers
(who may also be engaged as independent reserve or reservoir engineers for
Grantor), accountants (who may be the same accounting firm engaged as outside
auditors for Grantor), attorneys (who may be counsel to Grantor unless Grantor
otherwise notifies the Trustee in writing), transfer agents and other
professional and expert Persons and to employ or contract for clerical and other
administrative assistance (including assistance from Grantor or its Affiliates),
to delegate to Agents any matter, whether ministerial or discretionary, and to
act through such Agents and to make payments of all fees for services or
expenses in any manner thus incurred out of the Trust Estate.

Section 3.7. Payment of Liabilities of Trust; Depositor Funding Obligation.

All expenses and liabilities of the Trust, including, without limitation, all
amounts payable to the Trustee or the Delaware Trustee under Section 7.1,
Section 7.2, or Section 7.3, amounts required to repay any Depositor Loans,
compensation to such Persons as may be employed as provided for in Section 3.6
hereof, amounts to repurchase Units pursuant to Section 3.15(c) and the fees,
charges, expenses, disbursements and other costs incurred by the Trustee or
Delaware Trustee in connection with the discharge of its duties under this
Agreement (collectively, “Trust Obligations”) shall be paid by the Trustee 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); provided that to the extent the Trust Obligations exceed the funds of
the Trust available therefor, the Trust Obligations shall be paid promptly by
Depositor, as a contribution to the Trust and without any right of repayment or
interest in the Trust as a result thereof, up to a maximum of $350,000 per
calendar year (the “Depositor Annual Expense Cap”), and any amount in excess of
the Depositor Annual Expense Cap shall, except as provided in Section 3.16(d) or
Section 3.16(e) (for clarity, Expenses under Section 3.16(d) or Section 3.16(e)
shall not be subject to or count against or part of the Depositor Annual Expense
Cap, and shall be paid by Depositor in accordance with Section 3.16(d) or
Section 3.16(e), as applicable), be paid by the Trust out of proceeds of
Depositor Loans or loans pursuant to Section 3.9(b). Trust Obligations required
to be paid by Depositor may be paid directly by Depositor or, at the request of
the Trustee, Depositor shall transfer to the Trustee from time to time funds
equal to the aggregate amount of Trust Obligations that Depositor would
otherwise be required to pay, and the Trustee shall utilize such funds to pay
such Trust Obligations. The obligation of Depositor to make Depositor Loans is
set forth in Section 7.5.

Section 3.8. Establishment of Reserves. With respect to any liability that is
contingent or uncertain in amount or that otherwise is not currently due and
payable, the Trustee in its sole discretion may, but is not obligated to,
establish a cash reserve for the payment of such liability.

Section 3.9. Limited Power to Borrow.

(a) Trustee on behalf of the Trust is authorized and directed to borrow funds
from Depositor or any Affiliate of Depositor (as Depositor Loans), directly or
indirectly, for the purposes described in Section 3.7 and Section 7.5. Any
Depositor Loan pursuant to this Section 3.9 or Section 7.5 may be evidenced by a
written promissory note executed by the Trustee on behalf of the Trust, and
shall (i) be on an unsecured basis, (ii)

 

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have a maturity date no earlier than the Dissolution Date, (iii) be
interest-free, and (iv) be without recourse to the Trustee, it being agreed that
any such loan shall be payable solely out of the assets of the Trust. Depositor
Loans shall be paid in full prior to distributions to Unitholders.

(b) If at any time the cash on hand and to be received by the Trust and
available to pay Trust Obligations or to purchase Units if required under
Section 3.15(c) is not, or may not be, in the judgment of the Trustee,
sufficient to pay the Trust Obligations as they become due or to purchase Units
if required under Section 3.15(c), and Depositor fails to make Depositor Loans
in such amounts and at such times as Trustee deems sufficient (provided,
however, that nothing herein is intended to relieve Depositor of its obligation
to fund or cause an Affiliate of Depositor to fund all amounts requested by the
Trustee pursuant to Section 7.5 in accordance with the provisions of
Section 7.5), the Trustee is authorized to borrow the funds required to pay such
Trust Obligations or make such purchases from any party other than Depositor and
its Affiliates. If the Trust borrows any amounts pursuant to this
Section 3.9(b), no further distributions will be made to Unitholders (except in
respect of any previously determined and unpaid Quarterly Distribution Amounts)
until the indebtedness created by such borrowing has been paid in full. To
secure payment of such indebtedness, the Trustee is authorized (without any vote
of Unitholders) to mortgage, pledge, grant security interests in or otherwise
encumber (and to include as a part thereof any and all terms, powers, remedies,
covenants and provisions deemed necessary or advisable in the Trustee’s
discretion, including, without limitation, the power of sale with or without
judicial proceedings) the Trust Estate, or any portion thereof, including the
Royalties, and to carve out and convey production payments.

(c) No provision of this Agreement shall require either the Trustee, the
Delaware Trustee or any other Person serving as a fiduciary hereunder, to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers. The Trustee and the Delaware Trustee or any other Person
serving as fiduciary hereunder shall be indemnified and held harmless by
Depositor and Grantor in accordance with Section 6.2 for any liability incurred
in the performance of any of its duties under this Agreement. In no event shall
the Trustee be responsible for the payment of any Quarterly Distribution Amount,
Sales Proceeds Amounts or other amount except to the extent that it has
sufficient cash on hand on behalf of the Trust to make such payment.

Section 3.10. Income and Principal. The Trustee shall not be required to keep
separate accounts or records for income and principal or maintain any reserves
for depletion of the Royalties. 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 Royalties as income or principal without having to
maintain a 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.

Section 3.11. [Reserved].

 

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Section 3.12. Transactions between Related Parties. Each of the Trustee and the
Delaware Trustee shall not be prohibited in any way in exercising its powers
from making contracts or having dealings with itself or its Affiliates in any
other capacity (fiduciary or otherwise) or with Depositor or Grantor or any
Affiliate of either of them.

Section 3.13. No Bond Required. Neither the Trustee nor the Delaware Trustee
shall be required to furnish any bond or security of any kind.

Section 3.14. Timing of Trust Income and Expenses. The Trustee will attempt in
good faith to cause the Trust and the Unitholders to recognize income and
expenses on Quarterly Record Dates. The Trustee will invoice the Trust for
services rendered by the Trustee on a periodic basis and, except to the extent
that the Trustee’s fees previously have been paid directly by Depositor as
agreed in Schedule 2 to this Agreement, shall cause the Trust to pay such
invoices upon receipt by the Trust 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), and will attempt in good faith to
cause all Persons to whom the Trust becomes liable to invoice the Trust for such
liability on a periodic basis and to cause the Trust to pay any such invoices 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) upon receipt by the Trust. In connection with the requirements of any
securities exchange on which the Units are listed or market system through which
Units are traded, the Trustee will, if required by such securities exchange or
market system, use all reasonable efforts to determine the Quarterly
Distribution Amount and report such amount to the exchange or market system at
such time as may be required by such securities exchange or market system.

Section 3.15. Divestiture of Units. If at any time the Trust or the 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
because of the nationality, or any other status, of any one or more Unitholders,
the following procedures will be applicable:

(a) The Trustee will promptly give written notice (“Notice”) to each Unitholder
(“Ineligible Holder”) whose nationality or other status is an issue in the
proceeding as to the existence of such controversy related to the Royalties, the
Trust or the Units. The Notice will contain a reasonable summary of such
controversy and will constitute a demand to each Ineligible Holder that he
dispose of his Units to a party which would not be an Ineligible Holder within
30 days after the date of the Notice.

(b) If any Ineligible Holder fails to dispose of his Units as required by the
Notice, Depositor will have the right to purchase, and will purchase, any such
Units at any time during the 90 days after the expiration of the 30-day period
specified in the Notice; provided that in no case shall Depositor be required to
purchase Units for an aggregate purchase price in excess of $1 million (“IH
Purchase Cap”). The purchase price on a per Unit basis will be determined as of
the last Business Day (“Determination Day”) preceding the end of the 30-day
period specified in the Notice and will equal the following per Unit amount:
(i) if the Units are then listed on a securities exchange the price will equal
the closing price of the Units on such exchange (or, if the Units are then
listed on more than one exchange, on the largest such exchange in terms of the
volume of

 

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Units traded thereon during the preceding twelve months) on the Determination
Day if any Units were sold on such exchange on such day or, if not, on the last
preceding day on which any Units were sold on such exchange; (ii) if the Units
are not then listed on any securities exchange, but are traded through a market
system, the price will equal the mean between the closing bid and asked prices
for the Units in such market system on the Determination Day if quotations for
such prices on such day are available or, if not, on the last preceding day for
which such quotations are available; or (iii) if the Units are not then listed
on any stock exchange or traded through any market system, the price will be
determined by dividing the present value of the estimated discounted future net
revenues attributable to proved reserves of the Royalties as reflected in the
latest Reserve Report prepared for the Trust, prepared using a discount rate of
ten percent (10%) or such other rate required by the SEC and otherwise in
accordance with such other criteria as shall then be prescribed by the SEC as
contemplated by Section 3.17 (minus all liabilities of the Trust) by the number
of Units (including the Units to be purchased) then outstanding. Depositor shall
tender to the Trustee the aggregate purchase price for the Units to be purchased
pursuant to this Section 3.15 by wire transfer of immediately available funds to
the account of the Trustee set forth on Schedule 1 (or such other account as
designated in writing by the Trustee after the date hereof), and the Trustee
shall tender the above cash purchase price to each Ineligible Holder at his
address as shown on the records of the Trustee or the nominee holder through
which the Ineligible Holder holds such Units, either in person or by mail as
provided in Section 12.6, accompanied by notice of cancellation. Concurrently
with such tender the Trustee shall reflect the purchase of such Units then owned
by such Ineligible Holder and for which tender has been made, and the Trustee
shall reflect such purchase in the records of the Trustee and instruct the
transfer agent for the Units, if there shall then be one other than the Trustee,
in writing to reflect such purchase in the records of such transfer agent. Upon
such purchase, all interests, rights and benefits of the Ineligible Holder as a
Unitholder shall terminate. In the event the tender is refused by the Ineligible
Holder or if the tendered sum is returned to the Trustee, the tendered sum shall
be held by the Trustee in a non- interest bearing account (unless the Trustee
determines that it is legally required to hold the amount in an interest-bearing
account) for the benefit of such Ineligible Holder, until proper claim for same
(together with interest, if any, accrued thereon) has been made by such
Ineligible Holder, but subject to applicable laws concerning unclaimed property.
If a Determination Day shall occur prior to the earliest date at which a Reserve
Report is available to the Trust and at such time, the Units are not then listed
on any stock exchange or traded through any market system, the price will be
determined by the good faith resolution of Grantor’s Board of Directors, a copy
of which, certified by Grantor’s Secretary, will be provided by Grantor to the
Trustee promptly upon the adoption thereof.

(c) To the extent that the aggregate purchase price of the Units held by
Ineligible Holders required to be purchased by the Depositor pursuant to
Section 3.15(b) exceeds the IH Purchase Cap, then the Trustee shall have the
right to cause the Trust to purchase, and shall cause the Trust to purchase, any
such Units in excess of the IH Purchase Cap to the extent cash is available to
the Trust (pursuant to Section 3.7, Depositor Loans or Royalty proceeds) on the
same terms and conditions and in the same manner as set forth in
Section 3.15(b).

 

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(d) Notwithstanding any other provision of this Agreement, the Trustee shall
incur no liability to any Unitholder or to any other person as a result of any
action the Trustee may take or fail to take under this Section 3.15 or otherwise
as a result of the Trustee’s compliance or inability for any reason to comply
with its duties under this Section 3.15, unless such liability arises out of, or
is based upon, any fraudulent misrepresentation, gross negligence, or willful
misconduct of the Trustee or for acts or omissions in bad faith as adjudicated
by arbitration (pursuant to Article XI) or a final, nonappealable judgment of a
court of competent jurisdiction.

Section 3.16. Filing of Securities Act Registration Statement, Exchange Act
Registration Statement and Other Reports, Listing of Trust Units, etc.; Certain
Fees and Expenses.

(a) Prior to the execution and delivery hereof, Depositor, Grantor and the
Regular Trustees have taken, at Depositor’s and Grantor’s expense, all action
necessary to (i) prepare and file the Securities Act Registration Statement with
the SEC and request acceleration of the effectiveness of the Securities Act
Registration Statement and cause it to become effective so as to register, under
the Securities Act, the offer and sale of the Units to the persons who
subsequently became or will become Unitholders as contemplated by the Securities
Act Registration Statement or the Exchange Act Registration Statement,
(ii) register or qualify or exempt from registration or qualification the offer
and sale of the Units to such persons under all state securities or “Blue Sky”
laws, (iii) register or take any other action required under the laws of any
other jurisdiction in connection with the offer and sale of the Units to such
persons, (iv) if necessary, prepare and file the Exchange Act Registration
Statement with the SEC and register the Units under the Exchange Act, (v) take
all other actions required under all applicable laws in connection with the
offer, sale and distribution of the Units as described in the Securities Act
Registration Statement, and (vi) effect all other actions legally required in
connection with the offer and sale and distribution of the Units to the persons
who subsequently became or will become Unitholders as contemplated by the
Securities Act Registration Statement or the Exchange Act Registration
Statement. Depositor and Grantor shall use their commercially reasonable best
efforts to effect and maintain the registration under the Exchange Act to the
extent legally required.

(b) In the event that any further action is necessary in order to more fully
effectuate the matters described in Section 3.16(a) (including the filing of any
post-effective amendment to the Securities Act Registration Statement and any
Exchange Act Registration Statement, and including the filing of any
registration statement relating to the conversion of any Company Convertible
Securities), Depositor and Grantor, are each hereby authorized to act as agents
of the Trust and take any such action on behalf of the Trust (including
executing, by and on behalf of the Trust, any documents incidental or related to
the foregoing), all at the expense of Depositor, which shall pay all expenses
relating to any such actions, and which expenses shall not count in the
calculation of the Depositor Annual Expense Cap and shall not constitute
Depositor Loans.

(c) The Depositor shall use its commercially reasonable best efforts to prepare,
or cause to be prepared, and file, or cause to be filed, an application for the
listing of the Units on the OTCQX tier of the OTC Markets (the “OTCQX”) promptly

 

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following the Effective Time and take any other action and execute and deliver
any certificate or documents that may be necessary to effect such listing, and
the Trustee shall cooperate with Depositor as directed by Depositor as necessary
to effectuate such listing. If at any time the Units are not listed for trading
on the New York Stock Exchange (“NYSE”) or NASDAQ but become eligible (including
by satisfying the minimum price criteria (the “MPC”)) for such a listing, then
the Depositor shall use its commercially reasonable best efforts to prepare, or
cause to be prepared, and file, or cause to be filed, an application for the
listing of the Units on (i) if the Units satisfy the NYSE listing criteria
(including the MPC), the NYSE or (ii) if the Units do not satisfy the NYSE
listing criteria but satisfy the NASDAQ listing criteria (including the MPC),
NASDAQ, and take any other action and execute and deliver any certificates or
documents that may be necessary to effect such listing, and the Trustee shall
cooperate with Depositor as directed by Depositor as necessary to effectuate
such listing. All costs and expenses incurred by the Trust or Trustee in
connection with the listing or admittance to quotation on the OTCQX, NYSE or
NASDAQ, as applicable, or efforts to effect the same, whether or not successful,
shall be paid by Depositor (or, if paid by the Trustee, reimbursed by
Depositor), and shall not be subject to or count against all or part of the
Depositor Annual Expense Cap and shall not constitute Depositor Loans. If the
Units are listed or admitted for quotation on the OTCQX, NYSE or NASDAQ, then
the Trustee, on behalf of the Trust and acting upon the advice of counsel, shall
cause the Trust to comply with all rules, orders and regulations of the SEC and
the OTCQX, NYSE or NASDAQ, as applicable, on which the Units are listed or
admitted for quotation, to which the Trust is subject as a result of the Units
being registered under the Exchange Act if applicable and listed or admitted for
quotation on the OTCQX, NYSE or NASDAQ, as applicable, and to take all such
other actions directed by Depositor and which may reasonably be taken which are
necessary for the Units to remain registered under the Exchange Act if necessary
and listed or admitted for quotation on the OTCQX, NYSE or NASDAQ until the
Trust is terminated. In addition, the Trustee is authorized to take, and the
Trustee shall take, all actions to prepare and, to the extent required by this
Agreement or by law, mail to Unitholders any reports, press release or
statements, financial or otherwise, that the Trustee determines are required to
be provided to Unitholders by applicable law or governmental regulation or the
requirements of any securities exchange or quotation system on which the Units
are listed or admitted for quotation. In addition, the Trustee, on behalf of the
Trust and acting upon the advice of counsel, shall cause the Trust to comply
with all of the applicable provisions of the Sarbanes-Oxley Act and the rules
and regulations of the SEC related thereto, including but not limited to,
establishing, evaluating and maintaining a system of disclosure controls and
procedures and internal control over financial reporting and making all required
certifications pursuant to the Sarbanes-Oxley Act and the rules and regulations
of the SEC. The Trustee shall execute, by and on behalf of the Trust, any
documents incidental or related to the objectives specified in this
Section 3.16(c). The Trustee may at any time request directions or instructions
from Depositor with respect to any matter described in or contemplated by this
Section 3.16, and shall be fully protected, and shall incur no liability, in
relying on any such direction or instruction. For purposes of this Section 3.16,
“commercially reasonable best efforts” shall include, without limitation:
(v) filing an application for listing ten (10) Business Days following (1) in
the case of the OTCQX, the Closing and (2) in the case of the NYSE or NASDAQ,
the Units

 

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meeting the MPC of the NYSE or NASDAQ, as applicable, for thirty
(30) consecutive trading days; (w) taking all commercially reasonable steps
necessary to pursue the listing application, including cooperating with the
applicable listing authority and responding to any requests for information or
questions as soon as possible; (x) if a listing application is denied by the
applicable listing authority for any reason, taking all commercially reasonable
steps necessary to eliminate the reason for the denial; (y) if a listing
application is denied by the NYSE and the reasons for such denial cannot be
resolved on a commercially reasonable basis, pursuing a listing application with
NASDAQ if the NASDAQ listing criteria (including satisfying the MPC for thirty
(30) consecutive trading days) are met; and (z) reapplying for listing with the
applicable listing authority if the reasons for a prior denial of listing are no
longer applicable.

(d) To the fullest extent permitted by law, Depositor and Grantor agree to
defend, indemnify and hold the Trust, the Trustee, the Delaware Trustee and
their respective officers, employees, agents and controlling persons harmless
from and against any liabilities, obligations, costs, expenses, actions, suits,
claims, damages (including consequential damages and all other types of
damages), losses, penalties, taxes, fees and other charges of any kind and
nature whatsoever (collectively, “Expenses”), joint or several, or any action in
respect thereof, to which the Trust, the Trustee, the Delaware Trustee or the
officers, employees or agents of the Trustee or Delaware Trustee or any
controlling person of the Trustee or Delaware Trustee becomes subject, under or
with respect to the Securities Act, the Exchange Act, any other federal or state
securities law or otherwise, insofar as such Expenses arise out of, or are based
upon, (i) any untrue statement or alleged untrue statement of a material fact
contained in any Securities Act Registration Statement or Exchange Act
Registration Statement, listing application with any national securities
exchange, or any other document filed by or on behalf of the Trust or Grantor or
Depositor with the SEC or pursuant to any other federal or state securities law,
or any other statement publicly made by or on behalf of the Trust or Grantor, or
(ii) the omission or alleged omission to state in any Securities Act
Registration Statement or Exchange Act Registration Statement listing
application with any national securities exchange, or any other document, or any
other statement publicly made by or on behalf of the Trust or Grantor or
Depositor, any material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that neither Grantor
nor Depositor shall be liable in any case to the extent that any Expense arises
out of, or is based upon, (A) any fraudulent misrepresentation, gross negligence
or willful misconduct of the Trustee or (B) any untrue statement or alleged
untrue statement or omission or alleged omission included in any such Securities
Act Registration Statement or Exchange Act Registration Statement, or any other
document filed by or on behalf of Depositor, Grantor, the Trust or the Trustee
with the SEC, or any other statement publicly made by or on behalf of Depositor,
Grantor, the Trust or the Trustee in reliance upon and in conformity with
written information furnished by or on behalf of the Trustee specifically for
inclusion therein. This provision shall in no way limit the general rights to
indemnification and contribution and limitations on liability of the Trust, the
Trustee and the Delaware Trustee set forth in Article VI of this Agreement or
elsewhere herein, and no other provisions of this Agreement shall limit the
provisions of this Section 3.16(d). Depositor and Grantor shall promptly
reimburse the Trustee and the Delaware Trustee for, or advance to the Trustee
and the Delaware Trustee, any fees or expenses,

 

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including reasonable legal fees and fees and expenses of experts and other
litigation expenses, incurred by the Trustee or the Delaware Trustee in
connection with the investigation or defense of any Expenses with respect to
which the Trustee or the Delaware Trustee is entitled to indemnity by Grantor
under this Section 3.16(d).

(e) If the indemnification provided for in this Section 3.16 shall for any
reason (including, without limitation, due to violation of public policy) be
unavailable to or insufficient to hold harmless the Trustee or the Delaware
Trustee in respect of any Expense or other liability, expense, claims, damages
or loss as to which the Trustee or Delaware Trustee would otherwise be entitled
to indemnification pursuant to this Section 3.16, then Depositor, Grantor and
the Trust shall, in lieu of indemnifying the Trustee or Delaware Trustee, as
applicable, contribute to the amount paid or payable by the Trustee or Delaware
Trustee as a result of such liability, expense, claims, damages or loss, in such
proportion as shall be appropriate to reflect the relative fault of Depositor,
Grantor (with respect to contribution by Depositor, the Trust or Grantor), the
Trustee or Delaware Trustee with respect to the events, acts or circumstances
giving rise to the Expense or other liability, expense, claims, damages or loss,
as well as any other relevant equitable considerations, all as further set forth
in Section 6.4.

Section 3.17. Reserve Reports. If Grantor advises the Trustee that the Royalties
have quantifiable reserves related to them as of December 31 of any year, the
Trustee shall engage a firm of nationally recognized independent petroleum
engineers to prepare a Reserve Report for the Royalties as of December 31 of
such year. The engineers shall be directed to prepare the Reserve Report in
accordance with criteria established by the SEC, showing estimated proved oil
and gas reserves attributable to the Royalties as of December 31 of such year
and other reserve information required in order for the Trustee to furnish the
information required in Sections 5.3 and 5.4 of this Agreement. The independent
petroleum engineers shall be selected by Grantor, with the consent of the
Trustee (which consent shall not be unreasonably withheld or delayed). Such
Reserve Report shall also show estimated future net revenues and the net present
value (discounted at ten percent (10%) or such other rate required by the SEC)
of the estimated future net revenues (calculated in accordance with criteria
established by the SEC) of proved reserves attributable to the Royalties, or
such other information as may then be required by applicable rules. The costs of
such Reserve Reports shall be paid in accordance with Section 3.7. Grantor shall
assist in the preparation of the Reserve Reports by furnishing all reserve,
production and geophysical data in its possession relating to the Royalties
reasonably requested by or on behalf of the independent petroleum engineers as
necessary to prepare such Reserve Reports; provided, however, that Grantor 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 Grantor may
be entitled pursuant to applicable law.

Section 3.18. [Reserved].

Section 3.19. Unitholders. Upon request, the Trustee shall provide to any
Unitholder of record a list of Unitholders of record as of the Quarterly Record
Date prior to the date of receipt of such request or as of any other date. The
Trustee shall also have authority to provide any other listing of Unitholders to
any Unitholder or any beneficial owner of Units to the extent required or
permitted by applicable law. By accepting Units, each Unitholder consents to the
Trustee providing any such listing of Unitholders as described above.

 

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Section 3.20. Call Rights.

(a) At any time after the fifth anniversary of the date hereof, Depositor shall
have the right and option (such right and option, the “High-Value Call Option”)
to cause the Trust to purchase all, but not less than all, of the Units from all
the Unitholders at a price of $10 per Unit (appropriately adjusted for Unit
subdivisions, splits or combinations as described in Section 2.5(b) and
Section 3.20(k)), without interest on or any other adjustment to such price per
Unit. Depositor may exercise its High-Value Call Option by providing written
notice (the “HV Call Notice”) to the Trustee of its election to exercise its
High-Value Call Option and tendering to the Trustee the full purchase price for
all outstanding Units (other than Units held by Depositor or a Subsidiary of
Depositor) by wire transfer of immediately available funds to the account of the
Trustee set forth on Schedule 1 (or such other account as designated in writing
by the Trustee after the date hereof). Any election by Depositor to exercise the
High-Value Call Option shall be irrevocable. The HV Call Notice shall state the
record date (the “HV Call Record Date”) for which Unitholders shall be
determined for purposes of the purchase of the Units pursuant to the High-Value
Call Option, which shall be a date not less than 15 nor more than 30 days after
the date of the HV Call Notice. The transfer books for the Units shall be closed
as of 11:59 pm, central time, on the HV Call Record Date (the “HV Termination
Time”) and no transfer of the Units shall be made or recognized after such date.
The date and time of the HV Call Record Date and of the HV Termination Time
shall be identical.

(b) At any time after the fifth anniversary of the date hereof, if the Units are
then listed for trading or admitted for quotation on a national securities
exchange or any quotation system and the VWAP per Unit is equal to $0.25 or less
for the immediately preceding consecutive nine-calendar-month period (ending as
of 11:59 p.m. eastern time on the last day of the applicable calendar month (the
“Nine-Month Period”), Depositor shall have the right and option (such right and
option, the “Low-Value Call Option”) to cause the Trust to purchase all, but not
less than all, of the Units from all the Unitholders at a price of $0.25 per
Unit (appropriately adjusted for Unit subdivisions, splits or combinations as
described in Section 2.5(b) or Section 3.20(k)), without interest on or any
other adjustment to such price per Unit. Depositor may exercise its Low-Value
Call Option by providing to the Trustee within 30 days of the last calendar day
of the Nine-Month Period written notice (the “LV Call Notice”) of its election
to exercise its Low-Value Call Option, together with a certificate signed by a
duly authorized officer of Depositor (on which the Trustee shall be entitled to
rely) (the “VWAP Certificate”) certifying that the VWAP per Unit is equal to
$0.25 (appropriately adjusted for Unit subdivisions, splits or combinations as
described in Section 2.5(b) or Section 3.20(k)) or less for such Nine-Month
Period, and tendering to the Trustee the full purchase price for all outstanding
Units (other than Units held by Depositor or a Subsidiary of Depositor) by wire
transfer of immediately available funds to the account of the Trustee set forth
on Schedule 1 (or such other account as may be designated in writing by the
Trustee after the date hereof). Any election by Depositor to exercise the
Low-Value Call Option shall

 

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be irrevocable. The LV Call Notice shall state the record date (the “LV Call
Record Date”) for which Unitholders shall be determined for purposes of the
purchase of the Units pursuant to the Low-Value Call Option, which shall be a
date not less than 15 nor more than 30 days after the date of the LV Call
Notice. The transfer books of the Units shall be closed as of 11:59 pm, central
time, on the LV Call Record Date (the “LV Termination Time” and, together with
the HV Termination Time, the “Call Termination Time”) and no transfer of the
Units shall be made or recognized after such date. The date and time of the LV
Call Record Date and of the LV Termination Time shall be identical. The Trustee
shall have no duty or authority to question the VWAP Certificate or the matters
stated therein and shall be entitled to rely thereon and shall be fully
protected in relying thereon without investigation.

(c) As soon as reasonably practicable after the date of either a HV Call Notice
or LV Call Notice, the Trustee shall mail or cause to be mailed to each
Unitholder of record notice, substantially in form agreed between the Depositor
and the Trustee, of the exercise of the High-Value Call Option or the Low-Value
Call Option, as applicable, and instructions for use in effecting the surrender
of Book-Entry Units in exchange for the purchase price with respect to such
Units.

(d) All outstanding Units as of the Call Termination Time shall be cancelled as
of the Call Termination Time (including all Units held by Depositor) and no
Unitholder shall thereafter have any Beneficial Interest or other right or
interest with respect to any Units and all interests, rights and benefits of
such Unitholder as a Unitholder shall terminate other than the right to receive
the purchase price for such Units as provided in this Section 3.20 and an
amount, net of any expenses of the Trustee in connection with the dissolution
and termination of the Trust, equal to such Unitholder’s pro rata share of
(i) any Quarterly Distribution Amount for which a record date prior to the Call
Termination Date has been publicly announced by the Trustee and for which a cash
reserve has been established that has not been distributed to such Unitholder
and (ii) the Trust’s share of the proceeds of Production that has accrued but
not yet been paid prior to the Call Termination Time (the “Accrued Production
Amount”). Depositor shall certify to the Trustee the amount of the Accrued
Production Amount, and the Trustee shall be fully protected and shall incur no
liability in relying on such certification. In lieu of paying the Accrued
Production Amount to the Trust in accordance with the terms of the Conveyances,
Depositor shall pay the Accrued Production Amount to the Trust within five
(5) Business Days after the occurrence of the Call Termination Time. Within ten
(10) Business Days after the occurrence of the Call Termination Time, the
Trustee shall distribute to each record holder of Units (other than Depositor)
as of the Call Termination Time, at such Unitholder’s address as shown on the
records of the Trustee as provided in Section 12.6, together with notice of
cancellation, an amount equal to the product of (i) the total number of Units
held by such Unitholder as of the Call Termination Time multiplied by (ii) the
per Unit purchase price as provided in Section 3.20(a) or Section 3.20(b), as
applicable. In the event the tender is refused by a Unitholder or if the
tendered sum is returned to the Trustee, the tendered sum shall be held by the
Trustee in a trust account for the benefit of such Unitholder, until proper
claim for same (together with interest accrued thereon) has been made by such
Unitholder, but subject to applicable laws concerning unclaimed property. In the
event of

 

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a transfer of ownership of Units that is not registered in the transfer records
of the Trustee, the purchase price to be paid with respect to such Units may be
paid to such a transferee upon delivery to the Trustee of all documents required
by the Trustee (pursuant to Section 4.7 or otherwise) to evidence and effect
such transfer and to evidence that any potentially applicable stock transfer or
other similar taxes have been paid or are not applicable are presented to the
Trustee. No interest shall be paid or shall accrue on the cash payable upon
surrender of any Book-Entry Unit.

(e) All costs and expenses incurred by the Trustee in connection with the
exercise by Depositor of the High-Value Call Option or of the Low-Value Call
Option shall be paid by Depositor (or, if paid by the Trustee, reimbursed by
Depositor), without limitation by the Depositor Annual Expense Cap or any other
provision of this Agreement. All expenses and liabilities of the Trust at the
Call Termination Time that exceed the funds then available to the Trust shall be
paid by Depositor (or, if paid by the Trustee, reimbursed by Depositor, without
limitation by the Depositor Annual Expense Cap or any other provision of this
Agreement).

(f) The Trustee shall invest, as directed by Depositor, any funds tendered by
Depositor to the Trustee pursuant to Section 3.20(a) or Section 3.20(b), as
applicable; provided, however, that no such investment or loss thereon shall
affect the amounts payable to holders of Units pursuant to this Section 3.20,
and following any losses from any such investment, Depositor shall promptly
provide additional funds to the Trustee for the benefit of the Unitholders at
the Call Termination Time in the amount of such losses, which additional funds
will be deemed to be part of the purchase price for such Units. Any interest or
other income resulting from such investments shall be paid to Depositor, upon
demand.

(g) Any portion of the funds tendered by Depositor to the Trustee pursuant to
Section 3.20(a) or Section 3.20(b), as applicable (including any interest or
other amounts received with respect thereto) that remains unclaimed by, or
otherwise undistributed to, Unitholders for one year after the Call Termination
Time shall be delivered to Depositor, upon demand, and any Unitholder who has
not theretofore complied with this Section 3.20 shall thereafter look only to
Depositor as general creditor thereof, for satisfaction of its claim for the
purchase price of the Units held by such Unitholder as of the HV Call Record
Date or LV Call Record Date, as applicable, without any interest thereon.

(h) Neither Depositor nor the Trustee shall be liable to any person in respect
of any portion of the funds tendered by Depositor to the Trustee pursuant to
Section 3.20(a) or Section 3.20(b), as applicable, delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
Notwithstanding any other provision of this Agreement, any portion of the funds
tendered by Depositor to the Trustee pursuant to Section 3.20(a) or
Section 3.20(b), as applicable, that remains undistributed to the holders of
Book-Entry Units as of the second anniversary of the Call Termination Time (or
immediately prior to such earlier date on which such funds would otherwise
escheat to or become the property of any governmental entity), shall, to the
extent permitted by applicable law, become the property of Depositor, free and
clear of all claims or interest of any person previously entitled thereto.

 

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(i) Depositor and the Trustee (without duplication) shall be entitled to deduct
and withhold from the purchase price and other amounts otherwise payable to any
Unitholder upon the purchase of its Units pursuant to this Section 3.20 such
amounts as are required to be deducted and withheld with respect to the making
of such payment under applicable tax law. Any amounts so deducted, withheld and
paid over to the appropriate taxing authority shall be treated for all purposes
of this Agreement as having been paid to the Unitholder in respect of which such
deduction or withholding was made.

(j) If at any time the Trustee is uncertain about its duties pursuant to this
Section 3.20, or is subject to competing, conflicting or inconsistent demands in
connection with any matter under any provision of this Agreement, the Trustee
shall be fully protected and shall incur no liability to any Unitholder or
Depositor or to Grantor or to any other Person if the Trustee declines to take
any action until (i) all such demands are resolved in a written agreement signed
by all of the Persons having an interest in the matter, (ii) the Trustee has
received either (x) written instructions from Depositor (unless Depositor has a
conflict of interest in the matter) or (y) a written opinion of counsel, in
either case advising Trustee as to its duties or the manner in which to resolve
such uncertainties or competing, conflicting or inconsistent demands or
(iii) Trustee has obtained an appropriate order from a court of competent
jurisdiction.

(k) In the event outstanding Units shall be subdivided or split into a greater
number of Units, the price of the High-Value Call Option (as defined in
Section 3.20(a)) and the price of such Low-Value Call Option (as defined in
Section 3.20(b)) in effect on the day upon which such subdivision or split
becomes effective shall be proportionately reduced, and, conversely, in the
event outstanding Units shall each be combined into a smaller number of Units,
the price of such High-Value Call Option (as defined in Section 3.20(a)) and the
price of such Low-Value Call Option (as defined in Section 3.20(b)) in effect on
the day upon which such combination becomes effective shall be proportionately
increased, such increase or reduction, as the case may be, to become effective
immediately on the day upon which such subdivision, split or combination becomes
effective.

(l) Contemporaneously with the Depositor’s delivery to the Trustee of the HV
Call Notice or LV Call Notice, as applicable, Depositor shall deliver or cause
to be delivered to each record holder of the Company Convertible Securities a
copy of such HV Call Notice or LV Call Notice. If any such holder of the Company
Convertible Securities converts such Company Convertible Securities in
accordance with the respective terms of the applicable underlying agreements
prior to the HV Call Record Date or the LV Call Record Date, as applicable, then
such holder shall be deemed to hold the number of Units that would be
distributed to such holder upon such conversion (whether or not such Units have
been distributed to such holder) and shall be entitled to the purchase price
attributable to such Units upon exercise of the High-Value Call Option or
Low-Value Call Option, as applicable. The Depositor shall notify the Trustee or
transfer agent designated by the Trustee of such conversion in accordance with
Section 2.5.

 

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ARTICLE IV.

BENEFICIAL SHARES

Section 4.1. Creation and Distribution. The entire Beneficial Interest shall be
divided into 230,172,696 Units (as adjusted to reflect any Unit subdivision,
split or combination as described in Section 2.5(b) and Section 3.20(k)). The
Units shall be uncertificated and ownership thereof evidenced by entry of a
notation in an ownership ledger maintained for such purpose by the Trustee or a
transfer agent designated by the Trustee. All Units issued by the Trust in
accordance with the terms of this Agreement shall be validly issued, fully paid
and non-assessable. The Unitholders shall be the sole beneficial owners of the
Trust Estate and the Trust.

Section 4.2. Beneficial Interest of Unitholders; Limitation on Personal
Liability of Trust Unitholders. Each Unit shall represent pro rata undivided
ownership of the Beneficial Interest and shall entitle its holder to participate
pro rata in the rights and benefits of the Unitholders under this Agreement.
Each Unitholder (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 such Unitholder and the
heirs, personal representatives, successors and assigns of such Unitholder. By
an assignment or transfer of one or more Units the assignor thereby shall,
effective as of the close of business on the date of transfer and with respect
to such assigned or transferred Unit or Units, part with, except as required by
federal or state tax laws or provided in Section 4.4 in the case of a transfer
after a Quarterly Record Date and prior to the corresponding quarterly payment
date, (i) all his Beneficial Interest attributable thereto; (ii) all his rights
in, to and under such Unit; and (iii) all interests, rights and benefits under
this Trust of a Unitholder which are attributable to such Unit or Units as
against all other Unitholders and the Trustee. The Units and the rights,
benefits and interests attributable to them (including, without limiting the
foregoing, the entire Beneficial Interest) are and shall be held and construed
to be in all respects personal property, and Units shall be bequeathed,
assigned, disposed of and distributed as personal property. No Unitholder as
such shall have any legal title in or to any real or personal property interest
which is a part of the Trust Estate, including, without limiting the foregoing,
the Royalties or any part thereof, but the sole interest of each Unitholder
shall be such Unitholder’s Beneficial Interest and the obligation of the Trustee
to hold, manage and dispose of the Trust Estate and to account for the proceeds
thereof as herein provided. No Unitholder shall have the right to call for or
demand or secure any partition or distribution of the Royalties during the
continuance of the Trust or during the period of liquidation and winding up
under Section 9.3 of this Agreement or at any other time. Pursuant to
Section 3803(a) of the Delaware Trust Act, the Unitholders shall be entitled, to
the fullest extent permitted by law, to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.

Section 4.3. [Reserved].

 

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Section 4.4. Registration and Transfer of Units. The Units shall be transferable
as provided herein, and then only on the records of the Trustee and, except as
provided in Section 3.15 hereof, upon compliance with such reasonable
regulations as the Trustee may prescribe. No service charge shall be made to
Unitholders or Transferees for any transfer of a Unit, but the Trustee may
require payment of a sum sufficient to cover any expense, tax or other
governmental charge that may be imposed in relation thereto. Until any such
transfer is completed, the Trustee may treat the owner of any Unit as shown by
its records 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 Beneficial
Interest represented thereby by any other Person. Any such transfer of a Unit
shall, as to the Trust and the Trustee, transfer to the Transferee as of the
close of business on the date of transfer all of the Beneficial Interest of the
transferor; provided, however, that a transfer of a Unit after any Quarterly
Record Date shall not transfer to the Transferee the right of the transferor to
any sum payable to such transferor as title holder of the Unit of record on such
Quarterly Record Date or any right to vote on any matter as to which the record
date for the vote is prior to the transfer. As to matters affecting the title,
ownership, warranty or transfer of Units and Certificates, except as provided to
the contrary herein, Article 8 of the Uniform Commercial Code, the Uniform Act
for Simplification of Fiduciary Security Transfers, and other statutes and rules
with respect to the transfer of securities, each as adopted and then in force in
the State of Delaware, shall, govern and apply. Neither the death of any
Unitholder or any other event shall entitle any Unitholder or Transferee or
other Person to an accounting or valuation for any purpose.

Section 4.5. [Reserved].

Section 4.6. Protection of Trustee. At any time, the Trustee or the Delaware
Trustee may request certification of any fact, circumstance, computation or
other matter relevant to the Trust or the Trustee’s (or Delaware Trustee’s)
performance of its duties hereunder, and the Trustee or Delaware Trustee, as
applicable, shall be fully protected in relying on any such certification or
other statement or advice from Grantor or Depositor or any officer or other
employee of Grantor or Depositor or any agent of any of them. Without limiting
the foregoing, the Trustee and the Delaware Trustee shall be fully protected in
acting or relying upon any notice, certificate, assignment or other document or
instrument believed by the Trustee or the Delaware Trustee to be genuine and to
have been signed by the proper party or parties, including, without limitation,
any instructions or documents received from Grantor or Depositor in connection
with this Agreement. Except as provided herein to the contrary, the Trustee and
the Delaware Trustee are specifically authorized to rely upon the application of
Article 8 of the Uniform Commercial Code, the application of 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 adopted
and then in force in the State of Delaware, as to all matters affecting title,
ownership, warranty or transfer of the Units, without any personal liability for
such reliance, and the indemnity granted under Section 6.2 of this Agreement
shall specifically extend to any matters arising as a result thereof. In
accepting and performing its duties hereunder the Trustee acts not in its
individual capacity, and all persons having any claim against the Trustee by
reason of the transactions contemplated by this Agreement or any other Trust
related document or agreement shall look only to the Trust’s property for
payment or satisfaction thereof. No provision of this Agreement shall require
the Trustee to expend or risk its personal funds or otherwise incur any
financial liability in the performance of its rights or powers hereunder. Under
no circumstances shall the Trustee be personally liable for any representation,
warranty, covenant, agreement, or indebtedness of the Trust.

 

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Section 4.7. Determination of Ownership of Units. In addition to the rights and
protections of and for the Trustee set forth in Section 4.6 of this Agreement
and elsewhere in this Agreement, in the event of any disagreement between
Persons claiming to be Transferees of any Unit, or in the event of any question
on the part of the Trustee when presented with a request for transfer of a Unit
that the Trustee believes is not fully resolved by opinions of counsel or other
documents obtained in connection therewith, and in addition to any other rights
it may have under applicable law, the Trustee shall be entitled, at its option,
to refuse to recognize any such claim so long as such disagreement or question
shall continue. In so refusing, the Trustee may elect to refuse or refrain to
act with respect to making delivery or other 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 the Trustee shall be entitled to
continue so to refrain and refuse so to act, until:

(a) the rights of the adverse claimants or the questions of the Trustee have
been adjudicated by arbitration (pursuant to Article XI) or by a final
nonappealable judgment by a court assuming and having jurisdiction of the
parties and the interest and money involved, or

(b) all differences have been resolved by valid agreement between such parties
and the Trustee shall have been notified thereof in writing signed by all of the
interested parties.

Section 4.8. Transfer Agent. The Trustee may serve as transfer agent or may
designate a transfer agent at any time. The initial transfer agent shall be
American Stock Transfer & Trust Company, LLC. The Trustee may dismiss the
transfer agent and designate a successor transfer agent at any time with or
without reason. Any entity serving as transfer agent shall be entitled to
payment of its fees in accordance with the terms of its engagement.

ARTICLE V.

ACCOUNTING AND DISTRIBUTION; REPORTS

Section 5.1. Fiscal Year and Accounting Method. The fiscal year of the Trust
shall be the calendar year. The books and records of the Trust shall be
maintained and the financial statements of the Trust shall be prepared in
accordance with applicable requirements that will provide appropriate financial
data responsive to the reasonable needs of the Unitholders and which shall
comply with Sections 5.3 and 5.4, which may be a system of accounting other than
U.S. generally accepted accounting principles (“GAAP”).

Section 5.2. Distributions. The Trustee shall determine the Quarterly
Distribution Amount for each Quarter and shall establish a cash reserve equal to
such amount for distribution to Unitholders of record as of the Quarterly Record
Date for such Quarter. On the Distribution Date for such Quarterly Distribution
Amount, the Trust will distribute the Quarterly Distribution Amount pro rata to
the Unitholders of record on the applicable Quarterly Record Date.
Notwithstanding anything herein to the contrary, Trust shall not make any
distribution to the Unitholders unless and until the Trust has received revenues
generated from the Royalties and has paid any expenses or liabilities of the
Trust then due and payable (including any amounts

 

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payable to Grantor or Depositor) and funded any reserves the Trustee then
considers advisable in amounts the Trustee deems appropriate. Nothing herein
shall prevent or restrict payments to Unitholders pursuant to Section 3.15 or
Section 3.20.

Section 5.3. Income Tax Reporting. For federal and state income tax purposes,
the Trust shall file such returns and statements as it is advised are required
to comply with applicable provisions of the Code and regulations and any
applicable state laws and regulations, in either case to permit each Unitholder
to report such Unitholder’s share of the income and deductions of the Trust. The
Trust shall treat all income and deductions of the Trust for each Quarter as
having been realized on the Quarterly Record Date for such month unless
otherwise advised by its tax advisors, counsel or the Internal Revenue Service.
The Trust shall report as a grantor trust until and unless it is advised by tax
counsel or other tax experts that such reporting is no longer proper or
appropriate. Within 75 days following the end of each fiscal year, the Trust
shall mail, to each Unitholder of record on a Quarterly Record Date during such
fiscal year, a report which shall show in reasonable detail such information as
is necessary to permit all holders of record of Units on a Quarterly Record Date
during such fiscal year to make calculations necessary for tax purposes.

Section 5.4. Reports to Unitholders.

(a) Within 45 days following the end of each of the first three Quarterly
Periods of each calendar year (or such other period of time as may be required
by the rules and regulations of the SEC adopted with respect to the Exchange Act
or of any U.S. securities exchange or quotation system on which the Units are
listed or admitted to trading), the Trust shall mail to each Person who was a
Unitholder of record on the Quarterly Record Date for such Quarterly Period a
report, which may be a copy of the Trust’s Quarterly Report on Form 10-Q under
the Exchange Act (or any successor form or report under the Exchange Act or any
successor legislation), which shall show in reasonable detail the assets and
liabilities and receipts and disbursements of the Trust for such Quarterly
Period; provided, however, the obligation to mail a report to each Unitholder of
record shall be deemed to be satisfied if the Trust files a copy of its
Quarterly Report on Form 10-Q (or any successor form or report) on the
Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system maintained by
the SEC or any successor system or otherwise makes such report publicly
available on an Internet website that is generally accessible to the public or
otherwise make such report publicly available.

(b) Within 90 days following the end of each fiscal year (or such shorter period
of time as may be required by the rules and regulations of the SEC adopted with
respect to the Exchange Act or of any securities exchange or quotation system on
which the Units are listed or admitted to trading), the Trust shall mail to each
Person who was a Unitholder of record on a date to be selected by the Trustee an
annual report, which may be a copy of the Trust’s Annual Report on Form 10-K
under the Exchange Act (or any successor form or report under the Exchange Act
or any successor legislation), containing financial statements audited by an
independent registered public accounting firm selected by the Trustee, plus such
annual reserve information regarding the Royalties as may be required by the
rules and regulations of the SEC; provided, however, the obligation to

 

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mail a report to each Unitholder of record shall be deemed to be satisfied if
the Trust files a copy of its Annual Report on Form 10-K (or any successor form
or report) on the EDGAR system maintained by the SEC or any successor system or
otherwise makes such report publicly available on an Internet website that is
generally accessible to the public or otherwise makes such report publicly
available.

(c) Notwithstanding the foregoing, the Trust shall furnish to the Unitholders
such reports, in such manner and at such times, as are at any time required by
law or by rules or regulations of any U.S. securities exchange or quotation
system on which the Units are listed or admitted for trading, if applicable.

Section 5.5. Filings. The Trust shall make all Exchange Act filings required by
applicable law or regulation. Depositor or Grantor shall prepare and file all
filings and reports required under state securities or Blue Sky laws. The Trust
shall take all reasonable actions to prepare and mail to Unitholders any
reports, press releases or statements, financial or otherwise, that Depositor or
Grantor notifies the Trust in writing are required to be provided by the Trust
to Unitholders by law or governmental regulation or the requirements of any
securities exchange or quotation system on which the Units are listed or
admitted for trading, if applicable, subject to receipt by the Trust of a
satisfactory opinion of counsel confirming the necessity of such reports, if
such an opinion is deemed necessary by the Trustee; provided, however, the
obligation to mail such reports, press releases or statements, financial or
otherwise, to each Unitholder of record shall be deemed satisfied if such
information is filed on the EDGAR system maintained by the SEC or any successor
system or is otherwise made publicly available on an Internet website that is
generally accessible to the public or otherwise.

Section 5.6. Information to be Supplied by Grantor, Depositor and Trust.
Depositor or Grantor shall provide, or cause to be provided, to the Trust on a
timely basis (a) annual audited financial statements of the Trust and quarterly
unaudited financial statements of the Trust and such other information as the
Trustee may reasonably require in order for the Trust to obtain a third party
reserve report or other reports, in each case as shall be necessary for the
Trust to comply with its reporting obligations pursuant to the Exchange Act
and/or the requirements of any securities exchange or quotation system on which
the Units are listed or admitted for trading and (b) such other information
available to Depositor or Grantor concerning the Royalties (including
information with respect to the properties burdened by the Royalties) and
related matters as shall be necessary for the Trust to comply with its reporting
obligations pursuant to the Exchange Act, the requirements of any securities
exchange or quotation system on which the Units are listed or admitted for
trading and this Agreement, if applicable, including, without limitation,
Sections 5.3, 5.4 and 5.5 hereof. For purposes of this Section 5.6, the phrase
“timely basis” shall mean promptly and not less than 10 Business Days prior to
the date on which the Trust is required to comply with such reporting
obligations. In addition, Depositor or Grantor shall provide to the Trust on a
timely basis, for use in connection with the Trust’s annual report on Form 10-K
and quarterly report on Form 10-Q (or successor forms or reports), all
information required to comply with the applicable Exchange Act requirements
(including, if so required, a “Management’s Discussion and Analysis of Financial
Condition and Results of operations” relating to such financial statements) and
such further information as may be required by such reports or other required
reports and the related rules and regulations as they may exist from time to
time. In addition to the financial statements and other information or reports
to be prepared by

 

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Depositor or Grantor for the Trust, Depositor or Grantor shall provide to the
Trust in connection with such financial statements and other information or
reports, such supporting information, data, documentation and other information
or materials, and such certifications of Depositor or Grantor, as may be
reasonably requested by the Trustee from time to time for the purpose of
confirming or verifying any of the financial statements and other information or
reports to be prepared by Depositor or Grantor for the Trust, and the Trust and
the Trustee shall be entitled to rely thereon without investigation and shall be
fully protected and incur no liability in doing so. Such supporting information,
data, documentation and other information or materials, and such certifications
of Depositor or Grantor, shall be provided to the Trust on a timely basis.
Notwithstanding any provision to the contrary in this Agreement or the
Conveyances, Depositor, Grantor and their Affiliates shall not be required to
disclose, produce or prepare any information, documents or other materials which
(i) were generated for analysis or discussion purposes or contain interpretative
data or (ii) are subject to the attorney-client or attorney-work-product
privileges, or any other privileges to which they may be entitled pursuant to
applicable law.

Section 5.7. Reliance on Information. The Trustee, so long as acting in good
faith, shall be entitled to rely, without investigation, on all information
provided to it by Depositor or Grantor for purposes of complying with the
reporting obligations of the Trust as contemplated by Section 5.6, including,
without limitation, information regarding depletion and entitlement to tax
credits under Section 29 of the Code. Notwithstanding any time limit imposed by
applicable laws or regulations or by the provisions of this Agreement, if, due
to the unavailability prior to the expiration of any such time limit of
information necessary, or a delay in receipt by the Trustee of information
necessary, for preparation of a report required to be filed, made or delivered
by the Trustee, the Trustee shall be unable to prepare and file or mail such
report within such time limit, the Trustee shall prepare and file or mail such
report as soon as practicable after such information is received.

ARTICLE VI.

LIABILITY OF TRUSTEE, INDEMNIFICATION AND METHOD OF SUCCESSION

Section 6.1. Liability of Trustee and Delaware Trustee.

(a) Except as expressly set forth in this Agreement, neither the Trustee nor the
Delaware Trustee shall have any duties or liabilities, including fiduciary
duties, to the Trust or any Unitholder; provided that nothing herein shall be
deemed to eliminate the implied contractual covenant of good faith and fair
dealing. To the extent that, at law or in equity, the Trustee and the Delaware
Trustee have duties, including fiduciary duties, and liabilities relating
thereto to the Trust or any Unitholder, the Trustee and the Delaware Trustee
shall not be liable to the Trust or to any Unitholder for its good faith
reliance on the provisions of this Agreement. For the avoidance of doubt, to the
fullest extent permitted by law, no person other than the Trustee and the
Delaware Trustee shall have any duties (including fiduciary duties) or
liabilities at law or in equity to the Trust, any Unitholder or any other
Person. The provisions of this Agreement, to the extent that they restrict or
eliminate the duties (including fiduciary duties) and liabilities of the Trustee
or the Delaware Trustee or any other Person otherwise existing at law or in
equity are agreed by the parties hereto and the Trust to replace such other
duties and liabilities of the Trustee, the Delaware Trustee and such other
Persons. Notwithstanding any other provision of this Agreement, the Trustee
shall not be liable to Depositor, Grantor, any Unitholder or any other Person
under any circumstances for special, punitive or consequential damages or lost
profits.

 

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(b) Each of the Trustee and the Delaware Trustee, in carrying out its powers and
performing its duties, may act in its discretion directly, or at the expense of
the Trust, through agents or attorneys pursuant to agreements entered into with
any of them, and shall be personally or individually liable only for fraud,
willful misconduct or gross negligence or for acts or omissions in bad faith as
adjudicated by arbitration (subject to the Trustee’s consent to such arbitration
in accordance with Article IX) or a final, nonappealable judgment of a court of
competent jurisdiction and shall not individually or personally be liable for
any act or omission of any agent or employee of the Trustee or Delaware Trustee,
as applicable, unless the Trustee or Delaware Trustee, as applicable, has acted
in bad faith or with willful misconduct or gross negligence in the selection and
retention of such agent or employee.

Section 6.2. Indemnification of Trustee and Delaware Trustee. The Trustee, the
Delaware Trustee and their respective officers, agents and employees when acting
in such capacity shall be indemnified and held harmless by, and receive
reimbursement from, the Trust Estate, Depositor and Grantor, jointly and
severally, against and from any and all liabilities, obligations, costs,
expenses, actions, suits, claims, damages (including consequential damages and
all other types of damages), losses, penalties, taxes, fees and other charges of
any kind and any nature whatsoever (“Article VI Expenses”) incurred by it
individually or as Trustee or Delaware Trustee in the administration of the
Trust and the Trust Estate or any part or parts thereof, including, without
limitation, any Article VI Expenses arising out of or in connection with any
liability under Environmental Laws, or in the doing of any act done or performed
or omission occurring on account of its being Trustee or Delaware Trustee or
acting in such capacity, except any Article VI Expenses to which it is liable
under Section 6.1. Each of the Trustee and Delaware Trustee shall have a first
priority lien upon the Trust Estate to secure it for such indemnification and
reimbursement and for compensation to be paid to the Trustee and the Delaware
Trustee. Neither the Trustee or Delaware Trustee nor any officer, agent or
employee of the Trustee or the Delaware Trustee shall be entitled to any
reimbursement or indemnification from any Unitholder for any Article VI Expenses
incurred by the Trustee, the Delaware Trustee or any such officer, agent or
employee, their right of reimbursement and indemnification, if any, being
limited solely to the Trust Estate (and Depositor and Grantor as provided
herein), whether or not the Trust Estate is exhausted without full reimbursement
or indemnification of the Trustee, Delaware Trustee or any such officer, agent
or employee. The Trust Estate, Depositor or Grantor shall, promptly upon
request, reimburse the Trustee and the Delaware Trustee for, or promptly upon
request advance to the Trustee and the Delaware Trustee, any fees or expenses,
including reasonable legal expenses, incurred or estimated to be incurred by the
Trustee or Delaware Trustee in connection with the investigation or defense of
any Article VI Expenses with respect to which the Trustee or Delaware Trustee is
or may be entitled to indemnity by Depositor and Grantor under this Section 6.2.
All indemnification and contribution and other rights of the Trustee and the
Delaware Trustee set forth in this Article VI, and all Protective Provisions set
forth in this Article VI, are in addition to the other indemnification,
contribution and other rights and Protective Provisions set forth elsewhere in
this Agreement. All of the indemnification and contribution and Protective
Provisions and other rights of the Trustee and the Delaware Trustee set forth
elsewhere in this Agreement are in addition to the indemnification and
contribution and Protective Provisions and other rights of the Trustee and the
Delaware Trustee set forth in this Article VI.

 

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Section 6.3. Priority and Continuity of Indemnification Obligations. Any Article
VI Expenses for which the Trustee, the Delaware Trustee or any officer, agent,
employee or controlling person of the Trustee or Delaware Trustee may be
entitled to indemnification, reimbursement, advancement or contribution shall be
first satisfied out of the Trust Estate prior to any indemnification,
reimbursement, advancement or contribution from Grantor or Depositor; provided,
that Grantor or Depositor 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 Article
VI Expenses or if, for any reason (other than failure of the Trustee to cause
the Trust to pay such requested amounts if cash is available to the Trust
Estate), the Trustee or the Delaware Trustee has not received any amount it has
requested from the Trust Estate within ten days after making request therefor.
The obligations of the Trust Estate, Depositor and Grantor to provide
indemnification, reimbursement, advancement of expenses and contribution to the
Trustee, the Delaware Trustee and their respective officers, agents, employees
or controlling persons under this Agreement shall survive the resignation or
removal of the Trustee or the Delaware Trustee and the termination of the Trust
and this Agreement.

Section 6.4. Contribution. If the indemnification provided for in this Agreement
shall for any reason (including, without limitation, due to violation of public
policy) be unavailable to or insufficient to hold harmless the Trustee or the
Delaware Trustee in respect of any Article VI Expense or other liability,
expense, claims, damages or loss as to which the Trustee or Delaware Trustee
would otherwise be entitled to indemnification pursuant to Sections 3.16(d) or
6.2, then Depositor, Grantor and the Trust shall, in lieu of indemnifying the
Trustee or Delaware Trustee, as applicable, contribute to the amount paid or
payable by the Trustee or Delaware Trustee as a result of such liability,
expense, claims, damages or loss, in such proportion as shall be appropriate to
reflect the relative fault of Depositor, Grantor (with respect to contribution
by Depositor, the Trust or Grantor), the Trustee or Delaware Trustee with
respect to the events, acts or circumstances giving rise to the Article VI
Expense or other liability, expense, claims, damages or loss, as well as any
other relevant equitable considerations. For purposes of determining
contribution liability with respect to claims based upon the Exchange Act or
other securities laws, relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
Depositor or Grantor or by the Trustee or the Delaware Trustee. The Trustee and
the Delaware Trustee shall look first to the Trust Estate for contribution under
this Section 6.4, and then to Depositor or Grantor to the extent the assets of
the Trust Estate are not sufficient to reimburse the Trustee or Delaware Trustee
fully for all such Article VI Expense or other liability, expense, claims,
damages or loss; provided, however, that if, for any reason (other than the
failure of the Trustee to cause the Trust to pay such requested amounts if cash
is available to the Trust Estate), the Trustee or the Delaware Trustee has not
received any amount it has requested from the Trust Estate within ten days after
making request therefor, Depositor or Grantor shall pay such amount promptly.

 

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Section 6.5. Indemnification Procedures. If any action or proceeding shall be
brought or asserted against the Trust, the Trustee, the Delaware Trustee or any
officer, Agent, Affiliate or employee thereof (each referred to as an
“Indemnified Party” and, collectively, the “Indemnified Parties”) in respect of
which indemnity may be sought from Depositor or Grantor or the Trust (the
“Indemnifying Party”) pursuant to Sections 3.16(d) or 6.2 of this Agreement, 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 costs
and expenses; provided, however, that the failure so to notify the Indemnifying
Party of the commencement of any such action or proceeding shall not relieve the
Indemnifying Party from any liability that it may have to any Indemnified Party
except to the extent that the Indemnifying Party is prejudiced or damaged by the
failure to receive prompt notice. 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 (a) the Indemnifying Party has agreed to pay such
fees and expenses, (b) the Indemnifying Party shall have failed to assume the
defense of such action or proceeding and employ counsel reasonably satisfactory
(including the qualifications of such counsel) to the Indemnified Party on any
such action or proceeding or (c) the named parties to any such action or
proceeding include both the Indemnified Party and 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 except in the case of the addition of counsel as contemplated above or
caused by the existence or development of a conflict rendering unified
representation impermissible or unadvisable, 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 (which consent shall not be unreasonably withheld, conditioned or
delayed) 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 Expenses
by reason of such settlement or judgment. The Indemnifying Party shall not,
without the prior written consent of the Indemnified Party, settle or compromise
any claim or consent to the entry of any judgment with respect to which
indemnification is being sought hereunder unless such settlement, compromise or
consent (a) includes an unconditional release of the Indemnified Party from all
liability arising out of such claim, (b) does not contain any admission or
statement suggesting any wrongdoing or liability on behalf of the Indemnified
Party, and (c) does not contain any equitable order, judgment or term (other
than the fact of payment or the amount of such payment) that in any manner
affects, restrains or interferes with the business of the Indemnified Party. The
Indemnified Party and the Indemnifying Party (if not Grantor or Depositor)
shall, if so requested by Grantor or Depositor, provide reports to Grantor or
Depositor on the status of such actions or proceedings; provided,

 

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however, that no Indemnified Party or Indemnifying Party shall be required to
disclose or produce any information, documents or other materials that are
subject to the attorney-client or attorney-work-product privileges, or any other
privileges to which such party may be entitled pursuant to applicable law.

Section 6.6. Resignation of Trustee.

(a) The Trustee may resign, with or without cause, at any time by notice to
Depositor and each of the then Unitholders of record. Such notice shall specify
a date when such resignation shall take effect, which shall be a Business Day
not fewer than sixty (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 appointment as successor Trustee. In case
of such resignation, the Trustee may nominate a successor Trustee which shall be
approved and appointed by Depositor without a meeting or vote of the
Unitholders, provided such successor meets the standards to serve as the Trustee
as provided herein. If the Trustee has given notice of resignation in accordance
with this Section 6.6, such resignation is with cause and a successor has not
accepted its appointment as successor Trustee during the 90-day period following
the receipt by Depositor of such notice of resignation, the annual fee payable
to the Trustee in accordance with Section 7.1 and Schedule 2 hereto shall be
increased as of the end of such 90-day period by 5%, and shall be further
increased by 5% for each month or portion thereof thereafter (to a maximum of
two times the fee payable at the time the notice of resignation was received by
Depositor) until a successor has accepted its appointment as successor Trustee.
The incremental amount of any such increased fees shall be paid to the Trustee
on a monthly basis at the beginning of each such month or portion thereof.

(b) If at any time (a) the Trustee has not received compensation for its
services or expenses or other amounts owed to the Trustee pursuant to
Article VII, (b) Depositor has failed to fully fund a Depositor Loan in a
reasonably timely manner after the Trustee has requested such Depositor Loan
pursuant to Section 7.5 or has failed to pay Trust Obligations up to the
Depositor Annual Expense Cap in accordance with Section 3.7, (c) the Trust
Obligations exceed the amount of funds of the Trust available to pay such Trust
Obligations, and (d) at any time that a stand-by reserve account or letter of
credit is available to the Trustee as contemplated by Section 12.11, the Trustee
is entitled to draw on the stand-by reserve account or letter of credit, then
the Trustee shall be permitted to resign for cause. In the case of such
resignation for cause, the Trustee may at its election cause the sale of the
Royalties and dissolve, windup and thereafter terminate the Trust in accordance
with Article IX, and shall be fully protected and shall incur no liability to
Depositor, Grantor, any Unitholder or any other Person for doing so. No such
election by the Trustee to dissolve, windup and thereafter terminate the Trust
in accordance with this Section 6.6(b) or Article IX shall result or be deemed
to result in any waiver or release of any right or protection of the Trustee or
any waiver or release of any Protective Provision set forth in this Agreement.

 

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Section 6.7. Removal of Trustee. The Trustee or Delaware Trustee may be removed,
with or without cause, at a meeting held in accordance with the requirements of
Article VIII by the affirmative vote of the holders of a majority of all the
Units then outstanding; provided, however, that any removal of the Trustee or
Delaware Trustee shall be effective only at such time as a qualified successor
(including, in the case of the Delaware Trustee, fulfillment of the requirements
of Section 3807(a) of the Delaware Trust Act) Trustee or Delaware Trustee has
accepted appointment as successor Trustee or Delaware Trustee.

Section 6.8. Appointment of Successor Trustee. Except to the extent otherwise
provided in Section 6.6, in the event of a vacancy in the position of Trustee or
Delaware Trustee or if the Trustee or Delaware Trustee has given notice of its
intention to resign, the holders of the majority of the Units present or
represented at a meeting held in accordance with the requirements of Article
VIII may appoint a successor Trustee or Delaware Trustee. Except to the extent
otherwise provided in Section 6.6, nominees for appointment may be made by
(a) the resigned, resigning or removed Trustee or Delaware Trustee, (b) any
Unitholder or Unitholders owning of record at least twenty-five percent (25%) of
the Units then outstanding or (c) Depositor. Any such successor Trustee shall be
a bank or trust company having capital, surplus and undivided profits (as of the
end of its last fiscal year prior to its appointment) of at least $100,000,000.
Any successor Delaware Trustee shall be a bank or trust company having its
principal place of business in the State of Delaware. In the event that a new
Trustee or Delaware Trustee has not been approved within sixty (60) days after
the notice of resignation, a vote of a majority of the holders of Units removing
the Trustee or Delaware Trustee, or other occurrence of a vacancy in the
position of Trustee or the Delaware Trustee, a successor Trustee or Delaware
Trustee may be appointed by any State or Federal District Court having
jurisdiction in New York, New York or Wilmington, Delaware, upon the application
of Depositor, Grantor, any Unitholder or the Trustee or Delaware Trustee
tendering its resignation as Trustee or Delaware Trustee, and in the event any
such application is filed, such court may appoint a temporary trustee (which
shall not be required to meet the financial standards required for the
appointment of a 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 shall provide
in its order of appointment, consistent with the provisions of this Agreement.
Nothing herein shall prevent the same Person from serving as both the Delaware
Trustee and the Trustee if it meets the qualifications thereof.

Immediately upon the appointment of any successor Trustee or Delaware Trustee,
all rights, titles, duties, powers and authority of the predecessor Trustee or
Delaware Trustee hereunder (except for the predecessor Trustee’s or Delaware
Trustee’s rights to amounts payable under Section 3.16(d), or Article VI or
Article VII prior to 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 the predecessor Trustee or
Delaware Trustee all of the Trust Estate held by it hereunder net of any amounts
then owed to the predecessor Trustee or Delaware Trustee and all records and
files in connection therewith. Any resigning or removed Trustee or Delaware
Trustee shall account to its successor for its administration of the Trust. 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,
Delaware Trustee or anyone else from taking any action otherwise permissible in
connection with any such account.

 

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Section 6.9. Laws of Other Jurisdictions. If, notwithstanding the other
provisions of this Agreement, the laws of jurisdictions other than 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 or if for
any other reason the Trustee deems it advisable to appoint an ancillary trustee
in any jurisdiction, an ancillary trustee which need not meet the requirements
set forth in the third sentence of Section 6.8 shall be designated in writing by
the Trustee. To the extent permitted under the laws of such jurisdiction, the
Trustee may remove the ancillary trustee in such jurisdiction, without cause and
without necessity of court proceeding or Unitholder approval, and may or may not
appoint a successor ancillary trustee in such jurisdiction from time to time.
The ancillary trustee serving in such jurisdiction is requested and authorized,
to the extent not prohibited under the laws of such jurisdiction, to appoint the
Trustee to handle the details of administration in such jurisdiction. The
ancillary 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 ancillary trustee in
such jurisdiction shall be responsible 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 ancillary
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. 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. The fees and expenses of any ancillary trustee
shall constitute expenses that are reimbursable to the Trustee pursuant to
Section 7.2. Without limiting the generality of Sections 6.1 and 6.2, the
Trustee shall not have any personal liability for taking or failing to take any
action authorized or contemplated by this Section 6.9, or for any action or
inaction thereof by any ancillary trustee appointed hereunder, unless such
liability arises out of, or is based upon, any fraudulent misrepresentation,
gross negligence, or willful misconduct of the Trustee or for acts or omissions
in bad faith as adjudicated by arbitration or a final, nonappealable judgment of
a court of competent jurisdiction.

Section 6.10. Force Majeure. No party to this Agreement (or its Affiliates)
shall incur any liability to any other party to this Agreement or to any
Unitholder if, by reason of any current or future law, rule, regulation or
moratorium of or imposed by the federal government or any other governmental
authority or regulatory agency or authority, or by reason of any act of God, war
or other circumstance beyond its reasonable control, such party is prevented or
forbidden from doing or performing any act or thing required by the terms hereof
to be done or performed; nor shall any party to this Agreement incur any
liability to any other party to this Agreement or to any Unitholder 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 caused
as set forth above.

 

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Section 6.11. Failure of Action by Grantor or Depositor. In the event that
Grantor or Depositor shall fail or be unable to take any action as required
under any provision of this Agreement, the Trustee is empowered (but shall not
be required) to take such action for and in the name of Grantor or Depositor.
The Trustee shall incur no liability to any Unitholder or to Grantor, Depositor
or to any other person as a result of any action the Trustee may take or fail to
take under this Section 6.11.

ARTICLE VII.

COMPENSATION OF THE TRUSTEE

Section 7.1. Compensation of Trustee and Delaware Trustee. Each of the Trustee
and the Delaware Trustee shall receive compensation for its services as Trustee
and Delaware Trustee, respectively, hereunder as set forth in Schedule 2
attached hereto.

Section 7.2. Expenses. The reasonable out-of-pocket costs incurred by the Trust,
Trustee or Delaware Trustee, including, but not limited to, charges for SEC and
other fees and expenses relating to transfer agent services, Reserve Reports,
audits, long distance telephone calls, overtime necessitated by rush orders,
travel, legal, accounting, tax and other professional services, including
without limitation fees and expenses of news services, joint interest auditors,
stock exchange or quotation service fees, fees payable to the PCAOB and any
other regulatory body or authority, fees payable in connection with the
distribution of information to Unitholders, and costs of printing, stationery,
binders, envelopes, ledger sheets, transfer sheets, checks, postage and
insurance will be reimbursed to the Trustee or Delaware Trustee at actual cost.
The Trustee and Delaware Trustee shall be reimbursed for actual reasonable
expenditures made on account of the performance of its duties in connection with
matters pertaining to the Trust, and the compensation and expenses of its
counsel, accountants or other skilled Persons and of all other Persons who are
not full-time employees of the Trustee or Delaware Trustee, as applicable.

Section 7.3. Other Services. In the event of litigation involving the Trust,
audits or inspection of the records of the Trust pertaining to the transactions
affecting the Trust or any other unusual or extraordinary services rendered in
connection with the administration of the Trust, the Trustee shall be entitled
to receive additional reasonable compensation for the services rendered,
including but not limited to, the payment of the Trustee’s standard rates for
all time spent by Trust personnel on such matters; provided, however, the
Trustee shall not be entitled to reimbursement or additional compensation for
services that unreasonably duplicate services provided by or through Depositor
or Grantor.

Section 7.4. Payment. Subject to Article VI with respect to Article VI Expenses,
all compensation, reimbursements and other charges owing to the Trustee shall
constitute indebtedness and Trust Obligations under this Agreement and will be
payable as Trust Obligations in accordance with Section 3.7, and the Trustee
shall have a first priority lien on the Trust Estate for the payment of such
compensation, reimbursements, and other charges to the extent not paid pursuant
to Section 3.7, entitling the Trustee under this Agreement to priority as to
payment thereof over payment to any other Person.

 

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Section 7.5. Depositor Loans.

(a) From time to time as the Trustee deems reasonably necessary to assure
adequate funding for the administration of the Trust (in addition to amounts
required to be paid by Depositor pursuant to Section 3.7), the Trustee may
request Depositor to make loans, and Depositor shall make, or cause an Affiliate
of Depositor to make, such loans (“Depositor Loans”), in amounts estimated by
the Trustee to be required to cover Trust Obligations or any other expense of
the Trust expected to be incurred within the 90-day period following the date
each such loan is requested. To the extent that the Trust is then holding any
cash proceeds generated by the Royalties, or any of them, that have not
previously been set aside as a cash reserve for the Quarterly Distribution
Amount pursuant to Section 5.2, the Trustee shall take the amount of such cash
proceeds into account in estimating the amounts required to cover Trust
Obligations.

(b) All Depositor Loans shall be senior unsecured obligations of the Trust,
shall not bear interest, and shall be repaid in quarterly installments only from
the excess, if any, of (i) the cash received by the Trustee during the
applicable Quarter over (ii) all Trust Obligations (excluding Depositor Loans)
paid or payable by the Trust for such Quarter and any additions to reserves
during or relating to the Quarter.

(c) In the event that upon termination of the Trust the Trust does not hold any
cash on hand or other assets other than amounts established as reserves in such
amounts as the Trustee in its sole discretion deems appropriate for claims and
obligations of the Trust, including contingent, conditional and unmatured claims
and obligations in accordance with Section 3808 of the Delaware Trust Act, then
any Depositor Loans that remain outstanding will be deemed forgiven, cancelled
and discharged by Depositor, or its Affiliates, as applicable, without the
necessity of further act or evidence.

Section 7.6. Ownership of Units. Each of Depositor, Grantor, the Trustee or
Delaware Trustee, or any Affiliate thereof, in its individual or other
capacities, may become the owner or pledgee of Units with the same rights,
except as otherwise provided in Section 8.7, as it would have if it were not a
Depositor, Grantor, Trustee or Delaware Trustee hereunder.

ARTICLE VIII.

MEETINGS OF UNITHOLDERS

Section 8.1. Purpose of Meetings. Meetings 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 8.2. Call and Notice of Meetings. Any such meeting of the Unitholders
may be called by the Trustee in its discretion and will be called by the Trustee
at the written request of Depositor, Grantor or Unitholders owning of record not
less than fifteen percent (15%) in number of the Units then outstanding. All
such meetings shall be held at such time and at such place in New York, New
York, as the notice of any such meeting may designate. Except as may otherwise
be required by applicable law or by any securities exchange or market system on
which the Units are admitted for trading, as applicable, written notice of every
meeting of the

 

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Unitholders signed by the Trustee 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 or by mail not more than sixty (60) nor less
than twenty (20) days before such meeting is to be held to all of the
Unitholders of record as of a record date set by the Trustee (the “Record Date
Unitholders”), which shall be not more than sixty (60) days before the date of
such mailing. No matter other than that stated in the notice shall be acted upon
at any meeting. 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. Only Record Date Unitholders shall be entitled
to notice of and to exercise rights at or in connection with the meeting. Except
as provided in Section 8.6, any action required by this Agreement to be taken at
a meeting of the Unitholders, or any action which may be taken at a meeting of
the Unitholders, may not be taken and shall not be effective without an actual
meeting of the Unitholders, prior written notice to the Unitholders thereof and
a vote by the Unitholders with respect thereto.

Section 8.3. Voting.

(a) Subject to Section 8.3(b) and Section 8.7, each Record Date Unitholder
(including the Depositor and its Affiliates with respect to any Units (including
Company Convertible Units) owned of record by such persons) shall be entitled to
one vote for each Unit owned of record by him, and any Record Date Unitholder
may vote in person or by duly executed written proxy.

(b) All Units held of record by the Exchange Agent shall, as to each matter
submitted to the Unitholders for a vote or approval, (i) be deemed present in
the proportion described below for purposes of establishing a quorum and (ii) be
deemed voted without any action required of the Exchange Agent in the proportion
and manner as those Units (other than such Units so held by the Exchange Agent)
that actually are voted with respect to each such matter.

(c) At any such meeting the presence in person or by proxy (and including any
Units deemed present as described in Section 8.3(b)) of Record Date Unitholders
holding a majority of the Units outstanding at the record date shall constitute
a quorum, and, except as otherwise specifically provided herein, any matter
shall be deemed to have been approved by the Unitholders if it is approved by
the vote of a majority in interest of such Record Date Unitholders constituting
a quorum, although less than a majority of all of the Units at the time
outstanding, except that the affirmative vote by the Record Date Unitholders of:

 

  (i) prior to the fifth anniversary of the date hereof, eighty percent (80%) or
more of all the Units outstanding (subject to Section 8.7) at the record date
shall be required to:

 

  (A) approve or authorize any sale or other disposition of all or substantially
all of the assets of the Trust, in a single transaction or series of
transactions; or

 

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  (B) approve any amendment to or affecting this Section 8.3 (c)(i); or

 

  (C) approve any dissolution of the Trust; and

 

  (ii) except during any period that a greater vote is required under
Section 8.3(c)(i), sixty-six and two-thirds percent (66 2/3%) or more of all the
Units outstanding (subject to Section 8.7) at the record date shall be required
to:

 

  (A) approve or authorize any sale or other disposition of all or substantially
all of the assets of the Trust, in a single transaction or series of
transactions;

 

  (B) approve any amendment to or affecting this Section 8.3(c)(ii); or

 

  (C) approve any dissolution of the Trust.

In connection with any matter to be submitted to a vote of Unitholders,
Depositor shall deliver to the Trustee a certification of such facts and other
matters or determinations as may be necessary in order to determine the
applicability of any vote requirement or other matter relevant to the proposed
vote, together with an opinion of counsel (which may be in-house counsel of
Depositor or Grantor), in form and substance reasonably acceptable to the
Trustee, confirming that the proposed action has been approved in compliance
with the requirements of this Agreement; provided that such opinion (i) may rely
on a certificate of Depositor as to any factual matters with respect to the
subject matter of such opinion and (ii) is not required to address, and may
assume the correctness of, any determination by the Trustee as to conflicts of
interests pursuant to Section 8.7). The Trustee shall be fully protected and
shall incur no liability in relying on such certification.

Section 8.4. 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, including regulations covering the closing of
the transfer books of the Trustee for purposes of determining Unitholders
entitled to notice of or to vote at any meeting, the appointment of proxies, the
appointment and duties of inspectors of votes, the submission and examination of
proxies and other evidence of the right to vote, the preparation and use at the
meeting of a list authenticated by or on behalf of the Trustee of the
Unitholders entitled to vote at the meeting and such other matters concerning
the calling and conduct of the meeting as it shall deem advisable.

Section 8.5. Unitholder Proposals. In the event a meeting of Unitholders is
called for any purpose or a written consent is executed pursuant to Section 8.6
at the request of any Unitholder or Unitholders pursuant to the provisions of
this Article VIII and the Trust remains subject to the requirements of
Section 12 of the Exchange Act, the Unitholder or Unitholders requesting such
meeting or soliciting such written consent shall be required to prepare and file
a proxy or information statement with the SEC regarding such meeting or written
consent in satisfaction of all applicable SEC rules and regulations and at the
expense of such requesting Unitholder or Unitholders. The Unitholder or
Unitholders requesting such meeting or executing such written consent shall bear
the expense of distributing to Unitholders the notice of meeting

 

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and the proxy or information statement related thereto. The Trustee shall not be
required to cooperate in the preparation of any such proxy or information
statement and any related materials except to provide a list of Unitholders of
the Trust to the extent required by law.

Section 8.6. Action Without Meeting. Any action required or permitted to be
authorized or taken at any meeting of Unitholders may be taken without a
meeting, without prior notice and without a vote if a consent or consents in
writing setting forth the authorization or action so taken is signed by
Unitholders holding Units representing not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all Units entitled to vote thereon were present and voted. Prompt notice of the
authorization or taking of any action pursuant to this Section 8.6 shall be
given to those Unitholders who have not consented in writing.

Section 8.7. Units Beneficially Owned by Depositor or its Affiliates Deemed Not
Outstanding. In determining whether Unitholders holding the requisite number of
Units have approved any vote, direction, consent or waiver under this Agreement
pursuant to Section 6.7, Section 6.8, Section 8.3(c)(i) or Section 8.3(c)(ii),
or with respect to any other matter that the Trustee reasonably determines
presents a material conflict of interest between Depositor or its Affiliates, on
the one hand, and the Unitholders other than Depositor or its Affiliates, on the
other hand (which shall include the approval or authorization of any amendment,
modification, termination or waiver of any rights under any Conveyance), Units
which are beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) by Depositor or its Affiliates shall be disregarded and deemed
not to be outstanding for the purpose of any such vote or determination, except
that for the purpose of determining whether the Trustee shall be protected in
relying on any such vote, direction, consent or waiver only Units which the
Trustee actually knows are so owned shall be so disregarded. In connection with
any proposed vote, direction, consent or waiver under this Agreement, Depositor
shall deliver to the Trustee a certification setting forth in detail all facts,
circumstances and other relevant considerations regarding any potential
conflicts of interest between Depositor or any of its Affiliates, on the one
hand, and the Unitholders other than Depositor or its Affiliates, on the other
hand, or certifying to the Trustee that no such potential conflicts of interest
exist. Depositor shall deliver such certification to the Trustee as promptly as
practicable in connection with any proposed vote, direction, consent or waiver
under this Agreement, and in any case no less than ten (10) business days before
any filing of proxy materials or dissemination of any communication from the
Trustee to the Unitholders regarding any such proposed vote, direction, consent
or waiver under this Agreement. The Trustee shall be entitled to publish such
certification in proxy materials or other communications to the Unitholders or
the public, and shall be entitled to rely on such certification, and shall be
fully protected and shall incur no liability to Depositor or any of its
Affiliates or to any Unitholder or any other Person for relying on such
certification. In the event of any disagreement or dispute regarding any matter
relevant to any action or decision under this Section 8.7, the Trustee shall be
entitled to act or refuse to act until such disagreement or dispute is resolved
to the satisfaction of the Trustee, and in any case shall be entitled to act in
accordance with the advice of counsel, which advice of counsel shall be full
protection in respect of any decision made by the Trustee in accordance with
such advice. In addition to the foregoing, upon request of the Trustee,
Depositor shall furnish to the Trustee promptly an officer’s certificate listing
and identifying all Units so owned by Depositor or any of its Affiliates, if
any, and shall update such list as requested from time to time, including an
update as of the record date for any

 

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proposed vote, direction, consent or waiver under this Agreement. The Trustee
shall be entitled to accept such officer’s certificate as conclusive evidence of
the facts therein set forth and of the fact that all Units not listed therein
are outstanding for the purpose of any such determination. Notwithstanding the
foregoing, if Depositor and its Affiliates shall beneficially own (other than
any beneficial ownership attributable to Depositor pursuant to Rule 13d-3
promulgated under the Exchange Act solely due to Depositor’s right to exercise
the High-Value Call Option or Low-Value Call Option prior to Depositor’s
exercise of the High-Value Call Option or Low-Value Call Option, as applicable,
under Section 3.20) all of the Units outstanding, this Section 8.7 shall not
apply.

ARTICLE IX.

DURATION, REVOCATION AND TERMINATION OF TRUST

Section 9.1. Revocation. The Trust is and shall be irrevocable and Grantor, as
such, retains no power to alter, amend (except as provided otherwise in this
Article IX and in Section 10.2) or terminate the Trust. The Trust shall be
terminable only as provided in Section 9.2, and shall continue until so
terminated.

Section 9.2. Termination. The Trust shall dissolve, windup and thereafter
terminate upon the first to occur of the following events (the date of such
occurrence, the “Dissolution Date”):

(a) the disposition of all of the Royalties and any assets (other than cash),
tangible or intangible, including accounts receivable and claims or rights to
payment, constituting the Trust Estate;

(b) a vote in favor of dissolution by the requisite percentage of Unitholders
(as specified in Section 8.3(c) and subject to Section 8.3(b) and Section 8.7)
present or represented at a meeting and entitled to vote thereon, held in
accordance with the requirements of Article VIII;

(c) upon the occurrence of the HV Termination Time or the LV Termination Time
following Depositor’s exercise of the High-Value Call Option or the Low-Value
Call Option, as applicable;

(d) the Trustee’s election to dissolve, windup and thereafter terminate the
Trust following its resignation for cause pursuant to Section 6.6(b); or

(e) June 3, 2033.

Section 9.3. Disposition and Distribution of Properties.

(a) For the purpose of liquidating and winding up the affairs of the Trust
following its dissolution, the Trustee and the Delaware Trustee shall continue
to act as such and exercise their powers as such until their duties have been
fully performed and the Trust Estate has been finally distributed. In accordance
with the Master Conveyance,

 

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upon the dissolution of the Trust, the Trustee shall sell for cash in one or
more sales all the properties other than cash then constituting the Trust
Estate. The Trustee shall as promptly as possible distribute the Sales Proceeds
Amounts of any such sales and any other cash in the Trust Estate according to
the respective interests and rights of the Unitholders, after paying, satisfying
and discharging all of the liabilities of the Trust, including all Depositor
Loans, and setting up reserves in such amounts as the Trustee in its discretion
deems appropriate for contingent liabilities. No vote or other approval of the
Unitholders shall be held or required prior to selling property pursuant to this
Section 9.3(a).

(b) In the event that any property which the Trustee is required to sell is not
sold by the Trustee within two years after the dissolution of the Trust, the
Trustee shall cause such property to be sold at public auction to the highest
cash bidder within 120 days after the end of such two-year period after
dissolution of the Trust. Notice of such sale by auction shall be mailed at
least thirty (30) days prior to such sale to each Unitholder of record as of a
date set by the Trustee at such Unitholder’s address as it appears upon the
books of the Trustee. Depositor, Grantor or any Unitholder may purchase all or
any portion of the Trust Estate properties at any sale pursuant to this
Section 9.3(b). Notwithstanding anything herein to the contrary, in no event may
the Trustee distribute the Royalties to the Unitholders. No vote or other
approval of the Unitholders shall be held or required prior to selling property
pursuant to this Section 9.3(b).

(c) In connection with sales pursuant to this Section 9.3, the Trustee may
accept any offer to purchase the properties constituting the Trust Estate that
it deems reasonable in its discretion and shall have no liability in connection
with any such sales. To the extent deemed appropriate by the Trustee, the
Trustee shall, within 30 days after the dissolution of the Trust, use reasonable
efforts to engage the services of one or more investment advisers or other
parties deemed by the Trustee to be qualified as experts on such matters to
assist with such sales (which may include brokers, including online brokerage
services) and shall be entitled to rely on the advice of such professionals as
contemplated by Section 12.2. Any such sale or sales may be conducted by means
of an auction or similar process designed to be available to qualified bidders
and may be conducted by means of an electronic bidding process or other process
as may then be deemed appropriate by the Trustee or its advisors, without
necessity of any notice of the sale or auction to the Unitholders being
required; it being understood that the requirement of such notice shall apply
solely to an auction conducted pursuant to Section 9.3(b). In the event of such
auction or similar process, the Trustee may authorize agreements to reimburse
the expenses of such qualified bidders. No vote or other approval of the
Unitholders shall be held or required prior to selling property pursuant to this
Section 9.3(c).

(d) Upon making final distribution to the Unitholders, the Trustee shall be
under no further liability.

 

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(e) Upon completion of the winding up of the Trust, the Trustee shall execute
and caused to be filed a certificate of cancellation with the Delaware Secretary
of State and provide a copy to the Delaware Trustee.

ARTICLE X.

AMENDMENTS

Section 10.1. Prohibited. No amendment may be made to any provision of this
Agreement which would:

(a) alter the purposes of the Trust or permit the Trustee or Delaware Trustee to
engage in any business or investment activities or any activity substantially
different from that specified herein;

(b) alter the rights of the Unitholders vis-a-vis each other;

(c) permit the Trustee to distribute the Royalties in kind either during the
continuation of the Trust or during the period of liquidation or winding up
under Section 9.3; or

(d) affect the rights and duties of the Trustee, Delaware Trustee, Depositor or
Grantor under this Agreement, unless such amendment has been approved, in
writing, by such party affected.

Section 10.2. Permitted. Depositor, Grantor and the Trustee may, jointly, from
time to time, supplement or amend this Agreement, without the approval of the
Unitholders, in order to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other provision
hereof, or to change the name of the Trust, provided that such supplement or
amendment does not materially adversely affect the interests of the Unitholders.
All other amendments to the provisions of this Agreement shall be made only by a
vote of the Unitholders present or represented at a meeting held in accordance
with the requirements of Article VIII. The Trustee shall approve all amendments
permitted under this Section 10.2, provided all prior conditions are satisfied
and there is no adverse effect on the Trustee. In connection with any request by
Depositor or Grantor to supplement or amend this Agreement to cure any
ambiguity, defect or inconsistency, Depositor or Grantor shall provide to the
Trustee, and it shall be a condition to the Trustee’s approval thereof, an
officer’s certificate and an opinion of counsel (which may be in-house counsel
of Depositor or Grantor) deemed satisfactory to the Trustee to confirm to the
Trustee that the amendment or supplement is authorized and permitted by this
Agreement and is in compliance with all conditions precedent; provided that such
opinion of counsel is not required to address, and may assume the correctness of
any determination as to, whether an ambiguity, defect or inconsistency exists
that may be cured or corrected under this Section 10.2 or applicable law; it
being agreed that the existence of any such ambiguity, defect or inconsistency
shall be described in the officer’s certificate and that the Trustee shall be
entitled to rely thereon and shall incur no liability for doing so. The Trustee
shall be entitled to rely on such officer’s certificate and opinion, and such
officer’s certificate and opinion shall be full and complete authorization and
protection in respect of any action taken or suffered by it hereunder in good
faith and in accordance therewith.

 

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ARTICLE XI.

ARBITRATION AND RELATED MATTERS

Section 11.1. Arbitration; Trustee’s Consent Required. TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, THE PARTIES TO THIS AGREEMENT AGREE THAT, SUBJECT
TO THE WRITTEN CONSENT OF TRUSTEE, ANY DISPUTE, CONTROVERSY OR CLAIM THAT MAY
ARISE BETWEEN OR AMONG GRANTOR OR DEPOSITOR (ON THE ONE HAND) AND THE TRUST OR
THE 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), MAY BE FINALLY, CONCLUSIVELY AND EXCLUSIVELY SETTLED BY
BINDING ARBITRATION IN WILMINGTON, DELAWARE IN ACCORDANCE WITH THE COMMERCIAL
ARBITRATION RULES (THE “RULES”) OF THE AMERICAN ARBITRATION ASSOCIATION OR ANY
SUCCESSOR THERETO (“AAA”) THEN IN EFFECT. 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; PROVIDED,
HOWEVER, THAT THIS WAIVER SHALL NOT APPLY TO THE TRUSTEE UNLESS THE TRUSTEE HAS
CONSENTED IN WRITING TO THE ARBITRATION PROCESS. 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. 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 ten (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 Delaware 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

 

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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 ten (10) days after receipt of such notice, the
Respondent shall send written notice to the Claimant, with a copy to the
Delaware 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 ten (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 such ten
(10) day period, then the third arbitrator will be determined pursuant to the
Rules. For purposes of this Article XI, Grantor and Depositor (on the one hand)
and the Trust and the Trustee (on the other hand) shall each be entitled to the
selection of one (1) 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 fifteen
(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 fifteen (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 fifteen (15) day
period, the substitute arbitrator shall be a neutral arbitrator appointed by the
AAA arbitrator within fifteen (15) days thereafter.

(d) All arbitration hearings shall be commenced within one hundred twenty
(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 sixty (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 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

 

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United States Arbitration Act, 9 U.S.C. Sections 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 thirty (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. Section 91 or any successor statute thereto or
any substantially equivalent state law, (iii) restrict the right of the Trustee
to make application to any state or federal district court having jurisdiction
in New Castle County, Delaware, to appoint a successor Trustee or to request
instructions with regard to any provision in this Agreement when the Trustee is
unsure of its obligations thereunder, or (iv) apply to the Delaware Trustee.

Section 11.2. Litigation, Forum Selection; Venue; Waiver of Jury Trial.

(a) IN THE EVENT OF ANY DISPUTE, CONTROVERSY OR CLAIM AS TO WHICH THE TRUSTEE
DOES NOT CONSENT IN WRITING TO ARBITRATION AS PERMITTED BY SECTION 11.1, THE
PARTIES TO THIS AGREEMENT AGREE THAT ANY SUCH DISPUTE, CONTROVERSY OR CLAIM THAT
MAY ARISE BETWEEN OR AMONG GRANTOR OR DEPOSITOR (ON THE ONE HAND) AND THE TRUST
OR THE 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 BROUGHT AND MAINTAINED IN THE COURTS OF THE
STATE OF DELAWARE OR IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
DELAWARE. THE PARTIES TO THIS AGREEMENT SUBMIT TO

 

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THE JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE OR THE UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF DELAWARE FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE. THE PARTIES TO THIS AGREEMENT WAIVE, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY HAVE OR HEREAFTER
MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.

(b) THE PARTIES TO THIS AGREEMENT (AND ON BEHALF OF THE TRUST) EXPRESSLY WAIVE
THEIR RIGHT TO TRIAL BY JURY.

(c) Nothing in this Section 12.2 shall modify the provisions of Section 12.9 of
this Agreement.

ARTICLE XII.

MISCELLANEOUS

Section 12.1. Inspection of Books.

(a) Depositor, Grantor and each Unitholder and such Depositor, Grantor or
Unitholder’s duly authorized agents, attorneys and auditors shall have the
right, at such Depositor, Grantor or Unitholder’s own expense and during
reasonable business hours, upon reasonable prior notice, to examine and inspect
the records of the Trust and the Trustee relating to the Trust, including lists
of Unitholders.

(b) The Trustee and its duly authorized Agents shall have the right, at the
expense of the Trust and during reasonable business hours, upon reasonable prior
written notice, to examine and inspect the records of Grantor relating to the
Royalties.

Section 12.2. Trustee’s Employment of Experts. The Trustee may, but shall not be
required to, consult with counsel, who may be its own counsel, accountants,
geologists, engineers and other parties deemed by the Trustee to be qualified as
experts on the matters submitted to them, and the opinion or advice of any such
parties on any matter submitted to them by the Trustee shall be full and
complete authorization and protection in respect of any action taken or suffered
by it hereunder in good faith and in accordance with the opinion of any such
party. The Trustee is authorized to make payments of all reasonable and
necessary fees billed by third parties for services or expenses thus incurred
out of the Trust Estate.

Section 12.3. Merger or Consolidation of Trustee or Delaware Trustee. Neither a
change of name of the Trustee or Delaware Trustee nor any merger or
consolidation of it or of its corporate powers with another bank or with a trust
company shall affect its right or capacity to act hereunder. Upon any merger,
consolidation, sale of assets or other transaction involving the Trustee or
Delaware Trustee in which the Trustee or Delaware Trustee is not the surviving
entity, the surviving entity in such transaction shall automatically become the
Trustee or Delaware Trustee of the Trust and succeed to all rights, titles,
duties, powers and authority of the predecessor Trustee or Delaware Trustee
hereunder, without the requirement of Unitholder approval or any

 

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other action, provided such surviving entity has succeeded to the rights and
obligations of the predecessor Trustee or Delaware Trustee in accordance with
applicable law and is a bank or trust company having capital, surplus and
undivided profits (as of the end of its last fiscal year prior to the
consummation of such transaction) of at least $100,000,000.

Section 12.4. 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 or elsewhere, 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,
the Trustee agrees that to the extent applicable for the purpose of vesting the
record title to the Royalties in any successor Trustee, the succeeded Trustee
will, upon appointment of any successor Trustee, execute and deliver to such
successor Trustee appropriate assignments or conveyances.

Section 12.5. 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 12.6. Notices. Any and all notices or demands permitted or required to
be given under this Agreement shall be in writing and shall be validly given or
made if (a) personally delivered, (b) delivered and confirmed by Federal Express
or other nationally recognized overnight courier delivery service, which shall
be effective as of confirmation of receipt by the courier at the address for
notice hereinafter stated, (c) solely in the case of notice to any Unitholder,
by press release in a nationally recognized and distributed media, or
(d) deposited in the United States mail, first class, postage prepaid, certified
or registered, return receipt requested, addressed as follows:

If to the Trustee, to:

The Bank of New York Mellon Trust Company, N.A.

Institutional Trust Services

919 Congress Avenue, Suite 500

Austin, Texas 78701

Attention: Mike J. Ulrich

Facsimile No.: (512) 479-2253

With a copy to:

Bracewell & Giuliani LLP

111 Congress Avenue, Suite 2300

Austin, Texas 78701

Attention: Thomas W. Adkins

Facsimile No.: (512) 479-3940

 

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If to the Delaware Trustee, to:

BNY Mellon Trust of Delaware

100 White Clay Center, Suite 102

Newark, Delaware 19711

Attention: Corporate Trust Administration,

Kristine K. Gullo, Vice President

Facsimile No.: (302) 453-4400

If to Depositor, to:

Freeport-McMoRan Copper & Gold Inc.

333 N. Central Avenue

Phoenix, Arizona 85004

Attention: General Counsel

Facsimile No.: (602) 453-2871

If to Grantor, to:

McMoRan Oil & Gas LLC

1615 Poydras Street

New Orleans, Louisiana 70112

Attention: General Counsel

Facsimile No.: (504) 582-1603

If to a Unitholder, to:

the Unitholder

at its last address as shown on the

ownership records maintained by the Trustee

Notice which is mailed in the manner specified shall be conclusively deemed
given three (3) days after the date postmarked or upon receipt, whichever is
sooner. Any party to this Agreement may change its address for the purpose of
receiving notices or demands by notice given as provided in this Section 12.6.

In addition to the foregoing, the Trustee agrees to accept and act upon notice,
instructions or directions pursuant to this Agreement sent by unsecured e-mail,
facsimile transmission or other similar unsecured electronic methods; provided
however that no such electronic communication from a Unitholder to the Trustee
shall constitute a valid notice or demand. If a party to this Agreement elects
to give the Trustee e-mail or facsimile instructions (or instructions by a
similar electronic method) and the Trustee in its discretion elects to act upon
such instructions, the Trustee’s understanding of such instructions shall be
deemed controlling. The Trustee shall not be liable for any losses, costs or
expenses arising directly or indirectly from the Trustee’s reliance upon and
compliance with such instructions notwithstanding such instructions conflict or
are inconsistent with a subsequent written instruction. The party providing
electronic

 

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instructions agrees to assume all risks arising out of the use of such
electronic methods to submit instructions and directions to the Trustee,
including without limitation the risk of the Trustee acting on unauthorized
instructions, and the risk of interception and misuse by third parties.

Section 12.7. 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 12.8. Successors. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns.

Section 12.9. Governing Law. Notwithstanding any provision herein to the
contrary, this Agreement and the Trust, and all claims or causes of action
(whether in contract or tort) that may be based upon, arise out of or relate to
this Agreement (including, without limitation, the validity, construction and
administration of this Agreement and the Trust, the enforceability of the
provisions of this Agreement, all rights and remedies hereunder and the services
of the Trustee hereunder), or the negotiation, execution or performance of this
Agreement (including, without limitation, any claim or cause of action based
upon, arising out of or related to any representation or warranty made in or in
connection with this Agreement or as an inducement to enter into this
Agreement), shall be governed by the internal laws of the State of Delaware;
provided, however, that there shall not be applicable to the Trust, the Trustee,
the Delaware Trustee, Depositor, Grantor, the Unitholders or this Agreement any
provision of the laws (statutory or common) of the State of Delaware pertaining
to trusts that relate to or regulate, in a manner inconsistent with the terms
hereof (a) the filing with any court or governmental body or agency of trustee
accounts or schedules of trustee fees and charges, (b) affirmative requirements
to post bonds for trustees, officers, agents or employees of a trust, (c) the
necessity for obtaining court or other governmental approval concerning the
acquisition, holding or disposition of real or personal property, (d) fees or
other sums payable to trustees, officers, agents or employees of a trust,
(e) the allocation of receipts and expenditures to income or principal,
(f) restrictions or limitations on the permissible nature, amount or
concentration of trust investments or requirements relating to the titling,
storage or other manner of holding or investing trust assets or (g) the
establishment of fiduciary or other standards of responsibility or limitations
on the acts or powers of trustees that are inconsistent with the limitations or
liabilities or authorities and powers of the Trustee and the Delaware Trustee as
set forth as referenced in this Agreement. Sections 3540 and 3561 of Title 12 of
the Delaware Code shall not apply to the Trust.

Section 12.10. Confidentiality.

(a) Any confidential information provided by Depositor or Grantor to the Trustee
or Delaware Trustee pursuant to this Agreement shall not be disclosed by the
Trustee or Delaware Trustee to any third party, except with Depositor’s or
Grantor’s prior written consent. Notwithstanding the foregoing, the Trustee or
Delaware Trustee may disclose such information to its representatives or their
officers, directors, legal counsel, accountants and advisors (collectively,
“Representatives”) who, in each case, in the Trustee’s or Delaware Trustee’s
reasonable judgment, need to know such information for the purpose of
(i) confirming compliance with the terms of this Agreement or (ii) advising the
Trustee or Delaware Trustee with respect to any action required by or

 

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requested of the Trustee or Delaware Trustee pursuant to this Agreement or any
Conveyance provided that the Trustee or Delaware Trustee shall (a) inform each
person to whom such information is provided of the confidential nature of such
information, (b) take reasonable precautions necessary to prevent the disclosure
of such information by such persons to any third party, and (c) be responsible
for any breach of this Section 12.10 by any Representatives.

(b) If the Trustee or Delaware Trustee is requested or required (by law,
judicial or governmental order or regulatory process or by any self-regulatory
organization, interrogatory, request for information or documents, subpoena,
civil investigative demand or similar process) to disclose any confidential
information provided by Depositor or Grantor to the Trustee or Delaware Trustee,
it is agreed that the Trustee or Delaware Trustee will, to the extent legally
permitted, provide Depositor or Grantor with prompt notice of such request or
requirement prior to making such disclosure so that Depositor or Grantor may
seek an appropriate protective order and/or waive the Trustee’s or Delaware
Trustee’s compliance with this Section 12.10. The Trustee or Delaware Trustee
may disclose only that portion of the confidential information that the Trustee
or Delaware Trustee is advised by its counsel is legally required to be
disclosed; provided, that, to the extent legally permitted, the Trustee or
Delaware Trustee provides Depositor or Grantor prior written notice of the
information to be disclosed as far in advance of its disclosure as is
practicable and, upon Depositor’s or Grantor’s request, uses reasonable efforts
to obtain assurances that confidential treatment will be afforded to such
information.

(c) Notwithstanding the foregoing provisions of this Section 12.10 or any other
provision hereof, nothing herein shall prevent or restrict the Trust or Trustee
from making any public disclosure of any information the Trustee deems to be
required or advisable in order to ensure compliance by the Trust with applicable
securities laws, or other legal or regulatory requirements or securities
exchange listing or quotation system or similar requirements; provided, however,
that this sentence shall apply and remain in effect only until the later to
occur of (i) the conclusion of the winding up and termination of the Trust
(which may be after the Termination Date), and (ii) the termination of any
public reporting obligations of the Trust under applicable securities laws.

Section 12.11. Stand-by Reserve Account or Letter of Credit. Depositor hereby
agrees to provide and maintain a $1.0 million stand-by reserve account with The
Bank of New York Mellon Trust Company, N.A. or a letter of credit, in a form and
from a bank reasonably acceptable to the Trustee, for the purpose of enabling
the Trustee to draw on the reserve account or letter of credit to pay Trust
Obligations in the event that the Trust does not have funds adequate to pay the
Trust Obligations at any time or from time to time. At any time (and from time
to time) after the one-year anniversary of the date of this Agreement, with the
consent of the Trustee, Depositor may reduce the reserve account or substitute a
letter of credit in a different face amount for the original letter of credit or
any substitute letter of credit.

Section 12.12. Conveyances. Grantor shall record the Recordable Conveyances (and
any further conveyances necessary to properly convey to the Trust interests
required or intended to be conveyed to the Trust after the date hereof) in the
appropriate filing offices in accordance with

 

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the terms of the Conveyances, and Grantor and Depositor shall be solely
responsible for the correctness of the information contained in the Recordable
Conveyances and other conveyances and the proper filing thereof. The Trustee
shall have no responsibility for the correctness of the information contained in
the Recordable Conveyances or other conveyances and no obligation to record any
of the Recordable Conveyances or other conveyances or any other document and no
responsibility to confirm the proper filing of any of the Recordable Conveyances
or other conveyances or any other document. The Trustee shall have no obligation
to prepare or file or continue any financing statement or similar filing or to
create or perfect any lien or security interest.

Section 12.13. Waiver of Damages. TO THE FULLEST EXTENT PERMITTED BY LAW,
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NO PARTY SHALL BE
LIABLE HEREUNDER FOR EXEMPLARY, PUNITIVE, SPECIAL, INDIRECT, CONSEQUENTIAL,
REMOTE OR SPECULATIVE DAMAGES OR LOST PROFITS, WHETHER BASED IN CONTRACT, TORT,
STRICT LIABILITY, OTHER LAW OR OTHERWISE.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, Depositor, Grantor, Trustee and Delaware Trustee have caused
this Agreement to be duly executed the day and year first above written.

 

FREEPORT-MCMORAN COPPER & GOLD INC.,

as Depositor

By:

 

/s/ Kathleen L. Quirk

  Name:  

Kathleen L. Quirk

  Title:   Executive Vice President, Chief Financial Officer & Treasurer McMoRan
Oil & Gas LLC,

as Grantor

By:

 

/s/ Nancy D. Parmelee

 

Name:

 

Nancy D. Parmelee

 

Title:

 

Chief Financial Officer & Secretary

The Bank of New York Mellon Trust Company, N.A.,

as Trustee

By:

 

/s/ R. Tarnas

 

Name:

 

R. Tarnas

 

Title:

 

Vice President

 

SIGNATURE PAGE

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BNY Mellon Trust of Delaware,

as Delaware Trustee

By:

  /s/ Kristine K. Gullo  

Name:

 

Kristine K. Gullo

 

Title:

 

Vice President

 

SIGNATURE PAGE

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SCHEDULE 1

WIRE INSTRUCTIONS

 

SCHEDULE 1

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SCHEDULE 2

TRUSTEE AND DELAWARE TRUSTEE COMPENSATION

A. Administrative Fees and Expenses

1. A one-time charge of $10,000 is payable to the Trustee by Depositor
concurrently with the execution and delivery of the Amended and Restated Royalty
Trust Agreement (the “Agreement”).

2. For all administrative and other services to be provided by the Trustee under
the Agreement including, but not limited to, costs of the Trustee’s personnel,
the Trustee will be paid the sum of $150,000 per year, in advance; provided,
however, that during the first year in which the Trust receives any payment
pursuant to the Conveyance or Royalties (each as defined in the Agreement), and
each year thereafter, such sum shall be increased to $200,000 per year. Such
amount, whether $200,000 or $150,000, shall not be prorated or reduced for any
partial year.

3. Concurrently with the execution and delivery of the Agreement, Depositor
shall reimburse the Trustee for the fees and expenses of its counsels incurred
in connection with the review of governing documents and other matters relating
to the Trustee’s engagement as Trustee of the Trust.

4. In the event of the Trustee performing extraordinary or other services not
contemplated at the time of the execution and delivery of the Agreement, the
Trustee shall be paid additional fees commensurate with the service provided,
which will be charged in the Trustee’s sole reasonable discretion.

5. In the event that a default occurs under the Agreement, the Trustee shall be
paid an additional Default Administration Fee calculated in accordance with the
Trustee’s hourly rate in effect at the time of the default and as it may be
modified by the Trustee in its sole discretion from time to time thereafter,
plus all reasonable expenses incurred by the Trustee, which expenses shall
include reasonable fees and expenses of counsel to the Trustee.

6. All amounts payable to the Trustee as provided under the Agreement shall be
paid out of funds of the Trust to the extent funds of the Trust are available
therefor (which shall not include funds previously set aside for payment of a
Quarterly Distribution Amount); provided, that to the extent the Trust
Obligations exceed the funds of the Trust available therefor, the amounts
payable to the Trustee shall be funded promptly by the Depositor in accordance
with Sections 3.7 and 7.5 of this Agreement.

B. The fees provided above are in addition to out-of-pocket cost reimbursements
permitted under the Agreement.

 

SCHEDULE 2