EX-4.1



 





EXHIBIT 4.1




BP PRUDHOE BAY ROYALTY TRUST AGREEMENT




BY AND AMONG




THE STANDARD OIL COMPANY




AND




BP EXPLORATION (ALASKA) INC.




AND




THE BANK OF NEW YORK, TRUSTEE




AND




F. JAMES HUTCHINSON, CO-TRUSTEE




Dated February 28, 1989



 









 






	 	 	 	 	 
	 
	INDEX
	 	 	 	 
	 
	Preambles
	 	 	1	 
	 
	Article I — Definitions
	 	 	3	 
	 
	Article II — Creation, Name and Purpose of Trust
	 	 	 	 
	 
	Section 2.01 - Creation and Name of Trust
	 	 	13	 
	 
	Section 2.02 - Purposes
	 	 	13	 
	 
	Section 2.03 - Initial Conveyance
	 	 	14	 
	 
	Section 2.04 - Additional Conveyance
	 	 	15	 
	 
	Section 2.05 - Certificate of Trust
	 	 	21	 
	 
	Section 2.06 - Acceptance by Trustee
	 	 	21	 
	 
	Section 2.07 - Registration of Units
	 	 	21	 
	 
	Article III — Creation of Units and Certificates
	 	 	 	 
	 
	Section 3.01 - Creation of Units
	 	 	22	 
	 
	Section 3.02 - Certificates as Evidence of Ownership of Units
	 	 	22	 
	 
	Section 3.03 - Rights of Unit Holders
	 	 	23	 
	 
	Section 3.04 - Character of Rights
	 	 	24	 
	 
	Section 3.05 - Form, Execution and Dating of Certificates
	 	 	24	 
	 
	Section 3.06 - Registration and Transfer of Units
	 	 	26	 
	 
	Section 3.07 - Mutilated, Destroyed, Lost or Stolen Certificates
	 	 	30	 
	 
	Section 3.08 - Protection of Trustee
	 	 	31	 
	 
	Section 3.09 - Transfer Agent and Registrar
	 	 	31	 
	 
	Section 3.10 - Limitation of Personal Liability of Unit Holders
	 	 	31	 






 









 






	 	 	 	 	 
	 
	Article IV — Accounting and Distribution
	 	 	 	 
	 
	Section 4.01 - Fiscal Year and Accounting Method
	 	 	32	 
	 
	Section 4.02 - Distributions
	 	 	32	 
	 
	Section 4.03 - Income Tax Withholding & Reporting
	 	 	34	 
	 
	Section 4.04 - Reports to Unit Holders
	 	 	34	 
	 
	Section 4.05 - Information to be Supplied by the Company
	 	 	36	 
	 
	Section 4.06 - Information to be Provided to the Company
	 	 	37	 
	 
	Article V — Meetings of Unit Holders
	 	 	 	 
	 
	Section 5.01 - Purpose of Meetings
	 	 	38	 
	 
	Section 5.02 - Call and Notice of Meetings
	 	 	38	 
	 
	Section 5.03 - Voting
	 	 	39	 
	 
	Section 5.04 - Conduct of Meetings
	 	 	40	 
	 
	Section 5.05 - Voting of Units Held by Company, SOC and Their Respective Affiliates
	 	 	41	 
	 
	Article VI — Administration of Trust and Powers of Trustee
	 	 	 	 
	 
	Section 6.01 - General Authority
	 	 	41	 
	 
	Section 6.02 - Limited Power to Dispose of Royalty Interest and Other Trust Interests
	 	 	44	 
	 
	Section 6.03 - No Power to Engage in Business or Make Investments
	 	 	48	 
	 
	Section 6.04 - Payment of Liabilities of Trust
	 	 	48	 
	 
	Section 6.05 - Timing of Trust Income and Expenses
	 	 	49	 
	 
	Section 6.06 - Limited Power to Borrow
	 	 	50	 
	 
	Section 6.07 - Cash Reserves and Cash Held Pending Distribution Date
	 	 	52	 






 









 






	 	 	 	 	 
	 
	Section 6.08 - Settlement of Claims
	 	 	55	 
	 
	Section 6.09 - Income and Principal
	 	 	55	 
	 
	Section 6.10 - Effect of Trustee’s Power on Trust Property
	 	 	56	 
	 
	Section 6.11 - No Requirement of Diversification
	 	 	56	 
	 
	Section 6.12 - Divestiture of Units
	 	 	56	 
	 
	Section 6.13 - Prohibited Transactions
	 	 	61	 
	 
	Article VII — Rights and Liabilities of Trustee
	 	 	 	 
	 
	Section 7.01 - General Liability of Trustee
	 	 	61	 
	 
	Section 7.02 - Indemnification of Trustee
	 	 	62	 
	 
	Section 7.03 - Compensation
	 	 	66	 
	 
	Section 7.04 - Other Services and Expenses
	 	 	66	 
	 
	Section 7.05 - Reliance on Experts
	 	 	68	 
	 
	Section 7.06 - No Security Required
	 	 	68	 
	 
	Section 7.07 - Transactions in Multible Capacities
	 	 	69	 
	 
	Article VIII — Office of Trustee
	 	 	 	 
	 
	Section 8.01 - Removal of Trustee
	 	 	69	 
	 
	Section 8.02 - Resignation of Trustee
	 	 	69	 
	 
	Section 8.03 - Appointment of Successor Trustee
	 	 	70	 
	 
	Section 8.04 - Rights of a Successor Trustee
	 	 	72	 
	 
	Section 8.05 - Merger or Consolidation of Trustee
	 	 	73	 
	 
	Section 8.06 - Co-Trustee
	 	 	73	 
	 
	Article IX — Terms of Trust and Final Distribution
	 	 	 	 
	 
	Section 9.01 - Termination
	 	 	74	 
	 
	Section 9.02 - Disposition of Assets Upon Termination
	 	 	76	 







 









 






	 	 	 	 	 
	Section 9.03 - Distribution of Assets Upon Termination
	 	 	79	 
	 
	Article X — Irrevocability and Amendability
	 	 	 	 
	 
	Section 10.01 - Irrevocability
	 	 	80	 
	 
	Section 10.02 - Limited Amendability
	 	 	81	 
	 
	Section 10.03 - Corrective Amendments
	 	 	83	 
	 
	Section 10.04 - Tax Rulings & Opinions
	 	 	83	 
	 
	Article XI — Failure to Pay Amounts Due Trustee
	 	 	84	 
	 
	Article XII — Miscellaneous
	 	 	 	 
	 
	Section 12.01 - Inspection of Records
	 	 	84	 
	 
	Section 12.02 - Filing of this Agreement
	 	 	85	 
	 
	Section 12.03 - Disability of Unit Holder
	 	 	85	 
	 
	Section 12.04 - Savings Clause
	 	 	86	 
	 
	Section 12.05 - Notices
	 	 	86	 
	 
	Section 12.06 - Notice and Reports to the Company, SOC or BP
	 	 	86	 
	 
	Section 12.07 - Governing Law
	 	 	87	 
	 
	Section 12.08 - Counterparts
	 	 	87	 
	 
	Section 12.09 - Headings
	 	 	88	 
	 
	Section 12.10 - Independent Conduct
	 	 	88	 
	 
	Section 12.11
- Determination by the Trustee
	 	 	88	 
	 
	Signatures
	 	 	 	 






Exhibit A — Form of Initial Conveyance

Exhibit B — Form of Certificate

Exhibit C — Form of Compensation Agreement




 









 





BP PRUDHOE BAY ROYALTY TRUST AGREEMENT




     THIS ROYALTY TRUST AGREEMENT (the “Agreement”), made and entered into as of
the 28th day of February, 1989, by and among The Standard Oil Company, an Ohio
corporation having its principal office in Cleveland, Ohio (“SOC”), as depositor
and trustor, BP Exploration (Alaska) Inc., a Delaware corporation having its
principal office in Anchorage, Alaska (formerly Standard Alaska Production
Company) (the “Company”), The Bank of New York, a corporation organized under
the laws of the State of New York, authorized to do a banking business and
having a principal corporate trust office in New York, New York, as trustee and
F. James Hutchinson, a resident of the State of Delaware, as co-trustee.



     WHEREAS, the Company is engaged in the business of developing and
producing oil and gas and owns mineral interests in lands that contain proved
reserves and are currently producing oil and gas; and



     WHEREAS, the Company has determined to convey to SOC the Initial Royalty
Interest (hereinafter defined) pursuant to an Overriding Royalty Conveyance (as
hereinafter defined); and



     WHEREAS, SOC has determined to offer and sell trust units representing
undivided beneficial interests in the Trust, which will own the Initial Royalty
Interest; and






 









 












     WHEREAS, SOC has determined to grant to the Trust the Initial Royalty
Interest pursuant to a Trust Conveyance (as hereinafter defined) in
consideration of the issuance by the Trust of the Trust Units, (as hereinafter
defined); and



     WHEREAS, The British Petroleum Company p.l.c. (“BP”) has agreed to support
the payment obligations of the Company and SOC as more fully set forth in the
Support Agreement (as hereinafter defined); and



     WHEREAS, the Initial Conveyance (as hereinafter defined) is
contemporaneously executed and delivered to the Trust;



     NOW, THEREFORE, the Initial Royalty Interest has been granted,
assigned and delivered unto the Trust, receipt of which is hereby acknowledged
and accepted by the Trustee on behalf of the Trust, to have and to hold, in
trust as hereinafter set forth, such property and all other properties, real
or personal (including Additional Royalty Interests), which may hereafter be
received by the Trust pursuant to this Agreement; and the Company, SOC, The
Bank of New York in its capacity as Trustee, and the Co-Trustee (as
hereinafter defined) agree that such properties shall be held, administered,
paid and delivered for the purposes and subject to the terms and conditions
hereinafter provided.



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ARTICLE I




Definitions




     As used herein, the following terms have the meanings indicated:



     Section 1.01. “Affiliate” of a Person means another Person controlled by,
controlling or under common control with such Person.



     Section 1.02. “Additional Conveyance” means collectively any instrument(s)
pursuant to which one or more Additional Royalty Interests are created or
conveyed to the Trust as provided in Section 2.04 hereof.



     Section 1.03. “Additional Royalty Interest” means any royalty interest
which is identical in all respects to the Initial Royalty Interest, except for
the identity of the parties (other than the Trust), the effective date and the
percentage set forth in the definition of Royalty Production in the related
Additional Conveyance.



     Section 1.04. “Agreement” means this instrument, as originally executed,
or, if amended pursuant to the provisions of Section 10.02 or 10.03 hereof, as
so amended.



     Section 1.05. “Beneficial Interest” means the right to share in the
benefits and the obligation to share in the detriments resulting from the
accomplishment of the purposes of the Trust as expressly set out in this
Agreement, and includes without limitation the right to share in distributions
during the term of the



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Trust, to share in the final distributions from the Trust and to participate in
decisions affecting the Trust only to the extent expressly provided herein, and,
except as limited by the provisions of this Agreement, to exercise all other
rights of a beneficiary of a business trust created under the Delaware Trust
Act.




     Section 1.06. “BP” means The British Petroleum Company p.l.c., its
successors and assigns.



     Section 1.07. “Business Day” means any day that is not a Saturday,
Sunday, a holiday determined by the New York Stock Exchange as “affecting ‘ex’
dates” or any other day on which banking institutions in New York, New York,
or in any other city where the principal corporate trust office of the Trustee
may be located, are closed as authorized or required by law.



     Section 1.08. “Certificate” means a certificate issued by the Trust
pursuant to ARTICLE III hereof evidencing the ownership of one or more Units.



     Section 1.09. “Code” means the Internal Revenue Code of 1986, as amended,
or any successor statute or statutes.



     Section 1.10. “Company” means BP Exploration (Alaska) Inc., a Delaware
corporation and includes successors or assigns of the Company.



     Section 1.11. “Conveyance” means collectively the Initial Conveyance and
any Additional Conveyance.



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     Section 1.12. “Co-Trustee” shall have the meaning ascribed to it in Section
1.33 hereof.



     Section 1.13. “Delaware Trust Act” means 12 Delaware Code Section 3801 et
seq.



     Section 1.14. “Distribution Date” means the date of any distribution
pursuant to Section 4.02 hereof.



     Section 1.15. “ERISA” means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute or statutes.



     Section 1.16. “Initial Conveyance” means collectively the Overriding
Royalty Conveyance and the Trust Conveyance.



     Section 1.17. “Initial Royalty Interest” means the royalty interest being
conveyed by the Company to SOC and by SOC to the Trust contemporaneously with
the execution and delivery of this Agreement pursuant to the Initial Conveyance.



     Section 1.18. “Insignificant Investor Period” means each period of time
prior to the Opinion Date during which benefit plan investors (within the
meaning-of Department of Labor regulation section 2510.3-101(f)(2)) do not own a
sufficient number of Units of a “class” to cause their equity participation in
the Trust to be “significant” (within the meaning of Department of Labor
regulation section 2510.3-101(f)(1)).



     Section 1.19. “Officer’s Certificate” means a certificate duly executed on
behalf of the Company or SOC, as the case may be, signed by any president, any
vice president, any assistant vice



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president, or any treasurer or assistant treasurer, or any certificate
reasonably believed by the Trustee to have been so signed.




     Section 1.20. “Opinion Date” means the first date upon which all of the
following requirements have been satisfied: (i) the Trust Units have been
registered under section 12(b) or section 12(g) of the Securities Exchange Act
of 1934; (ii) the Trust Units are widely-held (within the meaning of paragraph
(b)(3) of the Regulation); (iii) the Trust Units are freely transferable (within
the meaning of paragraph (b)(4) of the Regulation); (iv) the Company has
delivered to the Trustee an opinion of nationally recognized ERISA counsel (such
counsel to be selected by the Company and approved by the Trustee and such
opinion to be reasonably acceptable to the Trust’s counsel) which states, in
effect, that the requirements described in clauses (i), (ii) and (iii) above
have been satisfied; and (v) the Company has delivered to the Trustee either (a)
an opinion of nationally recognized ERISA counsel (such counsel to be selected
by the Company and approved by the Trustee and such opinion to be reasonably
acceptable to the Trust’s counsel) or (b) an individual prohibited transaction
exemption or an advisory opinion issued by the Department of Labor to the
Trustee, the Trust or the Company which opinion, exemption or advisory opinion
states, in effect, that from and after the date upon which the requirements
described in clauses (i), (ii) and (iii) above have been satisfied, the assets
of the Trust shall not constitute plan assets (within the meaning



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of the Regulation) with respect to any employee benefit plan (as such term is
defined in section 3(3) of ERISA) which became a Unit Holder prior to the date
such requirements have been satisfied (provided, however, that if the Company
has delivered to the Trustee an opinion of counsel as described in clause (v)(a)
above, such opinion must specifically reference and be based primarily upon an
advisory opinion or other published announcement of similar authoritative import
issued by the Department of Labor which favorably addresses the same issues
which are to be addressed in such opinion and which is based upon facts similar
to those involving the Trust and such employee benefits plans). The Company
shall use its best efforts to obtain promptly, at its expense, from the
Department of Labor the individual prohibited transaction exemption or advisory
opinion referred to in clause (v)(b) above; provided, however, that if the
Company has delivered the opinion of counsel referred to in clause (v)(a) above,
then its obligation to use its best efforts to obtain such exemption or advisory
opinion shall terminate. For purposes of this Section, the term “Regulation”
means Department of Labor regulation section 2510.3-101.



     Section 1.21. “Overriding Royalty Conveyance” means the Overriding Royalty
Conveyance from the Company to SOC, the form which is attached hereto as part of
Exhibit A.



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     Section 1.22. “Person” means an individual, corporation, partnership,
unincorporated association, trust, estate or other organization.



     Section 1.23. “Quarter” means a period of approximately three months
beginning on the day after a Quarterly Record Date and continuing through and
including the next succeeding Quarterly Record Date, which shall be the
Quarterly Record Date for such Quarter; provided, however, that the first
Quarter hereunder shall be a period beginning on the date hereof and continuing
until April 17, 1989.



     Pursuant to the Conveyance royalty amounts payable to the Trust are
calculated on a calendar quarter basis, and each royalty payment is required to
be made on the Quarterly Record Date immediately following the close of the
calendar quarter during which the related oil production occurs. Therefore,
pursuant to the Conveyance royalty payments for the four calendar quarters in
each year are due and payable to the Trust on the Quarterly Record Date in
April, July and October of such year and in January of the following year. The
term “Quarter” as used herein refers to a three-month period which ends on the
Quarterly Record Date which occurs approximately one-half month after the end of
the corresponding royalty calculation period.



     Section 1.24. “Quarterly Income Amount” for any Quarter means the sum of
(a) the cash received by the Trust during the Quarter that is directly
attributable to the Royalty Interest, (b)



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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 6.07
hereof and (c) any other cash receipts of the Trust during the Quarter including
without limitation any cash received from interest earned pursuant to Section
6.07 hereof, reduced by the sum of (i) the liabilities of the Trust paid during
the Quarter and (ii) the amount of any cash used in the Quarter to establish or
increase a cash reserve pursuant to Section 6.07 hereof. If (a) prior to the end
of a Quarter the Trustee makes a determination of the Quarterly Income Amount
which it anticipates will be distributed to Unit Holders of record on the
Quarterly Record Date for such Quarter, based on notice provided to the Trustee
by the Company pursuant to Section 4.8(e) of the Overriding Royalty Conveyance
(and similar provisions of any Additional Conveyance), and (b) the Quarterly
Income Amount is not equal to the amount so determined because the amounts
stated in such notice were not received on or prior to such Quarterly Record
Date, the Trustee shall treat such amounts when received as if they were
received on such Quarterly Record Date.




     Notwithstanding anything to the contrary in this Section 1.24, the
Quarterly Income Amount for any Quarter shall not include any amount that would
have been required to be reported to any stock exchange on which the Units are
listed in connection with the establishment of an “ex” date in order to be
distributed to Unit Holders who were such on the Quarterly Record Date for



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such Quarter but was not so reported unless the stock exchange agrees to such
amount being a part of that Quarter’s Quarterly Income Amount or the Trustee
receives an opinion of counsel stating that neither the Trust, the Trustee nor
The Bank of New York will be adversely affected by such inclusion. An amount
that, pursuant to the preceding sentence, is not included in the Quarterly
Income Amount for that Quarter shall be treated as if received during the next
Quarter. In this connection, the Trustee shall report quarterly to such stock
exchange (so long as reporting is so required by the stock exchange), at the
time required by the stock exchange, the amount that, pursuant to the first
paragraph of this Section 1.24, the Trustee in good faith reasonably expects to
be the Quarterly Income Amount for the Quarter being reported on.




     Section 1.25. “Quarterly Record Date” means the fifteenth day of each
January, April, July and October; provided, however, that if such day is not a
Business Day then the Quarterly Record Date shall be the next Business Day after
such day and provided further that if the Trustee determines that a different
date is required to comply with applicable law or the rules or regulations of
any stock exchange on which the Units are listed, it means such different date.
The first Quarterly Record Date shall be April 17, 1989.



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     Section 1.26. “Record Date Unit Holder” means a Person who was a Unit
Holder of record on the Voting Record Date for a meeting of Unit Holders.



     Section 1.27. “Royalty Interest” means the Initial Royalty Interest and any
Additional Royalty Interests which may hereafter be granted to the Trust
pursuant to this Agreement, taken together.



     Section 1.28. “Royalty Statement” means the statement prepared by the
Company and delivered to the Trust pursuant to Section 4.8(f) of the Overriding
Royalty Conveyance or the comparable provision of any Additional Conveyance.



     Section 1.29. “Support Agreement” means the Support Agreement dated as of
even date herewith by and among BP, the Company, SOC and the Trust.



     Section 1.30. “Trust” means the business trust under the Delaware Trust Act
created by and administered under the terms of this Agreement.



     Section 1.31. “Trust Conveyance” means the Trust Conveyance from SOC to the
Trust, the form of which is attached hereto as part of Exhibit A.



     Section 1.32. “Trust Estate” means all assets, however and whenever
acquired, that may belong to the Trust at any designated time and shall include
both income and principal.



     Section 1.33. “Trustee” means collectively (except as otherwise provided in
Section 8.06 hereof) The Bank of New York, a



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corporation organized under the laws of the State of New York and authorized to
do a banking business and qualified to exercise trust powers, in its capacity as
trustee hereunder, and, F. James Hutchinson, in his capacity as co-trustee
hereunder. The Bank of New York and F. James Hutchinson shall serve as the
initial trustees under this instrument. The term “Trustee” shall include any
ancillary or successor trustee or co-trustee hereunder, during the period it is
so serving in such capacity. The term “Co-Trustee” means F. James Hutchinson,
in his capacity as co-trustee hereunder, and any successor co-trustee hereunder,
during the period he or it is serving in such capacity. References to The Bank
of New York or to the Trustee, individually, or similar references shall be
deemed to be references to The Bank of New York in its individual capacity and
not in its capacity as Trustee hereunder and shall be deemed to include its
successors or assigns which serve as Trustee in their individual capacities and
not in their capacities as successor Trustees hereunder.




     Section 1.34. “Unit” or “Trust Unit” means an undivided fractional interest
in the Beneficial Interest determined as hereinafter provided.



     Section 1.35. “Unit Holder” means the owner of one or more Units as shown
by the records of the Trustee pursuant to the provisions of ARTICLE III hereof.



     Section 1.36. “Voting Record Date” means a date selected by the Trustee as
the record date for determining Unit Holders of



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record entitled to notice of and to vote at a meeting of Unit Holders, as
provided in ARTICLE V hereof.




ARTICLE II




Creation, Name and Purpose of Trust




     Section 2.01 — Creation and Name of Trust. The Trust is hereby created
under the Delaware Trust Act as a Delaware business trust for the benefit of the
Unit Holders. The Trust shall be known as the BP Prudhoe Bay Royalty Trust, and
the Trustee may transact all affairs of the Trust in that name. Pursuant to the
Trust Conveyance, SOC has granted, bargained, sold, conveyed, assigned, set over
and delivered the Initial Royalty Interest to the Trust. The Initial Royalty
Interest shall constitute the initial Trust Estate.



     Section 2.02 — Purposes. The purposes of the Trust are (a) to convert the
Royalty Interest to cash either (1) by retaining the Royalty Interest and
collecting the proceeds from production in accordance with the terms of the
Conveyance until production has ceased permanently or the Royalty Interest has
otherwise terminated or (2) by selling or otherwise disposing of the Royalty
Interest (within the limits stated herein); and (b) to distribute such cash, net
of amounts for payment of expenses and liabilities of the Trust, to the Unit
Holders as provided herein.



     It is the intention and agreement of SOC, the Company and the Trustee to
create a grantor trust for federal income tax purposes of which the Unit Holders
are treated as the owners of trust



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income and corpus. As set forth above and amplified herein, the Trust is
intended to be a passive entity limited to the receipt of revenues attributable
to the Royalty Interest and the distribution of such revenues, after payment of
or provision for Trust expenses and liabilities, to the Unit Holders. It is
neither the purpose nor the intention of the parties hereto to create, and
nothing in this Agreement shall be construed as creating, a partnership, joint
venture, joint stock company or similar business association between or among
Unit Holders, present or future, or between or among Unit Holders, or any of
them, and the Trustee or SOC or the Company.




     Section 2.03. — Initial Conveyance. SOC, as depositor and trustor, has
delivered, and the Trustee on behalf of the Trust has accepted, executed copies
of the Initial Conveyance. Accordingly, the Initial Royalty Interest described
therein constitutes the initial Trust Estate. In consideration of the grant of
the Initial Royalty Interest and the execution and delivery of the Support
Agreement, the Trustee is hereby directed to execute and deliver on behalf of
SOC Certificates representing an aggregate of 21,400,000 Trust Units in such
denominations and to the Persons identified by SOC in an Officer’s Certificate
delivered to the Trustee; provided, however, that the Trustee shall not be
obligated to execute and deliver such Certificates to any Person unless such
Person delivers to the Trustee a written instrument evidencing the agreement of
such Person with respect to matters



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set forth in subsections (i) through (iv) of the last paragraph of Section 2.04
hereof.




     Section 2.04. — Additional Conveyances. The Company or an Affiliate may
from time to time grant, assign and deliver unto the Trust one or more
Additional Royalty Interests by executing and delivering to the Trust one or
more Additional Conveyances, and, subject to the conditions set forth below, the
Trustee shall accept on behalf of the Trust the assignment of such Additional
Royalty Interests and the delivery of such Additional Conveyances.



     The obligation of the Trustee to accept the assignment of any such
Additional Royalty Interest shall be subject to the condition that the
Additional Royalty Interest shall be identical in all respects to the Initial
Royalty Interest except for the effective date of the Additional Conveyance
(which must be on the first day of a calendar quarter and must be the date of
delivery thereof to the Trustee), the percentage set forth in the definition of
Royalty Production in the related Additional Conveyance and the identity of the
parties (other than the Trust) to the Additional Conveyance (provided that the
entity which will make payments to the Trust under any Additional Royalty
Interest must be the same entity which will make payments to the Trust under the
Initial Royalty Interest). Any Additional Conveyance must be identical in all
respects to the Initial Conveyance, except for changes which



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may be necessary to ensure that the Additional Royalty Interest conforms to the
conditions set forth herein.




     In consideration of the grant of an Additional Royalty Interest, and in
exchange therefor, the Trustee shall issue, upon receipt of an Officer’s
Certificate containing the direction of the Company or such Affiliate to issue
to the order of the Company or such Affiliate, a number of whole Units in the
Trust not to exceed a total of 18,600,000 additional Units determined by the
following formula:



	 	 	 	 	 	 	 	 	 
	 

	 	Number of Units =
	 	 	A	 	 	x 21,400,000
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	16.4246	%	 	 





where “A” equals the percentage set forth in the definition of “Royalty
Production” in the related Additional Conveyance. In connection with such
issuance, the recipients of such Units and their transferees shall not be
treated as Unit Holders of record entitled to distributions with respect to the
Quarterly Income Amount for the Quarterly Record Date which occurs during the
month in which such Additional Conveyance is effective and shall not be entitled
to transfer such Units (other than to the Company or one of its Affiliates) on
or prior to such Quarterly Record Date, and the Certificates therefor shall
prominently so state.




     The acceptance by the Trustee of any assignment of an Additional Royalty
Interest shall be subject to the condition precedent that the Trustee shall have
received (a) a ruling from the Internal Revenue Service to the effect that
neither the existence



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nor exercise of the right to assign the Additional Royalty Interest, the power
to accept such assignment or the issuance of additional Units as herein
contemplated will adversely affect the classification of the Trust as a “grantor
trust” for federal income tax purposes and (b) a ruling from the Internal
Revenue Service or an unqualified written opinion of counsel to the Trust to the
effect that such assignment will not cause (i) the income from the Trust to be
treated as unrelated business taxable income for federal income tax purposes or
(ii) the Unit Holders to recognize income, gain or loss attributable to the
Royalty Interests as a result of such assignment, except to the extent of any
gain or loss attributable to any cash received by the Trust in connection with
such assignment.




     In addition, the Trustee shall require that the Company or such Affiliate
making the deposit of the Additional Royalty Interest to the Trust pay the
expenses of such assignment and contribute a cash reserve equal to the value of
the cash reserve, if any, existing on the date such Additional Conveyance is
effective multiplied by a fraction whose numerator is the additional number of
Units to be issued and whose denominator is the sum of (a) the number of Units
outstanding immediately preceding such deposit of the Additional Royalty
Interest and (b) the number of Units then to be issued. The Trustee shall invest
the cash, if any, deposited with respect to such cash reserve as provided in
Section 6.07 hereof in investments maturing on the next succeeding Quarterly



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Record Date, and there shall be included in the Quarterly Income Amount
distributed to Unit Holders of record on the Quarterly Record Date which occurs
during the month in which such Additional Conveyance is effective an amount
equal to the sum of (a) the amount so deposited and (b) the interest earned on
such amount from the time it is invested to such Quarterly Record Date.




     Upon acceptance thereof by the Trustee on behalf of the Trust, the
Additional Royalty Interest shall constitute a part of the Trust Estate and, to
the extent permitted by law, shall be treated by the Trustee, together with the
Initial Royalty Interest and all other Additional Royalty Interests previously
assigned to the Trust, as constituting one Royalty Interest held for the benefit
of all Unit Holders.



     Notwithstanding any other provision of this Agreement, with respect to any
Additional Royalty Interest to be conveyed to the Trust prior to the date upon
which the requirements of clauses (i), (ii), (iii) and (iv) of Section 1.20 have
been satisfied (the “Restriction Date”), the Trustee shall not be required to
accept such Additional Royalty Interest on behalf of the Trust unless each
Person who is to be issued Units in connection with such conveyance delivers to
the Trustee a written instrument evidencing the agreement of such Person:




	 	(i)	 	to furnish to the Trustee, from time to time and within five days of
its receipt of a written request from the Trustee, complete and
correct information in a form and





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	 	 	 	manner reasonably acceptable to the Trustee as to whether such Person
is a benefit plan investor (within the meaning of Department of Labor
regulation section 2510.3-101(f)(2)) and, if such Person is a benefit
plan investor, information as to (a) the identity of the employee
benefit plan or plans established or maintained in connection with, or
owning an interest in, such benefit plan investor if such benefit plan
investor is not a “collective investment fund maintained by a bank”
within the meaning of Department of Labor Prohibited Transaction
Exemption 80-51 (a “Fund”) nor an insurance company pooled separate
account within the meaning of Department of Labor Prohibited
Transaction Exemption 78-19 (an “Account”), (b) the identity of the
employee benefit plan or plans owning an interest in excess of five
percent (with all such plans maintained by the same employer or
employee organization treated as a single plan for purposes of this
determination) of all of the assets in such benefit plan investor if
such benefit plan investor is a Fund or an Account, and (c) the
identity of the sponsor of the plan or plans described in subclauses
(a) or (b) above, and (d) information as to whether any Person
designated by the Trustee as a Person with whom the Trust proposes to
engage in a transaction is a “party in interest” (within the meaning





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	 	 	 	of Section 3(14) of ERISA) or a “disqualified person” (within the
meaning of Section 4975(e)(2) of the Code), (collectively referred to
as a “party in interest”), as to such benefit plan investor (including
without limitation, each Plan owning a five percent interest in a Fund
or Account),
	 
	 	(ii)	 	that the Trustee shall be authorized to disclose any information
described in clause (i) above which is provided by such Person to the
Trustee and which may be necessary, in the sole opinion of the
Trustee, in order for the Trustee to perform its duties under this
Agreement,
	 
	 	(iii)	 	to comply in all respects with the recordkeeping and examination
requirements of Section III of (a) Department of Labor Prohibited
Transaction Exemption 80-51 if such Person is a benefit plan investor
which is a Fund, or (b) Department of Labor Prohibited Transaction
Exemption 78-19 if such Person is a benefit plan investor which is an
Account, and
	 
	 	(iv)	 	that such Person will not directly or indirectly transfer any of the
Units to be issued to such Person prior to the Restriction Date unless
the transferee of such Units delivers to the Trustee a written
instrument evidencing its agreement with respect to the matters
described in clauses (i), (ii) and (iii) above and this





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	 	 	 	clause (iv) as if such transferee had received a direct issuance of
Units from the Trust in connection with the conveyance of such
Additional Royalty Interest.





     Section 2.05. — Certificate of Trust. The Trustee shall cause to be filed a
certificate of trust in the office of the Secretary of State of Delaware in
compliance with Section 3810 of the Delaware Trust Act.



     In the event that the Trustee becomes aware that any statement contained or
any matter described in the certificate of trust has changed making the
certificate false in any material respect, the Trustee shall promptly file a
certificate of amendment in the office of the Secretary of State of Delaware in
compliance with Section 3810 of the Delaware Trust Act. Upon the termination of
the Trust pursuant to Section 9.01 of this Agreement, the Trustee shall file a
certificate of cancellation in the office of the Secretary of State of Delaware
in compliance with Section 3810 of the Delaware Trust Act.



     Section 2.06. — Acceptance by Trustee. The Trustee, by joining in the
execution of this Agreement, accepts the Trust herein created and provided for
and accepts all of the rights, powers, privileges, duties and responsibilities
of the Trustee hereunder and agrees to exercise and perform the same in
accordance with the terms and provisions contained herein.



     Section 2.07. — Registration of the Units. In connection with the
contemplated registration of the Units under the



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Securities Act of 1933, as amended, if required by the Securities and Exchange
Commission, the Company, or its designee, is hereby granted full power and
authority to sign on behalf of the Trust such registration statements and any
amendments, including post-effective amendments and any other related documents
relating to the Units as may be necessary to effect or to continue in effect
such registration.




ARTICLE III




Creation of Units and Certificates




     Section 3.01 — Creation of Units. The entire Beneficial Interest shall
initially be divided into 21,400,000 Units.



     If at any time there is assigned to the Trust an Additional Royalty
Interest pursuant to Section 2.04 hereof, the Beneficial Interest shall
thereafter be considered to be divided into a number of Units equal to the sum
of the number of Units existing prior to such assignment and the number of Units
created upon such assignment pursuant to Section 2.04 hereof, and upon the
acceptance of such assignment, the Trustee shall cause to be issued in
accordance with Section 2.04 hereof new Certificates representing the number of
Units created upon such assignment.



     Section 3.02 — Certificates as Evidence of Ownership of Units. The
ownership of the Units shall be evidenced by Certificates in substantially the
form set forth in Exhibit B attached hereto. Except as otherwise provided in
Sections 2.04 and 3.08



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hereof and notwithstanding anything else stated herein, the Trustee may for all
purposes set forth in this Agreement, including, without limitation, the making
of distributions and voting, treat the holder of any Certificate as shown by the
records of the Trustee maintained pursuant to Section 3.06 hereof as the owner
of the Units evidenced thereby.




     Section 3.03. — Rights of Unit Holders. Except as otherwise specifically
provided herein, the Unit Holders shall own pro rata the Beneficial Interest and
shall be entitled to participate pro rata in the rights and benefits of Unit
Holders under this Agreement. A Unit Holder by assignment or otherwise shall
take and hold the same subject to all the terms and provisions of this Agreement
and the Conveyance, which shall be binding upon and inure to the benefit of the
successors, assigns, legatees, heirs and personal representatives of the Unit
Holder. 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
provided in Sections 3.06 and 4.02 hereof in the case of a transfer after a
Quarterly Record Date and prior to the corresponding Distribution Date, (a) all
of his Beneficial Interest attributable thereto, (b) all of his rights in, to
and under such Unit or Units and (c) all interests, rights and benefits under
this Agreement of a Unit Holder that are attributable to such Unit or Units as
against all other Unit Holders, the Trust



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and the Trustee.




     Section 3.04. — Character of Rights. The sole interest of each Unit Holder
shall be his pro rata portion of the Beneficial Interest and the obligations of
the Trust expressly created under this Agreement with respect to the Beneficial
Interest. Such interest of a Unit Holder is and shall be construed for all
purposes (except for tax purposes) to be intangible personal property, and no
Unit Holder as such shall have any legal title in or to any real property
interest that is a part of the Trust Estate including, without limiting the
foregoing, the Royalty Interest or any part thereof. No Unit Holder shall have
the right to seek or secure any partition or distribution of the Royalty
Interest or any other asset of the Trust Estate or any accounting during the
term of the Trust or during the period of liquidation and winding up under
Section 9.02 hereof.



     Section 3.05. — Form, Execution and Dating of Certificates. The
Certificates may contain such changes of form, but not substance, as the
Trustee, from time to time in its discretion, may deem necessary or desirable.
In addition, the Certificates shall contain such changes (not inconsistent with
the provisions of this Agreement) as from time to time may be required to comply
with any rule or regulation of any stock exchange on which the Units are listed.
Each Certificate shall be dated the date of its issuance. Each Certificate shall
be signed on behalf of the Trust by a duly authorized signatory of the Trustee
(which signature may be a



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facsimile to the extent permitted by law or regulations of any stock exchange on
which the Units are listed) and may be sealed with the seal of the Trustee or a
facsimile thereof.




     Pending the preparation of definitive Certificates, the Trustee shall
execute, and the Transfer Agent and Registrar (as provided in Section 3.06
hereof) shall record, countersign and register, temporary Certificates, as
directed in an Officer’s Certificate of SOC. Temporary Certificates may contain
such references to any provisions of this Agreement as may be appropriate. Every
temporary Certificate shall be executed by the Trustee and recorded,
countersigned and registered upon the same conditions and in substantially the
same manner, and with like effect, as the definitive Certificates.



     As promptly as practicable, the Trustee shall execute and furnish
definitive Certificates and thereupon temporary Certificates may be surrendered
in exchange therefor without charge to the Unit Holders at the principal
corporate trust office of The Bank of New York at which Certificates may be
presented for a transfer pursuant to Section 3.06 hereof, and the Transfer Agent
and Registrar shall record, countersign and register in exchange for such
temporary Certificates a like aggregate amount of definitive Certificates. Until
so exchanged, the temporary Certificates shall be entitled to the same benefits
under this Agreement as definitive Certificates.



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     Section 3.06 — Registration and Transfer of Units. With respect to the
issuance of the initial Certificates representing ownership of the Units
(including Certificates issued pursuant to Section 2.04 hereof) and upon
subsequent transfer of such Certificates in accordance with the provisions of
this Section 3.06, the Trustee shall maintain records that reflect the name and
address of the holder of each Certificate, the number of Units represented by
each Certificate, the date of issuance and/or transfer of each Certificate, the
name of each transferee of a Certificate and any other such information as the
Trustee shall deem necessary or advisable.



     Until the Units have been registered under the Securities Act of 1933, as
amended (the “Act”), and qualified under the securities laws of the various
states in which qualification is required, the Units may not be transferred
except pursuant to the provisions of Rule 144 or, if adopted, Rule 144A under
the Act or another exemption from registration under the Act, provided that
prior to any such proposed transfer (other than a transfer to an affiliated
company), the holder of the Trust Units to be transferred shall give written
notice to the Company and the Trustee of such holder’s intention to effect such
transfer, which notice shall be accompanied by an unqualified written opinion of
legal counsel, which counsel (who the Company and the Trustee acknowledge may be
counsel in the employ of the transferring Unit Holder) and opinion (in form,
scope and substance) shall be reasonably



( 26 )




 









 




satisfactory to the Company and the Trustee, to the effect that the proposed
transfer of such Trust Units may be effected without registration under the Act
and applicable state securities laws. Further, until the requirements of clauses
(i), (ii), (iii) and (iv) of Section 1.20 have been satisfied (and for purposes
of this agreement, such requirements shall be deemed to be satisfied
simultaneously with the delivery of the opinion required by clause (iv) of
Section 1.20), the Units may not be transferred unless the Trustee shall have
received a written instrument from the proposed transferee evidencing its
agreement with respect to the matters described in clauses (i), (ii), (iii) and
(iv) of the last paragraph of Section 2.04 hereof (applied without regard to
whether the Units were originally acquired in connection with an Additional
Conveyance or the Initial Conveyance). Except as set forth in the preceding
sentences of this paragraph and as set forth in Section 2.04 hereof, all Units
shall be freely transferable, but (except as otherwise provided in Section 6.12
hereof) no transfer of any Unit shall be effective as against the Trustee prior
to entry on the records of the Trustee upon the surrender of the Certificate or
Certificates evidencing ownership of such Unit or Units (or upon compliance with
the provisions of Section 3.07 hereof) and compliance with such reasonable
regulations and requirements, including but not limited to such instruments of
transfer, including signature guarantees of a broker or bank located, or having
a correspondent located, within New York City,




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as the Trustee may prescribe. Certificates shall be presented for transfer at
the principal corporate trust office of The Bank of New York or at such office
or agency of the Trustee as the Trustee shall maintain (and hereby agrees to
maintain) in the Borough of Manhattan, in the event the Units are listed on any
stock exchange.




     The Trustee hereby appoints The Bank of New York as Transfer Agent and
Registrar for the registration of transfer of Units. The Trustee may in its sole
discretion remove The Bank of New York as Transfer Agent and Registrar and
appoint such one or more other Transfer Agents and Registrars as it deems
appropriate.



     No service charge will be made by the Trustee to the transferor or
transferee of a Certificate for any transfer of a Unit evidenced by the
transferred Certificate, but the Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation to
such transfer. Until any such transfer, the Trustee may treat the holder of any
Certificate as shown by its records as the owner of the Units evidenced thereby
and shall not be charged with notice of any claim or demand respecting such
Certificate or the interest represented thereby by any other party. Any such
transfer of a Unit as evidenced by a transfer of a Certificate shall, as to the
Trustee, transfer to the transferee of the Certificate as of the close of
business on the date of transfer all of the undivided right, title and interest
of the transferor in and to the Beneficial Interest,



( 28 )




 









 




provided that, as to the Trustee, a transfer of a Certificate after any
Quarterly Record Date shall not transfer to the transferee of such Certificate
the right of the transferor of the Certificate to any sum payable to the
transferor as the holder of record of the Certificate on such Quarterly Record
Date. However, nothing stated herein shall affect the right of the Trustee to
act in accordance with Sections 3.07 and 6.12 hereof.




     Notwithstanding the foregoing, in the event that the Trust receives an
amount which will comprise, in whole or in part, a Quarterly Income Amount on a
day other than a Quarterly Record Date, the Trustee may notify Unit Holders of
the fact of such receipt by any means, including a press release, which the
Trustee deems appropriate in the circumstances.



     As to matters affecting the title, ownership, warranty or transfer of
Certificates, 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. The death of any Unit Holder shall
not entitle such Unit Holder’s transferee to an accounting or valuation for any
purpose, but as to the Trustee, the transferee of a deceased Unit Holder shall
succeed to all rights of the deceased Unit Holder under this Agreement upon
proper proof of title satisfactory to the Trustee.



( 29 )




 









 





     Upon the Trustee’s receipt of written notice of the death of a Unit Holder,
the Trustee may refuse to effect the transfer of any Units held by such deceased
Unit Holder until it has received satisfactory evidence of compliance with all
tax, probate and other requirements of applicable law.



     Section 3.07 — Mutilated, Destroyed, Lost or Stolen Certificates. In the
event that any Certificate is mutilated, destroyed, lost or stolen, the Trustee
shall, if the conditions in this section are met and the Trustee has not
received notice that such Certificate has been acquired by a bona fide holder,
issue to the holder of such Certificate as shown by the records of the Trustee a
new Certificate in exchange and substitution for the mutilated Certificate or in
lieu of and substitution for the Certificate so destroyed, lost or stolen. In
every case, the applicant for a substituted Certificate shall furnish to the
Trust and the Trustee such security or indemnity as the Trustee may reasonably
require to save the Trust and the Trustee harmless and, in every case of
destruction, loss or theft, the applicant shall also furnish to the Trustee
evidence to the Trustee’s reasonable satisfaction of the destruction, loss or
theft of such Certificate. Upon the issuance of any substituted Certificate, the
Trustee may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
reasonable expenses incurred in connection therewith.



( 30 )




 









 





     Section 3.08 — Protection of Trustee. The Trustee shall be protected in
acting upon any notice, stock power, Royalty Statement, Officer’s Certificate,
opinion of counsel, report of certified public accountant, any petroleum
engineer or auditor or other expert, credential, certificate, instrument of
assignment or transfer or other document or instrument reasonably believed by
the Trustee to be genuine and correct and to be signed or sent by the proper
party or parties. The Trustee is specifically authorized to rely upon the
application of Article 8 of the Uniform Commercial Code, the Uniform Act for
Simplification of Fiduciary Security Transfers and 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 Certificates and the Units represented thereby, without any personal
liability for such reliance, and the indemnity granted pursuant to Section
7.02(a) hereof shall specifically extend to any matters arising as a result
thereof.



     Section 3.09 — Transfer Agent and Registrar. Any references in this ARTICLE
III to the rights and duties of the Trustee with respect to the transfer or
registration of Certificates shall also be deemed to be references to the
Transfer Agent and Registrar acting hereunder.



     Section 3.10 — Limitation of Personal Liability of Unit Holders. Unit
Holders shall, to the full extent permitted by Section 3803 of the Delaware
Trust Act, be entitled to the same



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limitation of personal liability extended to stockholders of private
corporations for profit under the laws of the State of Delaware.




ARTICLE IV




Accounting and Distribution




     Section 4.01 — Fiscal Year and Accounting Method. Except as otherwise
required pursuant to Section 4.03 hereof, the fiscal year of the Trust shall be
the calendar year. The Trustee shall maintain the books of the Trust on a cash
basis, in accordance with generally accepted accounting practices, except to the
extent that such books must be kept on any other basis pursuant to applicable
law.



     Section 4.02 — Distributions. On the fifth day after the Trustee’s receipt
in same day finally collected funds of amounts to be received on a Quarterly
Record Date for each Quarter in each year during the term of the Trust or if
such day is not a Business Day on the next succeeding Business Day, the Trustee
shall distribute the Quarterly Income Amount for the Quarter to which such
Quarterly Record Date relates to the Unit Holders of record on such Quarterly
Record Date (except those Unit Holders which, pursuant to Section 2.04 hereof,
are not treated as Unit Holders of record entitled to distributions with respect
to the Quarterly Income Amount for such Quarterly Record Date) in proportion to
the Units owned by each such Unit Holder; provided that during any



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period prior to the Opinion Date which is not an Insignificant Investor Period,
the Trustee shall distribute such Quarterly Income Amount (including amounts
referred to in the last sentence of this Section 4.02) on or as soon as
practicable following the Quarterly Record Date and such amounts shall be held
uninvested in a non-interest bearing account. Payment of each Unit Holder’s pro
rata portion of the Quarterly Income Amount shall be made by check or draft
mailed to each of the Unit Holders. Notwithstanding the foregoing, payments of
$100,000 or more shall be made to any Unit Holder who enters into an agreement
with the Trustee providing for such payments by wire transfer in immediately
available funds to an account of such Unit Holder as specified in the agreement.
The Trustee shall, upon the request of any such Unit Holder, enter into such an
agreement unless such agreement adversely affects The Bank of New York’s own
rights, duties or immunities under this Agreement or otherwise, in which case
the Trustee may, but shall not be obligated to, enter into such an agreement.
Except as otherwise provided in any such agreement, if, pursuant to the last
sentence of the first paragraph of Section 1.24, the Trustee treats amounts
received after a Quarterly Record Date as if they were received on such
Quarterly Record Date, the distributions of such amounts shall be made on the
fifth day after the date of receipt thereof by the Trust in finally collected
same day funds or if such day is not a Business Day, on the next succeeding
Business Day.




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     Section 4.03 — Income Tax Withholdings and Reporting. For federal and
Alaska state income tax purposes, the Trustee shall effect such withholdings and
file such returns and statements as in its judgment are required to comply with
applicable provisions of the Code and the regulations thereunder and any Alaska
state income tax laws and regulations thereunder.



     Section 4.04 — Reports to Unit Holders. As promptly as practicable
following the end of each calendar year of the Trust, but no later than 90 days
following the end of each calendar year, the Trustee shall mail to each Person
who was a Unit Holder of record at any time during such calendar year a report
containing sufficient information to enable Unit Holders to make all
calculations necessary for federal and Alaska tax purposes, including the
calculation of any depletion deduction which may be available to them for such
calendar year.



     As promptly as practicable following the end of each Quarter during the
term of the Trust, but no later than 60 days following the end of each such
Quarter, the Trustee shall mail to each Person who was a Unit Holder of record
on the Quarterly Record Date immediately preceding the distribution of such
report a report showing in reasonable detail on a cash basis the assets and
liabilities, receipts and disbursements and income and expenses of the Trust and
the Royalty Production (as that term is defined in the overriding Royalty
Conveyance) for such Quarter.



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     Within 90 days following the end of each calendar year (or at such earlier
time as may be required by any stock exchange on which the Units are listed),
the Trustee shall mail to each Person who was a Unit Holder of record on the
Quarterly Record Date immediately preceding the distribution of such report an
annual report containing (a) financial statements audited by a nationally
recognized firm of independent public accountants retained by the Trust for such
purposes, (b) a certification by such firm stating whether or not all fees and
expenses paid by the Trust to the Trustee from the beginning of such calendar
year through the first Quarterly Record Date in the next following year were
calculated and paid in accordance with this Agreement and setting forth any
exceptions as may be noted by such firm, (c) such information as the Trustee
deems appropriate from a letter of the Independent Accountants (as such term is
defined in the Overriding Royalty Conveyance) which has been provided to the
Trustee stating whether or not, based on procedures set forth in detail in such
letter (i) the Company has complied in all material respects with the terms and
provisions of the Overriding Royalty Conveyance, Article Three and Article Four,
Sections 4.1 to 4.7 inclusive, and comparable provisions of any Additional
Conveyance, and (ii) the amounts payable to the Trust in respect of the Royalty
Interest have been accurately computed, and setting forth any exceptions to the
foregoing matters as may be noted by such firm (d) a letter of the Independent
Petroleum Engineers (as such term is defined in



( 35 )




 









 




the Overriding Royalty Conveyance) setting forth a summary of such firm’s
determinations regarding the Company’s methods, procedures and estimates
referred to in Section 4.8(d) of the Overriding Royalty Conveyance (and similar
provisions of any Additional Conveyance) and (e) copies of the latest annual
report or reports, if any, with respect to the Units filed with the Securities
and Exchange Commission or, if no such report is filed, a summary of the
information furnished to the Trustee pursuant to Section 4.8(c) of the
Overriding Royalty Conveyance (and similar provisions of any Additional
Conveyance). The Trust shall engage annually a nationally recognized firm of
independent public accountants, a firm of Independent Accountants (which may be
the same firm as the nationally recognized firm of independent public
accountants) and a firm of Independent Petroleum Engineers in order to furnish
such services as are required to permit the Trustee to perform its obligations
under this Section 4.04.




     The Trustee shall mail to Unit Holders any other reports or statements,
financial or otherwise, required to be provided to Unit Holders by law or
governmental regulation or the requirements of any stock exchange on which the
Units are listed.



     Section 4.05 — Information to be Supplied by the Company. The Company shall
provide to the Trustee on a timely basis upon request such information not known
or otherwise available to the Trustee concerning the Royalty Interest (including
information with respect to the properties burdened by the Royalty



( 36 )




 









 




Interest) as shall be necessary to permit the Trustee to comply with respect to
the Trust with the reporting obligations of the Trust pursuant to the Securities
Exchange Act of 1934, as amended, the requirements of any stock exchange on
which the Units are listed and this Agreement and for any other reasonable
purpose of the Trust.




     The Company hereby agrees to indemnify The Bank of New York, the Trustee
and the Trust, against any loss, liability, damage and expense (including
reasonable attorneys’ fees) incurred by The Bank of New York, the Trustee or the
Trust as a result of or arising out of any of the information provided to the
Trustee by the Company pursuant to this Section 4.05 being untimely, incorrect,
misleading or untrue in any material respect.



     Section 4.06 — Information to be Provided to the Company. To the extent the
Company is required to file any report with respect to the Trust with any stock
exchange on which the Units are listed or any governmental authority, the
Trustee will provide to the Company on a timely basis upon the Company’s request
such information with respect to the Trust and the Trustee that is not within
the knowledge of the Company and that is necessary to the Company’s ability to
make such filing or such report. The Company shall be indemnified by the Trustee
(which shall in turn be indemnified to the extent provided pursuant to Section
7.02(a) hereof) against any loss, liability, damage and expense (including
reasonable attorneys’ fees) incurred by the Company as a result of



( 37 )




 









 




or arising out of any of the information provided to the Company by the Trustee
pursuant to this Section 4.06 being untimely or incorrect or untrue in any
material respect. Any indemnification by the Trustee of the Company pursuant to
this Section 4.06, except for indemnification which relates to any such
information concerning The Bank of New York, shall be limited to amounts
actually received by the Trustee for such purposes from the Trust Estate.




ARTICLE V




Meetings of Unit Holders




     Section 5.01 — Purpose of Meetings. A meeting of the Unit Holders may be
called at any time and from time to time pursuant to the provisions of this
ARTICLE V to act with respect to any matter regarding which the Unit Holders are
authorized to act by the express terms of this Agreement.



     Section-5.02 — Call and Notice of Meetings. Any such meeting of the Unit
Holders may be called by the Trustee in its discretion and will be called by the
Trustee (i) as soon as practicable after receipt of a written request by the
Company or (ii) as soon as practicable after receipt of a written request that
sets forth in reasonable detail the action proposed to be taken at such meeting
and is signed by unit Holders owning not less than 25 percent of the then
outstanding units or (iii) as may be required by applicable law or regulations
of any stock exchange on which the Units



( 38 )




 









 




are listed. Except as may be otherwise required by applicable law or by any
stock exchange on which the Units are listed, written notice signed by the
Trustee (which signature may be a facsimile) of every meeting of the Unit
Holders setting forth the time and place of such 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 60 nor fewer than 10 days before such meeting is to be
held to all Unit Holders of record on a date (“Voting Record Date”) selected by
the Trustee, which Voting Record Date shall not be more than 60 days before the
date of such meeting. If such notice is given to any Unit Holder by mail, it
shall be directed to him at his last address as shown by the records of the
Trustee and shall be deemed to have been duly given when so addressed and
deposited in the United States mail, postage prepaid. No matter other than that
stated in the notice shall be acted upon at any meeting. All such meetings shall
be held at such time and place in the Borough of Manhattan, The City of New
York, as the notice of any such meeting may designate.




     Section 5.03 — Voting. Only a Person who was a Unit Holder on the Voting
Record Date (“Record Date Unit Holder”) shall be entitled to be present,
speak or vote at any such meeting. A person appointed by an instrument in
writing as a proxy for such Record Date Unit Holder shall be entitled at such
meeting to exercise all rights exercisable by such Record Date Unit Holder as if
such Record Date Unit Holder attended such meeting and exer-



( 39 )




 









 




cised such rights in person. In addition, any representative of the Company and
the Trustee shall be entitled to be present, speak and generally to participate
in any such meeting. All references in this Agreement to Record Date Unit
Holders shall mean either such Record Date Unit Holder or his duly appointed
proxy.




     At any such meeting, the presence in person or by proxy of Record Date Unit
Holders holding Certificates representing a majority of the Units outstanding on
the Voting Record Date shall constitute a quorum and, unless otherwise provided
in this Agreement, any matter shall be deemed to have been approved if it is
approved by the Vote of Record Date Unit Holders holding Certificates
representing a majority of the Units represented at the meeting. Each Record
Date Unit Holder shall be entitled to one vote for each Unit represented by the
Certificate or Certificates held by him. The Trustee, subject to all applicable
laws, may solicit from and vote proxies of Unit Holders entitled to vote at any
meeting thereof.



     Section 5.04 — Conduct of Meetings. The Trustee may make such reasonable
regulations as it may deem advisable governing the conduct of any such meeting
including, without limitation, provisions governing the appointment of proxies,
the appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidences of the right to vote,
the preparation and use at the meeting of a list of the Persons



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entitled to vote at the meeting and the appointment of a chairman and secretary
of the meeting.




     Section 5.05. Voting of Units Held by Company, SOC and Their Respective
Affiliates. SOC and the Company agree that, at any meeting of Unit Holders, they
will vote or cause to be voted any Units held of record or beneficially by the
Company, SOC or any Affiliate of either of them in the same proportion as the
Units voted by other Unit Holders voting at such meeting.



ARTICLE VI




Administration of Trust and Powers of Trustee




     Section 6.01 — General Authority. Subject to the limitations set forth in
this Agreement, the Trustee is authorized to and shall take such actions as in
its judgment are necessary, desirable or advisable to achieve the purposes of
the Trust, including the appointment of an ancillary trustee or trustees under
this Agreement, the solicitation and voting of proxies at meetings of Unit
Holders, the taking of appropriate action to enforce the terms of the
Conveyances and the Support Agreement (including the institution of any actions
or proceedings at law or in equity necessary to the foregoing) and the authority
to agree to modifications of the terms of the Conveyances or the Support
Agreement or to settle disputes with respect thereto, so long as (i) the Trustee
shall have received an unqualified written opinion of counsel to the Trust to
the effect that such modification or



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settlement will not adversely affect the classification of the Trust as a
“grantor trust” for federal income tax purposes or cause the income from the
Trust to be treated as unrelated business taxable income for federal income tax
purposes, and (ii) such modifications or settlements do not alter the nature of
or the amount or time of receipt of payments under the Royalty Interest. The
Trustee shall not be (i) obligated or permitted to make any investment or
operating decision or otherwise physically inspect the properties burdened by
the Royalty Interest or (ii) obligated to prevent drainage or any other event or
state of facts which damages or diminishes the value of the Royalty Interest.
The Trustee is authorized to execute the Trust Conveyance and the Support
Agreement on behalf of the Trust. The Trustee is authorized to and shall take
such actions as in its judgment are necessary or advisable to give such
approvals as may be appropriate under the Conveyance, and to make such requests
as in its judgment are necessary or advisable under Section 4.8 of the
Overriding Royalty Conveyance or any comparable provision of any Additional
Conveyance, in order to preserve and protect the Trust Estate and to discharge
its other duties hereunder.




     The Company and the Trustee are hereby authorized to make and shall be
responsible for all filings on behalf of the Trust with the Securities and
Exchange Commission required by the Exchange Act and with the Securities and
Exchange Commission or such other



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governmental authorities required by applicable law or regulation with respect
to the Units as may be specified from time to time in an Officer’s Certificate
delivered to the Trustee. It is the expectation of the Company that the Units
may, in the future, be listed on the New York Stock Exchange or another stock
exchange. In this regard, the Company will advise the Trustee of any actions
that the Trustee should take in connection with effectuating such listing and,
unless the Trustee shall determine that such actions are not in the best
interest of the Trust, the Trustee shall take such actions. If listing is
accomplished, the Trustee will take all actions necessary to maintain such
listing including compliance with the rules of the stock exchange and the filing
of any reports required by the stock exchange; provided, however, that if at any
time the Company shall have informed the Trustee in writing that, in the opinion
of the Company, such listing is not in the best interest of the Unit Holders or
the interests of the Unit Holders would be better served by listing the Units on
another stock exchange as specified by the Company, then the Trustee shall as
soon as practicable call a meeting of Unit Holders in accordance with the
provision of ARTICLE V hereof and submit to a vote of Unit Holders at such
meeting a proposal to delist the Units, or to delist the Units and list the
Units on another stock exchange as specified by the Company; if such proposal is
a approved at such meeting by the affirmative vote of the Record Date Unit
Holders




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holding Certificates representing a majority of the Units represented at such
meeting in accordance with ARTICLE V, the Company will seek to accomplish the
delisting, or the delisting and listing on such other stock exchange, without
the involvement of the Trustee, but if the Company determines that action by the
Trustee is necessary, the Company will instruct the Trustee regarding what
actions the Trustee must take in order to accomplish such delisting, or
delisting and listing on such other stock exchange; in such event the Trustee
shall take such action, if any, as shall be specified by the Company in order to
accomplish the delisting of the Units from their then current stock exchange or
such delisting and listing of the Units on such other stock exchange. The
Company agrees to consider, on a periodic basis, whether or not such listing is
in the best interest of the Unit Holders and whether the interests of the Unit
Holders would be better served by listing the Units on another stock exchange,
and the Company agrees that if it should reach either conclusion it will furnish
appropriate notice in writing to the Trustee.




     The Trustee may not dispose of all or any portion of the Royalty Interest
except as provided in Sections 6.O2, 6.06 or 9.02 hereof.



     Section 6.02 — Limited Power to Dispose of Royalty Interest and Other Trust
Interests. (a) The Trustee shall not sell or otherwise dispose of all or any
part of the Trust Estate, in-



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cluding all or any part of the Royalty Interest, or any interest therein, except
that




     (i) the Trustee shall make cash distributions to Unit Holders and pay the
liabilities of the Trust as provided herein,



     (ii) the Trustee shall sell or otherwise dispose of all or a part of the
Royalty Interest or an interest therein if, prior thereto, such sale or other
disposition and all material terms and conditions thereof (including, if
practicable, the record date for determining Unit Holders of record entitled to
receive any cash to be distributed as a result of such sale) are approved by the
affirmative vote of the Record Date Unit Holders holding Certificates
representing 70% of the Units outstanding on the Voting Record Date if such sale
is to be effected on or prior to December 31, 2010, or 60% of the Units
outstanding on the Voting Record Date if such sale is to be effected thereafter,
in each case at a meeting duly called and held in accordance with the provisions
of ARTICLE V hereof (provided that if the terms or conditions of such sale or
other disposition adversely affect The Bank of New York’s own rights, duties or
immunities under this Agreement or otherwise, the Trustee may in its discretion,
but shall not be obligated to, effect such sale or other disposition); provided,
however, that if such sale is effected in order to provide for the payment of
specific liabilities of the Trust then due and involves a part, but not all or
substantially all, of the Trust Estate, such sale shall be approved by the
affirmative vote of the Record



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Date Unit Holders holding Certificates representing a majority of the Units
outstanding on the Voting Record Date for such meeting,




     (iii) the Trustee shall mortgage, pledge, grant security interests in or
otherwise encumber the Trust Estate, or a portion thereof, if required pursuant
to Section 6.06 or 6.12 hereof,



     (iv) the Trustee shall dispose of the Trust Estate if required pursuant to
Section 9.02 hereof,



     (v) the Trustee shall sell for cash the Trust Estate, or a portion thereof,
if and to the extent that



     (1) the Trustee is unable to effect a borrowing by the Trust, as specified
in sections 6.06 or Section 6.12 hereof,



     (2) the Trustee determines that it is not practicable to submit such sale
and all material terms and conditions thereof to a vote of the Unit Holders
pursuant to clause (ii) of this paragraph (a) above,



     (3) such sale is effected in order to provide for the payment of specific
liabilities of the Trust then due, and the cash on hand is insufficient to
discharge such liabilities,



     (4) the Trustee determines that the failure to pay such liabilities at such
time will be contrary to the best interest of the Unit Holders and that such
sale is necessary to provide for the payment of such liabilities,



     (5) the sale is effected at a price which, in the opinion of an investment
banking firm, commercial banking firm or other Person qualified to render such
opinion and selected by the



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Trustee, is at least equal to the fair market value of the interest sold, and
the sale is effected pursuant to terms and conditions which, in the opinion of
such investment banking firm, commercial banking firm or other Person, are
commercially reasonable when compared to alternatives available to the Trust,
and




     (6) the Trustee has received an unqualified written opinion of counsel to
the Trust to the effect that such sale will not adversely affect the
classification of the Trust as a “grantor trust” for federal income tax purposes
or cause the income from the Trust to be treated as unrelated business taxable
income for federal income tax purposes; provided, however, that if the Trustee
is unable to obtain such opinion the Trustee shall nevertheless effect such sale
if the Trustee determines that the failure to effect such sale will be
materially detrimental to the Unit Holders considered as a whole.



     (b) The Trustee shall distribute any cash received as a result of any such
sale pursuant to clause (ii) of paragraph (a) above, subject to the need to pay
any liabilities of the Trust or to establish or increase any cash reserves
pursuant to Section 6.07 hereof, or any cash received as a result of a sale
pursuant to clause (v) of paragraph (a) which is in excess of the amount needed
to discharge liabilities of the Trust then due, to Unit Holders of record as
specified in connection with the Unit Holder vote or, if there is no Unit Holder
vote or no record date for determining Unit Holders of record entitled to
receive any cash to



( 47 )




 









 




be distributed as a result of such sale is so specified, to Unit Holders as part
of the Quarterly Income Amount distributed with respect to the first Quarterly
Record Date following the date of any such sale (unless such sale occurs on a
Quarterly Record Date or within ten days prior to a Quarterly Record Date in
which event the distribution may be on such Quarterly Record Date unless the
Trustee determines that such an immediate distribution would prevent the Trust
from complying with applicable law or any regulation of any stock exchange on
which the Units are listed).




     Section 6.03 — No Power to Engage in Business or Make Investments.
Notwithstanding any provision of the Delaware Trust Act, the Trustee shall not
cause the Trust to engage in any business, commercial or investment activity of
any kind whatsoever, except for investment activity permitted in Section 6.07
hereof, 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 or,
except as permitted in Sections 6.07 and 6.12, acquire any other asset. The
Trustee shall not accept any contribution to the Trust other than the Initial
Royalty Interest, any Additional Royalty Interest and any cash required to be
deposited pursuant to Section 2.04 hereof; provided that nothing herein shall be
construed to prevent the Trust from receiving the benefits of the Conveyance and
the Support Agreement.



     Section 6.04 — Payment of Liabilities of Trust. The Trustee is authorized
to and shall first apply all money received by it



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(other than amounts contributed under Section 2.04 hereof with respect to any
cash reserve) for the payment of all liabilities of the Trust, including but not
limited to all expenses, taxes and liabilities incurred of all kinds,
compensation to it for its services and reimbursement of its expenses pursuant
to Sections 7.03 and 7.04 hereof and compensation to such parties as may be
consulted pursuant to Section 7.05 hereof.




     Section 6.05 — Timing of Trust Income and Expenses. The Trustee will use
reasonable efforts to cause the Unit Holders to recognize income (including any
income from interest earned on investments made in accordance with this
Agreement or from any sale of the Royalty Interest, except as may be specified
in a vote of Unit Holders in the case of a sale pursuant to clause (ii) of
paragraph (a) of Section 6.02 hereof) and expenses on Quarterly Record Dates.
The Trustee will invoice the Trust for services rendered by the Trustee and, to
the extent provided in Section 7.04 hereof, reimbursement of expenses incurred
by the Trustee relating to the Trust only on a Quarterly Record Date and shall
cause the Trust to pay such invoice only on the Quarterly Record Date on which
such invoice is rendered and will use reasonable efforts to cause all Persons to
whom the Trust becomes liable to invoice the Trust for such liability on a
Quarterly Record Date and to cause the Trust to pay such liability on the
Quarterly Record Date on which such liability is invoiced. In connection with
the requirements of any stock exchange on which the Units are



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listed, the Trustee will, if required by such stock exchange, use reasonable
efforts to determine the Quarterly Income Amount and report such amount to such
stock exchange at such time as may be required by such stock exchange; provided
that the Trustee shall not be required to calculate any amounts payable pursuant
to the Conveyance. Nothing in this Section 6.05 shall be construed as requiring
the Trustee to cause payment to be made for Trust liabilities on any date other
than on such date as in its sole discretion it shall deem to be in the best
interests of the Unit Holders.




     Section 6.06 — Limited Power to Borrow. If at any time the amount of cash
on hand (which amount shall not include any amounts which have been reported to
a stock exchange on which the Units are listed or otherwise publicly announced
as the amount which will be paid to Unit Holders with respect to a Quarterly
Record Date and which amounts have not been paid) is not sufficient to pay
liabilities of the Trust then due (including any amount payable upon redemption
of Units pursuant to Section 6.12 hereof), the Trustee shall borrow from another
Person not affiliated with the Trustee, on a secured or unsecured basis, such
amounts as are required after use of any available Trust funds to pay such
liabilities as have become due; provided that the Trustee shall effect such
borrowing only under the following conditions:



     (a) the Trustee shall have determined that it is not practical to pay such
liabilities on subsequent Quarterly Record Dates



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out of funds anticipated to be available on such dates and that, in the absence
of such borrowing, the Trust Estate is subject to the risk of loss or diminution
in value;




     (b) the borrowing is effected pursuant to terms and conditions which, in
the opinion of an investment banking firm, commercial banking firm or other
Person qualified to render such opinion and selected by the Trustee, are
commercially reasonable when compared to alternatives available to the Trust,
and



     (c) the Trustee shall have received an unqualified written opinion of
counsel to the Trust to the effect that such borrowing will not adversely affect
the classification of the Trust as a “grantor trust” for federal income tax
purposes or cause the income from the Trust to be treated as unrelated business
taxable income for federal income tax purposes; provided, however, that if the
Trustee is unable to obtain such opinion the Trustee shall nevertheless effect
such borrowing if the Trustee determines that the failure to effect such
borrowing will be materially detrimental to the Unit Holders considered as a
whole.



     To secure payment of such indebtedness, the Trustee is authorized 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 Royalty



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Interest and to carve out and convey production payments. The Trustee is
prohibited from borrowing in its capacity as Trustee or on behalf of the Trust
except as provided in this Section 6.06 and in Section 6.12(d) hereof. In the
event of such borrowings, no further Trust distributions shall be made until the
indebtedness created by such borrowings has been paid in full.




     Section 6.07 — Cash Reserves and Cash Held Pending Distribution Date. The
Trustee shall establish a cash reserve for the payment of material liabilities
of the Trust which may become due, but only under the following conditions: (a)
the Trustee shall have determined that it is not practical to pay such
liabilities on subsequent Quarterly Record Dates out of funds anticipated to be
available on such dates and that, in the absence of such reserve, the Trust
Estate is subject to the risk of loss or diminution in value or The Bank of New
York is subject to the risk of personal liability for such liabilities and (b)
the Trustee shall have received an unqualified written opinion of counsel to the
Trust to the effect that the establishment and maintenance of such reserve will
not adversely affect the classification of the Trust as a “grantor trust” for
federal income tax purposes or cause the income from the Trust to be treated as
unrelated business taxable income for federal income tax purposes; provided
however, that if the Trustee is unable to obtain such opinion the Trustee shall
nevertheless establish such reserve if the Trustee determines that



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the failure to establish such reserve will be materially detrimental to the Unit
Holders considered as a whole or will subject The Bank of New York to the risk
of personal liability for such liabilities.




     Collected cash balances being held by the Trustee as a reserve for
liabilities shall be invested (i) in obligations issued by (or unconditionally
guaranteed by) the United States or any agency or instrumentality thereof
(provided such obligations are secured by the full faith and credit of the
United States) or (ii) if such obligations maturing as required in the last
sentence of this paragraph are not available, in repurchase agreements (1) with
any bank, having capital, surplus and undivided profits of $100,000,000 or more;
(2) which are secured by collateral of the type specified in (i) above which
collateral (a) is in the possession of the Trustee either directly or through
the Federal Reserve book-entry account of the Trustee individually or a third
party acting solely as agent for the Trustee, (b) is not subject to any third
party claims, (c) has a market value (determined at the execution date of the
relevant repurchase agreement) at least equal to the principal amount invested
in the repurchase agreement; and (3) which have a fixed rate of return. Any such
obligation or repurchase agreement must mature (x) on the next succeeding
Quarterly Record Date or, if the due date of the liability with respect to which
the reserve is established is known, on the due date of such liability and (y)
must be held to maturity



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unless there is an earlier default. In the event of a default thereon prior to
maturity, the Trustee may liquidate such investment and reinvest in another
obligation of the type and maturity date specified in this Section 6.07,
provided that the rate of return thereon is not in excess of the rate of return
specified in the investment so liquidated.




     Collected cash balances being held by the Trustee for distribution at the
next Distribution Date shall be invested (i) in obligations issued by (or
unconditionally guaranteed by) the United States or any agency or
instrumentality thereof (provided such obligations are secured by the full faith
and credit of the United States) or (ii) if such obligations with a maturity
date on such Distribution Date are not available, in repurchase agreements as
described in the immediately preceding paragraph; provided that any such
obligation or repurchase agreement must mature on such Distribution Date and
must be held to maturity, except as provided in the last sentence of the
previous paragraph.



     Except as otherwise provided in Section 4.02 hereof, in the event funds are
received by the Trustee at a time that does not allow it sufficient time to
invest in obligations or repurchase agreements of the type and maturity
specified in this Section 6.07 with interest accruing from the day such funds
are received by the Trustee, the Trustee shall, if practicable, invest such
funds overnight in a time deposit with a bank having capital, surplus and
undivided profits of $100,000,000 or more and shall, on the



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following day, reinvest such funds (and any interest earned thereon) in
obligations or repurchase agreements of the type and maturity so specified.




     Notwithstanding the foregoing, prior to the Opinion Date and during any
period which is not an Insignificant Investor Period, none of the investments
described in this section shall be purchased from The Bank of New York.



     Section 6.08 — Settlement of Claims. The Trustee is authorized to prosecute
and defend, and to settle by arbitration or otherwise, any claim of or against
the Trustee, the Trust or the Trust Estate, to waive or release rights of any
kind and to pay or satisfy any debt, tax or claim upon any evidence by it deemed
sufficient, without the joinder or consent of any Unit Holder.



     Section 6.09 — 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 any mineral assets in the Trust Estate. To the extent
that such separate accounts or records are kept, the Trustee may allocate the
receipts, disbursements and reserves of the Trust between income and principal
in the discretion of the Trustee, and the Trustee’s discretion need not accord
with the provision of any requirement of applicable law. Regardless of any such
characterization, however, the Trustee shall not make any distribution,
accumulate any funds or maintain any reserve except as expressly provided in
this Agreement.



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     Section 6.10 — Effect of Trustee’s Power on Trust Property. The powers
granted the Trustee under this Agreement may be exercised upon such terms as the
Trustee deems advisable and may affect Trust properties.



     Section 6.11 — No Requirement of Diversification. The Trustee shall be
under no obligation to diversify the Trust’s assets or to dispose of any wasting
assets.



     Section 6.12 — Divestiture of Units. If at any time the Trust or the
Trustee is made 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
Unit Holders, the following procedures will be applicable:



     (a) The Trustee will promptly give written notice (“Notice”) of the
existence of such controversy to each Unit Holder (“Ineligible Holder”) whose
nationality or other status is an issue in the proceeding and will mail a copy
of such notice to SOC and the Company. 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 that 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, the Trustee shall have the right to redeem and shall redeem any such
Units at any time during the 90



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days after the expiration of the 30-day period specified in the Notice. The
redemption 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:





     (1) if the Units are then listed on a stock exchange, the price will
equal the closing price of the Units on such stock exchange (or, if the
Units are then listed on more than one stock exchange, on the largest such
stock exchange in terms of the volume of Units traded thereon during the
preceding 12 months, or for the period the Units have been traded on such
stock exchange if less than 12 months) on the determination day if any
units were sold on such stock exchange on such day or, if not, on the last
day preceding the determination day on which any Units were sold on such
stock exchange, or




     (2) if the Units are not then listed on any stock exchange but are
traded in the over-the-counter market, the price will equal the closing bid
price on the determination date as quoted on the National Market System of
the National Association of Securities Dealers Automatic Quotation System
if the Units are so quoted or, if not, the mean between the closing bid and
asked prices for the Units in the over-the-counter market on the
determination day, if quotations for such prices on such day are available
or, if not, on the last



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day preceding the determination day for which such quotations are
available, or




     (3) if the Units are neither listed nor traded in the over-the-
counter market, the price shall equal the price which, in the written
opinion of a recognized firm of investment bankers selected by the Trustee,
is the fair market value of the Units. The Trustee in relying on the
opinion of such investment banking firm, shall have full authorization and
be entitled to the full protection provided by Section 7.05 hereof. If the
Trustee cannot obtain an opinion from an investment banking firm which in
the Trustee’s sole discretion is competent to render such opinion, then the
Trustee may obtain (and rely on) the opinion of any other advisor or expert
which the Trustee in its sole discretion believes to have sufficient
competence to render such opinion. Such redemption (or sale) will be
accomplished by tender of the above cash price to the Ineligible Holder at
his address as shown on the records of the Trustee, either in person or by
mail as provided in Section 12.05 hereof, accompanied by notice of
cancellation. Concurrently with such tender the Trustee shall cancel or
cause to be cancelled all Certificates representing Units then owned by
such Ineligible Holder and for which tender has been made. In the event the
tender is refused by the Ineligible Holder or if he cannot be located after
reasonable efforts to do so, the tendered but



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unclaimed sum shall be held by the Trustee in a non-interest bearing
account, uninvested and in trust for the benefit of such Ineligible Holder,
until proper claim for same has been made by such holder, but subject to
applicable laws concerning unclaimed property.




     (c) During any period prior to the Opinion Date which is not an
Insignificant Investor Period, if the redemption provided in paragraph (b)
of this Section 6.12, if effected by the Trust, would constitute a
non-exempt “prohibited transaction” within the meaning of section 406 of
ERISA or section 4975 of the Code, the Units subject to the Trust’s right
of redemption shall be purchased by the Company or by another Person
eligible to purchase such Units and designated by the Company in a
transaction which does not constitute such a non-exempt “prohibited
transaction.” Such purchase shall be accomplished by tender of the cash
price referred to in paragraph (b) to the Ineligible Holder at his address
as shown on the records of the Trustee, either in person or by mail as
provided in Section 12.05 hereof, accompanied by notice that the Units will
be transferred to the purchaser. In the event the tender is refused by the
Ineligible Holder or if he cannot be located after reasonable efforts to do
so, the Company shall cause the tendered but unclaimed sum to be placed in
a non-interest bearing account, uninvested and in trust for the benefit of
such Ineligible Holder, until a



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proper claim for same has been made by such holder, but subject to
applicable laws concerning unclaimed property. Upon receipt by the Trustee
of notice from the Company or the purchaser that the tender has been
refused or that the Ineligible Holder has not been located after reasonable
efforts to do so and that the tendered but unclaimed sum has been placed in
trust as provided herein, the Trustee shall cause to be transferred to the
purchaser the Units purchased and shall issue to the purchaser Certificates
representing such Units. Such transfer and issuance shall be effected
notwithstanding the fact that the Certificates representing the Units
purchased have not been presented to the Trustee for cancellation, and from
and after the date of such transfer such Certificates shall only represent
the right to receive the funds held in trust for the benefit of such
Ineligible Holder.




     (d) The Trustee may cause the Trust to borrow any amount required to
redeem Units in accordance with the procedures described in paragraph (b)
above, or if the Trustee is unable to effect such borrowing the Trustee may
cause the Trust to sell a portion of the Trust Estate for cash in order to
obtain funds to effect such redemption; provided that the Trustee shall
effect such borrowing only upon the terms and conditions specified in
Section 6.06 hereof and shall effect



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such sale only under the conditions specified in Section 6.02 hereof.



     Section 6.13 — Prohibited Transactions. Notwithstanding any power, right,
duty or obligation of the Trustee under this Agreement, the Trustee shall not
cause or permit the Trust to participate in any transaction which would
constitute a non-exempt “prohibited transaction” within the meaning of section
406 of ERISA or section 4975 of the Code. During any period prior to the Opinion
Date which is not an Insignificant Investor Period, (a) the Company shall
provide to the Trustee on a timely basis any and all information reasonably
requested by the Trustee concerning the relationship of the Company and its
Affiliates to certain Unit Holders specified by the Trustee and any information
listing parties-in-interest furnished by Unit Holders, (b) the Trustee shall
review all such information provided by the Company as well as any relevant
information the Trustee may receive from a Unit Holder concerning its status as
an ERISA-covered entity and the identification of parties-in-interest under
ERISA with respect to such Unit Holder, and (c) the Trustee shall make
reasonable inquiry of each Person desiring to enter into a transaction with the
Trust as to whether such Person is a party-in-interest under ERISA with respect
to ERISA-covered Unit Holders.



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ARTICLE VII




Rights and Liabilities of Trustee




     Section 7.01 — General Liability of Trustee. The Trustee is empowered to
act in its discretion and shall not be personally or individually liable for any
act or omission except in the case of negligence, bad faith or fraud. No action
taken or suffered in good faith by the Trustee in reliance upon and in
accordance with the written opinion of any counsel or the written advice of any
other expert shall in any event constitute negligence, bad faith or fraud within
the purview of this Agreement.



     The Trustee shall not be answerable for the negligence of any experts,
provided that the Trustee has selected such experts with due care in good faith.



     It is acknowledged that the Trustee has taken the Trust Estate as is and
without examination. The Trustee shall have no responsibility for any statements
made or omitted in any disclosure documents relating to the Units or the Trust
Estate and, except as may be required by law, no duty to verify the accuracy or
completeness of the same.



     The Bank of New York and the Trustee will have no duties whatsoever except
such duties as are set forth in this Agreement, and no implied covenant or
obligation shall be read into this Agreement against the Trustee.



     Section 7.02 — Indemnification of Trustee.




     (a) The Bank of New York and the Trustee (including its



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agents and employees) shall be indemnified by, and receive reimbursement
from (i) the Company (1) during any period prior to the Opinion Date which
is not an Insignificant Investor Period, (2) whenever the assets of the
Trust are insufficient or not permitted by applicable law to provide such
indemnity and (3) after the termination of the Trust to the extent that the
Trustee did not have actual knowledge, or should not have reasonably known,
of a potential claim against the Trustee for which a reserve could have
been established and used to satisfy such claim in accordance with Section
9.03 prior to the final distribution of assets of the Trust upon its
termination or to the extent any such reserve was insufficient and (ii) the
Trust Estate during any other period, against and from any and all
liability, expense, claim, damage or loss (including reasonable legal fees
and expenses) incurred by it, individually or as Trustee, in the
administration of the Trust and the Trust Estate or any part or parts
thereof, or in the doing of any act done or performed or omission occurring
on account of its being Trustee or any consequence thereof, including
without limitation, those resulting from any non-exempt prohibited
transaction or its resignation as Trustee, except (1) such liability,
expense, claim, damage or loss arising from the Trustee’s negligence, bad
faith or fraud and (2) any loss resulting from the Trustee’s expenses
(direct or indirect) in acting



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hereunder exceeding the compensation and reimbursement provided for
pursuant to Sections 7.03, 7.04 and 7.05 hereof. From and after the Opinion
Date and during any Insignificant Investor Period, the Trustee shall have a
lien upon the Trust Estate to secure it for such indemnification and
reimbursement and for compensation to be paid to it; provided, however,
that any such lien on the Royalty Interest shall be deemed released upon a
sale or other disposition of the same. Except as provided in Section 3.07
hereof, neither the Trustee nor any agent or employee of the Trustee shall
be entitled to any reimbursement or indemnification from any Unit Holder
for any liability, expense, claim, damage or loss incurred by the Trustee
or any such agent or employee. Notwithstanding the foregoing, the Trustee
shall not be entitled to indemnity from the Trust Estate with respect to
matters for which it is entitled to indemnity pursuant to paragraph (b) of
this Section 7.02.




     (b) The Company will indemnify and hold the Trustee, individually and
as Trustee, and the Trust harmless from and against any losses, claims,
damages or liabilities to which the Trustee, individually or as Trustee, or
the Trust may become subject, under the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based



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upon an untrue statement or alleged untrue statement of a material fact
contained in any offering circular, private placement memorandum or similar
document or the registration statement or any prospectus relating to the
registration of the Units under the Securities Act of 1933, as amended, or
in any report or other document filed pursuant to the Securities Exchange
Act of 1934, as amended, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Trustee,
individually and as Trustee, or the Trust for any legal or other expenses
reasonably incurred by the Trustee, individually and as Trustee, or the
trust in connection with investigating or defending any such action or
claim; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in the registration statement or any
prospectus or such amendment or supplement in reliance upon and in
conformity with information furnished to the Company by the Trustee,
individually or as Trustee. The foregoing indemnity and hold harmless
agreement shall inure to the benefit of all offi-



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cers,
directors and controlling persons of the Trustee, individually and as
Trustee.




     (c) All indemnifications of The Bank of New York and the Trustee by
the Company under this Agreement shall survive the termination of the Trust
and the termination of this Agreement. Moreover, any provision in this
Agreement that provides for the indemnification of The Bank of New York and
the Trustee or that limits the liability of The Bank of New York and the
Trustee shall also apply with respect to any Transfer Agent and Registrar.



     Section 7.03 — Compensation. The Trustee shall receive from the Trust
Estate compensation for its services as set forth in Exhibit C attached hereto
and, to the extent provided in Sections 7.04 and 7.05 hereof, reimbursement of
expenses incurred as Trustee of the Trust and as Transfer Agent and Registrar of
the Certificates representing the Units. In the event that any Person serving as
Trustee is not also serving as Transfer Agent and Registrar, the compensation
payable pursuant to Exhibit C shall be allocated among such Persons as the
Trustee shall determine.



     Section 7.04 — Other Services and Expenses. Charges for performing any
services not contemplated or specifically covered in Exhibit C will be charged
to the Trust on the basis of the Trustee’s then prevailing rate for such
services; provided, however, that during any period prior to the Opinion Date
which is not an Insignificant Investor Period, any services rendered by the



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Trustee in enforcing the terms and conditions of the Conveyance or the Support
Agreement shall not be deemed to be services not contemplated or specifically
covered in Exhibit C; and provided further that services by the Trustee on
behalf of the Trust in connection with the defense of any litigation against the
Trust or the Trustee, in connection with any audit of the books and records of
the Trust by the Internal Revenue Service, in connection with any investigation
by the Securities and Exchange Commission or other governmental bodies involving
the Trust and other matters which increase the obligations of the Trustee beyond
those contemplated by this Agreement and are not the result of discretionary
action on the part of the Trustee shall constitute services not contemplated or
specifically covered in Exhibit C.




     The initial organizational costs of the Trust, including the printing of
the initial Certificates, the Trustee’s acceptance fee, out of pocket expenses
and the fees of legal counsel of the Trustee, will be paid by the Company.
During any period prior to the opinion Date which is not an Insignificant
Investor Period, the Trustee shall cause the Trust to pay directly out of the
Trust Estate all expenses, taxes and liabilities incurred and relating to the
Trust, including but not limited to fees and expenses incurred for experts hired
pursuant to Section 7.05 hereof; provided, however, that The Bank of New York
may incur, and shall be reimbursed out of the Trust Estate for, the actual cost
to The Bank of New York of all of its out-of-pocket costs and expenses



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for printing, microfiche, postage, delivery and pick-up, long distance
telephone, travel and other similar costs and expenses which are incurred in
connection with the performance of its duties as Trustee or Transfer Agent and
Registrar. From and after the Opinion Date and during any Insignificant Investor
Period, The Bank of New York may incur any out-of-pocket costs and expenses in
the discharge of its duties as Trustee or Transfer Agent and Registrar (or may,
but shall not be required to, cause the Trust to pay any or all of such expenses
directly out of the Trust Estate), including but not limited to fees and
expenses incurred for experts hired pursuant to Section 7.05 hereof; provided,
however, that The Bank of New York shall be reimbursed out of the Trust Estate
at actual cost to The Bank of New York.




     Section 7.05 — Reliance on Experts. The Trustee shall consult with
accountants, counsel and petroleum engineers as specifically provided herein and
may otherwise consult with counsel (including its own counsel), accountants,
geologists, engineers and other parties deemed by the Trustee to be qualified as
experts on the matters submitted to them. The Trustee is authorized to rely on
the advice of such experts as provided in Section 7.01 hereof and to make
payments of all reasonable fees for services or expenses thus incurred out of
the Trust Estate.



     Section 7.06 — No Security Required. No bond or other security shall be
required of the Trustee.



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     Section 7.07 — Transactions in Multiple Capacities. To the extent permitted
by applicable law and except as otherwise provided herein, the Trustee shall not
be prohibited in any way in exercising its powers or from dealing with The Bank
of New York in any other capacity, fiduciary or otherwise.



ARTICLE VIII




Office of Trustee




     Section 8.01 — Removal of Trustee. The Trustee may be removed as Trustee
hereunder, with or without cause, by the affirmative vote at a meeting duly
called and held in accordance with the provisions of ARTICLE V hereof of Record
Date Unit Holders holding Certificates representing a majority of the Units
represented at the meeting. Subsequent to such vote, any Trustee being removed
shall have only those duties and obligations such Trustee would have if such
Trustee had commenced a resignation as described in Section 8.02 hereof.



     Section 8.02 — Resignation of Trustee. (a) Any Trustee may at any time
resign for any reason whatsoever, with or without cause, and without the
necessity of any court proceeding. Any such resignation may be commenced by
giving notice to the Company. Such notice to the Company shall be promptly
confirmed in writing, and shall be followed by the giving of written notice to
each of the Unit Holders at such Unit Holder’s last address as shown by the
records of the Trust at the time such notice is given by



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first-class mail. Any resigning Trustee shall account to its successor for the
administration of the Trust as may be reasonably required by the successor
Trustee. Any and all successors to any resigning Trustee shall be fully
protected in relying upon such accounting. Any resignation shall be effective
upon the appointment of and acceptance of the appointment by a successor
Trustee.




     (b) At no time subsequent to any Trustee’s commencement of a resignation
(as described above) shall such Trustee have any duties or obligations with
respect to any filings under the Securities Act of 1933, as amended, or any
successor statute or statutes or the rules and regulations thereunder, and
subsequent to the commencement of a resignation, the resigning Trustee shall
have only those other duties and obligations expressly set forth herein or
contemplated hereby.



     (c) No Trustee commencing a resignation shall have any liability for any
consequences, expenses, damages, or effects of any kind whatsoever including,
without limitation, any delay in or non-commencement of any SEC registration, in
whole or in part, arising out of or relating to its commencing a resignation or
in invoking its rights and privileges with respect thereto as set forth above.



     Section 8.03 — Appointment of Successor Trustee. If the Trustee has given
notice of its intention to resign, a successor Trustee shall be appointed by the
Company; provided, that if the Trustee has been removed by a vote of Unit
Holders pursuant to



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Section 8.01 hereof, a successor Trustee may be appointed by the Unit Holders at
such meeting. Notice of the appointment of a successor Trustee shall be given by
the resigning Trustee within ten days of receipt of notice of such appointment
to each Unit Holder as of the date of the appointment of the successor Trustee
at each Unit Holder’s last address as shown by the records of the Trustee.




     In the event that a successor Trustee has not been appointed within 60 days
after the commencement of a resignation or occurrence of a vacancy, a successor
Trustee may be appointed by any state court of Delaware, upon the application of
any Unit Holder. In the event any such application is filed, any such court may
appoint a temporary successor Trustee at any time after such application is
filed with it which shall, pending the final appointment of a successor Trustee,
have such powers and duties as the court appointing such temporary successor
Trustee shall provide in its order of appointment, consistent with the
provisions of this Agreement. In the event such court shall deem it necessary,
the court may appoint such temporary successor Trustee or successor Trustee on
such terms as to compensation as it shall deem necessary and reasonable
notwithstanding any provision herein to the contrary. In no event shall any
Trustee which has commenced a resignation as described in preceding Section 8.02
have any duty or obligation to appoint or apply for the appointment of



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any successor Trustee or be eligible to be named as a successor Trustee.




     A Trustee appointed under the provisions of this Section 8.03 shall be a
corporation organized and doing business under the laws of the United States,
any state thereof or the District of Columbia authorized under such laws to
exercise trust powers or a national banking association domiciled in the United
States, in either case which has a capital, surplus and undivided profits (as of
the end of its last fiscal year prior to its appointment) of at least
$50,000,000 and subject to supervision or examination by federal or state
authorities. Unless the Trust already has a Trustee that is a resident of or has
a principal office in the State of Delaware, then any Trustee appointed under
this Section 8.03 shall be such a resident or have such a principal office.



     Section 8.04 — Rights of Successor Trustee. Immediately upon the
appointment of any successor Trustee (including a temporary successor Trustee),
all rights, titles, duties, powers and authority of the resigning Trustee
hereunder shall be vested in and undertaken by the successor Trustee which shall
be entitled to receive from the Trustee which it succeeds, in addition to the
accounting referred to in Section 8.02 hereof, all of the Trust Estate held by
it hereunder and all records and files in connection therewith. No successor
Trustee shall be obligated to examine or seek alteration of any accounting of
any preceding Trustee, nor shall any successor Trustee be liable personally for
failing



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to do so or for any act or omission of any preceding Trustee. The preceding
sentence shall not prevent any successor Trustee or anyone else from taking any
action otherwise permissible in connection with any such accounting.




     Section 8.05. — Merger or Consolidation of Trustee. Neither a change of
name of the Trustee, any merger or consolidation of the Trustee with or into
another bank or trust company nor the transfer of its trust operations to a
separate corporation shall affect the Trustee’s right, obligation or capacity to
act hereunder. Any such successor shall continue as the Trustee hereunder.



     Section 8.06 — Co-Trustee.



     (a) The Co-Trustee has been appointed as trustee and joined as a party
hereunder in order to satisfy the requirements of Section 3807 of the Delaware
Trust Act. In the event of the resignation or removal of the Co-Trustee, there
shall be appointed a successor Co-Trustee hereunder who shall meet the
requirements of Section 3807 of the Delaware Trust Act unless at the time of
such resignation or removal at least one other Trustee acting hereunder
satisfies such requirements. Any successor Co-Trustee shall be appointed in the
manner set forth in Section 8.03 hereof.



     (b) Notwithstanding any other term or provision hereof to the contrary, The
Bank of New York, in its capacity as Trustee, alone may exercise the rights and
powers granted to the Trustee herein and shall be solely charged with the
performance of the



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duties herein declared on the part of the Trustee to be had and exercised or to
be performed; provided, however, that if The Bank of New York, in its capacity
as Trustee, deems it necessary or desirable for the Co-Trustee to act in a
particular matter, the Co-Trustee shall have and exercise the rights and powers
granted herein and shall be charged with the performance of the duties herein
declared on the part of the Trustee to be had and exercised or to be performed,
but only in such particular matter, and the foregoing shall not relieve The Bank
of New York, in its capacity as Trustee, from any liability or obligation of the
Trustee to any Unit Holder.




     (c) The Bank of New York, in its capacity as Trustee, alone may execute and
deliver, on behalf of the Trust, any writing, document or instrument which the
Trustee is required to execute and deliver, including, without limitation, the
Conveyance, the Certificates and any writing, document or instrument of a purely
ministerial nature.



ARTICLE IX




Term of Trust and Final Distribution




     Section 9.01. — Termination. The Trust shall terminate upon the first to
occur of the following events or times:




(a) on or prior to December 31, 2010, a decision to terminate the Trust by
the affirmative vote at a meeting duly called and held in accordance with
the provisions of ARTICLE



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V hereof of the Record Date Unit Holders holding Certificates representing
70 percent of the Units outstanding on the Voting Record Date; or




(b) after December 31, 2010 either




     (i) at such time as the sum of the net revenues from the Royalty
Interest for two successive years commencing with any year after 2010 are
less than $1,000,000 per year, unless the net revenues during such period
have been materially and adversely impacted by an event constituting “Force
Majeure” as defined below; or




     (ii) a decision to terminate the Trust by the affirmative vote at a
meeting duly called and held in accordance with the provisions of ARTICLE V
hereof of the Record Date Unit Holders holding Certificates representing 60
percent of the Units outstanding on the Voting Record Date.



     The term “Force Majeure” shall mean, without limitation, the following:




     (i) acts of God; strikes, lockouts or other industrial disturbances;
acts of public enemies; orders or restraints of any kind of the government
of the United States or of the State of Alaska or any of their departments,
agencies, political subdivisions or officials, or any civil or military
authority; insurrections; civil disturbances; riots; epidemics; sabotage;
war, whether or not declared; landslides; lightning; earthquakes; fires;
hurricanes; winds; tornados;



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storms; droughts; floods; arrests; restraint of government and people;
explosions; breakage, malfunction or accident to facilities, machinery,
transmission pipes or canals; partial or entire failure of utilities;
shortages of labor, materials, supplies or transportation; or




     (ii) any other cause, circumstance or event (other than depletion of
the petroleum reservoir in which the Trust has an interest) not reasonably
within the control of the Company.



     Section 9.02. — Disposition of Assets Upon Termination. Subject to the
proviso set forth below, upon termination of the Trust, the Trustee shall sell
for cash (unless by the affirmative vote of the Record Date Unit Holders holding
Certificates representing 70 percent of the Units outstanding on the Voting
Record Date if the decision to terminate the Trust was made on or prior to
December 31, 2010, or 60 percent of the Units outstanding on the Voting Record
Date if the decision to terminate the Trust was made thereafter, the Unit
Holders approve the sale for a specified non-cash consideration, in which event
the Trustee may, but shall not be required to, attempt to consummate such
non-cash sale, but only if the Trustee shall have received a ruling from the
Internal Revenue Service or an unqualified written opinion of counsel to the
Trust to the effect that such non-cash sale will not adversely affect the
classification of the Trust as a “grantor trust” for federal income tax purposes
or cause the income from the Trust to



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be treated as unrelated business taxable income for federal income tax purposes)
in one or more sales all the assets other than cash then held in the Trust
Estate; provided however that as soon as practical following termination of the
Trust the Trustee shall obtain an opinion of an investment banking firm,
commercial banking firm or other Person qualified to render such opinion and
selected by the Trustee as to the fair market value of the Trust Estate on the
day of termination of the Trust; and provided further, that upon receipt of such
opinion the Trustee shall notify the Company thereof, and the Company shall have
the right, exercisable by notice to the Trustee within thirty days of receipt of
such notice, to purchase the assets of the Trust at a price equal to the greater
of (i) the fair market value of the Trust Estate as set forth in such opinion or
(ii) the number of then outstanding Trust Units times the following per Unit
amount:




     (A) if the Units are then listed on a stock exchange, the price will equal
the closing price of the Units on such stock exchange (or, if the Units are then
listed on more than one stock exchange, on the largest such stock exchange in
terms of the volume of Units traded thereon during the preceding twelve months,
or for the period the Units have been traded on such stock exchange if less than
twelve months) on the day of termination of the Trust if any Units were sold on
such stock exchange on such day or, if not, on the last day preceding the day of
termination



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of the Trust on which any Units were sold on such stock exchange, or




     (B) if the Units are not then listed on any stock exchange but are traded
in the over-the-counter market, the price will equal the closing bid price on
the day of termination of the Trust as quoted by the National Market System of
the National Association of Securities Dealers Automated Quotation System if the
Units are so quoted or, if not, the mean between the closing bid and asked
prices for the Units in the over-the-counter market on the day of termination of
the Trust, if quotations for such prices on such day are available or, if not,
on the last day preceding the day of termination of the Trust for which such
quotations are available.


If the Units are neither listed nor traded in the over-the-counter market, the
price shall equal the fair market value of the Trust Estate as set forth in such
opinion.




     In rendering such opinion, such firm or other Person shall take into
account the cash owned by the Trust, the liabilities of the Trust, the costs
incident to the sale of the Royalty Interest, the other costs of termination of
the Trust and such other factors as such firm or other Person rendering such
opinion shall deem relevant.



     In the event that the Company does not exercise its option, the Trustee
shall effect any such sale (a) pursuant to procedures or material terms and
conditions approved by the affirmative vote



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of the Record Date Unit Holders holding Certificates representing 70 percent of
the Units outstanding on the Voting Record Date if such sale is effected on or
prior to December 31, 2010, or 60 percent of Units outstanding on the Voting
Record Date if such sale is effected thereafter, in each case at a meeting duly
called and held in accordance with the provisions of ARTICLE V hereof (provided
that if the procedures, terms or conditions of such sale adversely affect The
Bank of New York’s own rights, duties or immunities under this Agreement or
otherwise, the Trustee may in its discretion, but shall not be obligated to,
effect such sale pursuant to such procedures or terms or conditions) or (b)
without a vote of the Unit Holders if (i) the Trustee determines that it is not
practicable to submit such procedures or terms and conditions to a vote of the
Unit Holders pursuant to clause (a) above and (ii) such sale is effected at a
price which is at least equal to the fair market value of the Trust Estate as
set forth in such opinion and pursuant to terms and conditions which, in the
opinion of such firm or other Person rendering such opinion on the fair market
value of the Trust Estate are commercially reasonable when compared to
alternatives available to the Trust.




     Section 9.03. — Distribution of Assets upon Termination. The Trustee shall
as promptly as practicable send notice by first class mail of the date (which
shall be not more than 10 Business Days after the date such notice is sent) on
which it will distribute the proceeds of any such sale, and on such date shall
dis-



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tribute such proceeds and any other cash in the Trust Estate in proportion to
the Units owned by each such Unit Holder upon surrender of the Certificate
evidencing such Units, after paying, satisfying and discharging all of the
existing liabilities of the Trust including fees of the Trustee, or, if
necessary, setting up reserves in such amounts as the Trustee in its discretion
deems appropriate to provide for payment of contingent liabilities. Any such
reserve shall be established in accordance with the procedures specified in
Section 6.07 hereof. From and after the date of distribution set forth in such
notice to Unit Holders, any amounts held by the Trustee pending distribution
shall be held uninvested in a non-interest bearing account.




     Upon making final distribution to the Unit Holders, the Trustee shall be
under no further liability except as provided in Section 7.01 hereof. For the
purposes of liquidating and winding up the affairs of the Trust at its
termination, the Trustee shall continue to act as Trustee and may exercise each
power until its duties have been fully performed and the Trust Estate has been
finally distributed.



ARTICLE X




Irrevocability and Amendability




     Section 10.01 — Irrevocability. This Agreement and Trust are intended to be
and are irrevocable. No Person shall have the



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right or power to terminate, revoke, alter, amend or change this Agreement or
any provisions hereof except as expressly provided in ARTICLE IX hereof or in
this ARTICLE X.




     Section 10.02 — Limited Amendability. Any provision of this Agreement
(other than this Section 10.02) may be amended by the vote at a meeting duly
called and held in accordance with the provisions of ARTICLE V hereof of the
Record Date Unit Holders holding Certificates representing a majority of the
Units outstanding on the Voting Record Date, but no such amendment shall be
effective unless and until consented to in writing by the Trustee (provided,
however, that the Trustee will so consent unless such amendment affects The Bank
of New York’s own rights, duties or immunities under this Agreement or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, agree to such amendment), and in no event may an amendment be made
which would:




     (a) alter the rights of the Unit Holders as against each other;




     (b) reduce or delay the distributions to the Unit Holders provided for
in Sections 2.04, 4.02, 6.02 and 9.02 hereof;




     (c) permit the Trustee to distribute the Royalty Interest in kind
either during the continuation of the Trust or during the period of
liquidation and winding up under Section 9.02 hereof;



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     (d) provide the Trustee with the power to engage in business or
investment activities (this prohibition is not intended to limit the
authority of the Trustee specifically provided in this Agreement);




     (e) adversely affect the characterization of the Trust as a business
trust under the Delaware Trust Act or as a grantor trust for federal income
tax purposes or cause the income from the Trust to be treated as unrelated
business taxable income for federal income tax purposes;




     (f) alter the voting requirements set forth in Sections 6.02, 8.01,
9.01 and 10.02 hereof;




     (g) alter the number of Units in the Trust; or




     (h) alter the nature of or the amount or time of receipt of payments
under the Royalty Interest;


unless such amendment is approved (1) by the vote at a meeting duly called and
held in accordance with the provisions of ARTICLE V hereof of the Record Date
Unit Holders holding Certificates representing at least 80 percent of the Units
outstanding on the Voting Record Date in the case of subsections (b) through (h)
inclusive above and 100 percent of such Units in the case of subsection (a)
above, and (2) by the Trustee (provided, however, that the Trustee will so
consent unless such amendment affects The Bank of New York’s own rights, duties
or immunities under this Agreement or otherwise, in which case the Trustee may
in its discretion, but shall not be obligated to, agree to such amendment).




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     Any amendment of Sections 4.05 or Section 7.02(b) shall, in addition to the
above requirements, also require the consent of the Company.



     Section 10.03 — Corrective Amendments. Notwithstanding Section 10.02
hereof, SOC, the Company and the Trustee (without the consent of the Unit
Holders) may from time to time and at any time enter into an agreement amending
the terms of this Agreement or any other agreement relating to the establishment
or administration of the Trust to cure any ambiguity or to correct or supplement
any provision contained herein or therein which may be defective or inconsistent
with any other provision contained herein or therein, to make any other
provision with respect to matters arising hereunder or thereunder that do not
adversely affect the Unit Holders or which may be required by law in connection
with the registration of the Units for resale.



     Section 10.04 — Tax Rulings and Opinions. No amendment to this Agreement
permitted by Sections 10.02 or 10.03 hereof shall be effective until the Trustee
shall have received a ruling from the Internal Revenue Service or an unqualified
written opinion of counsel to the Trust to the effect that such amendment will
not adversely affect the classification of the Trust as a “grantor trust” for
federal income tax purposes or cause the income from the Trust to be treated as
unrelated business taxable income for federal income tax purposes.



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ARTICLE XI




Failure to Pay Amounts Due Trustee




     If, for any reason the royalty payable with respect to the Royalty Interest
or any amount payable by the Company hereunder is not paid to the Trustee as
provided in the Conveyance or hereunder, the Trustee shall as soon as
practicable notify BP by facsimile transmission or telex. The Trustee shall not
exercise any remedies it may have against the Company for failure to pay any
amounts unless BP fails to cause to be paid such amounts pursuant to its
obligations under the Support Agreement within 30 days of notice to BP as set
forth in the preceding sentence. Notice to the Company or BP shall be made to
the notice addresses specified in Section 12.06 hereof.



ARTICLE XII




Miscellaneous




     Section 12.01 — Inspection of Records. Each Unit Holder and his duly
authorized agents, attorneys and accountants shall have the right upon request
during reasonable business hours at his own cost and expense to examine and
inspect the books and records of the Trustee relating to the Trust, including
lists of Unit Holders, for any proper purpose, except information which the
Conveyance requires the Trustee to keep confidential.



     The Trustee, or its authorized representative, shall have the right during
reasonable business hours at the cost and expense of



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the Trust to inspect the Company’s books and records relating to the properties
burdened by the Royalty Interest and to discuss with representatives of the
Company the affairs, finances and accounts of the Company relating to the
properties burdened by the Royalty Interest.




     Section 12.02 — Filing of this Agreement. Except as otherwise required by
law, neither this Agreement nor any executed copy hereof need be filed in any
jurisdiction in which any of the properties comprising the Trust Estate is
located, but the same may be filed for record in any jurisdiction by the
Trustee. In order to avoid the necessity of filing this Agreement for record,
the Trustee agrees that for the purpose of vesting the record title in any
successor Trustee, the retiring Trustee will, upon appointment of any successor
Trustee, execute and deliver to such successor Trustee appropriate assignments
or conveyances.



     Section 12.03 — Disability of Unit Holder. Except as otherwise provided in
Section 4.02 hereof, any payment or distribution to a Unit Holder may be made by
check of the Trustee drawn to the order of the Unit Holder, regardless of
whether or not the Unit Holder is a minor or under other legal disability,
without the Trustee having further responsibility with respect to such payment
or distribution. This Section 12.03 shall not be deemed to prevent the Trustee
from making any payment or distribution by any other method that is appropriate
under law.



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     Section 12.04 — Savings Clause. If any provision of this Agreement should
be held illegal or invalid, such invalidity or illegality shall not affect the
remaining provisions of this Agreement, or any other property interests, and
each provision of this Agreement shall exist separately and independently, and
shall be applied to property interests separately and independently, of every
other provision, and this Agreement shall be construed as if such illegal or
invalid provision had never existed.



     Section 12.05 — Notices. Any notice or demand which by any provision of
this Agreement is required or permitted to be given or served upon the Trustee
by any Unit Holder may be given or served by being deposited, postage prepaid
and by registered or certified mail, in a post office or letter box addressed
(until another address is designated by notice given by the Trustee to the Unit
Holders and the Company) to the Trustee at 21 West Street, 12th Floor, New York,
NY 10286, Attention: Corporate Trust, Trustee Administration. Any notice or
other communication by the Trustee to any Unit Holders shall be deemed to have
been sufficiently given, for all purposes, when deposited, postage prepaid, in a
post office or letter box addressed to said holder at his last address as shown
by the records of the Trustee.



     Section 12.06 — Notice and Reports to the Company, SOC or BP. Whenever any
notice, communication or report is given by the Trustee to Unit Holders pursuant
to the provisions of this Agreement or is otherwise required to be provided to
Unit Holders



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pursuant to the provisions of this Agreement or is required to be provided to
the Company, SOC or BP, the Trustee shall provide, by in-hand delivery or by
certified or registered mail, such notice, communication or report to the
Company at the following address:



BP Exploration (Alaska) Inc.

c/o BP America Inc.

200 Public Square

Cleveland, OH 44114-2375

Attention: Treasurer




or to SOC at the following address:



The Standard Oil Company

c/o BP America Inc.

200 Public Square

Cleveland, OH 44114-2375

Attn: Treasurer




or to BP at the following address:



The British Petroleum Company p.l.c.

Brittanic House, Moor Lane

London EC24 9BU, England

Attention: Secretary

FAX: 011-44-879-2341



or at such other address as the Company, SOC or BP, as the case may be, may from
time to time advise the Trustee in writing.




     Section 12.07 — Governing Law. The Trust hereby created is a Delaware
business trust, and the laws of Delaware shall control with respect to the
construction, administration and validity of the Trust. This Agreement shall be
governed by and construed in accordance with the law of the State of Delaware
without regard to conflicts of law rules.



     Section 12.08 — Counterparts. This Agreement may be executed in a number of
counterparts, each of which shall constitute an



( 87 )




 









 




original, but such counterparts shall together constitute but one and the same
instrument.




     Section 12.09 — Headings. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof.



     Section 12.10. — Independent Conduct. SOC, the Company, The Bank of New
York and the Co-Trustee on behalf of all future Unit Holders hereby reserve and
retain the right to engage in all businesses and activities of any kind
whatsoever (irrespective of whether the same may be in competition with the
Trust), and to acquire and own all assets however acquired and whenever situated
and to receive compensation or profit thereof, for their own respective accounts
and without in any manner being obligated to disclose or offer such businesses,
activities, assets, compensation or profit to each other or to the Trust.



     Section 12.11 — Determination by the Trustee. In the event that the Trustee
is required to take action or permitted not to take action under Sections
6.02(a)(ii), 9.02(b) and 10.02 (except for any amendment to Sections 7.03, 7.04
or the last sentence of Section 7.05 hereof) which is conditioned upon a
determination by the Trustee that the action to be taken or omitted does not or
will not adversely affect The Bank of New York’s rights, duties or immunities
under this Agreement or otherwise, the Trustee shall not, in making such
determination, take into consideration the loss of Trustee’s fees or the loss of
other financial benefits



( 88 )




 









 




(other than the right to reimbursement of expenses or indemnities against
liabilities) which may result from any termination of the Trust or other event
which would cause The Bank of New York to cease to serve as Trustee hereunder as
a result of such action. The loss of such fees or such other financial benefits
shall not be deemed to constitute an adverse impact on The Bank of New York’s
own rights, duties or immunities under this Agreement or otherwise.




( 89 )




 









 





     IN WITNESS WHEREOF, SOC has caused this Agreement to be executed by its
duly authorized Chairman and Chief Executive officer and its seal to be hereunto
affixed and attested by its duly authorized Secretary and the Company has caused
this Agreement to be executed by its duly authorized Treasurer and its seal to
by hereunto affixed and attested by its duly authorized Secretary and the
Trustee has caused this Agreement to be executed by its duly authorized
Assistant Vice President and its seal to be hereunto affixed and attested by its
duly authorized Assistant Vice President and the Co-Trustee has executed this
Agreement as of the 28th day of February, 1989.



	 	 	 	 	 	 
	ATTEST:	 	THE STANDARD OIL COMPANY
	 
	 	 	 	 
	/s/ J. M. Casarik
 

Secretary

	 	By:
	 	/s/ James H. Ross
 

	 
	 	 	 	 
	ATTEST:	 	BP EXPLORATION (ALASKA) INC.
	 
	 	 	 	 
	/s/ J. M. Casarik
 

Secretary

	 	By:
	 	/s/ E. Whitehead
 

	 
	 	 	 	 
	ATTEST:	 	THE BANK OF NEW YORK, Trustee
	 
	 	 	 	 
	/s/ David A. Sampson
 


	 	By:
	 	/s/ W. N. Gitlin
 

	 
	 	 	 	 
	/s/ Eric A. Mazie
 

Witness

	 	 	 	/s/ F. James Hutchinson
 

F. James Hutchinson, Co-Trustee






 









 





	 	 	 	 	 
	STATE OF OHIO

	)	 	 	 
	 

	)     SS
	 
	COUNTY OF CUYAHOGA

	)	 	 	 






     BEFORE ME, the undersigned authority, a Notary Public in and for said
County and State, on this day personally appeared J. H. Ross, known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged before me that the same was the act of The Standard Oil Company, an
Ohio corporation, and that he executed the same as the act of such corporation
for the purposes and consideration therein expressed and in the capacity therin
stated.



     GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 28th day of February,
1989.



	 	 	 	 
	 

	 	/s/ JoAnn Motuza
	 

	 	 
	 

	 	Notary Public
	 

	 	My commission expires:
	 
	 	 
	 

	 	JoANN
MOTUZA

	 

	 	Notary
Public, State of Ohio

	 

	 	Recorded in Cuyahoga County
	 

	 	My
Comm. Expires 9-14-92







 









 





	 	 	 	 	 
	STATE OF OHIO

	)	 	 	 
	 

	)     SS
	 
	COUNTY OF CUYAHOGA

	)	 	 	 






     BEFORE ME, the undersigned authority, a Notary Public in and for said
County and State, on this day personally appeared E. Whitehead, known to me to
be the person and officer whose name is subscribed to the foregoing instrument
and acknowledged before me that the same was the act of the said BP Exploration
(Alaska) Inc., a Delaware corporation, and that he executed the same as the act
of such corporation for the purposes and consideration therein expressed and in
the capacity therein stated.



     GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 28th day of February,
1989.



	 	 	 	 
	 

	 	/s/ JoAnn Motuza
	 

	 	 
	 

	 	Notary Public
	 

	 	My commission expires:
	 
	 	 
	 

	 	JoANN
MOTUZA

	 

	 	Notary
Public, State of Ohio

	 

	 	Recorded in Cuyahoga County
	 

	 	My
Comm. Expires 9-14-92







 









 





	 	 	 	 	 
	STATE OF NEW YORK

	)	 	 	 
	 

	     ss.:
	 
	COUNTY OF NEW YORK

	)	 	 	 






     Before me, a notary public in and for said County, personally appeared
Walter N. Gitlin, known to me to be the person who, as Assistant Vice President
of The Bank of New York, the corporation which executed the foregoing
instrument, signed the same, and acknowledged to me that he did so sign said
instrument in the name and upon behalf of said corporation as such officer and
that he executed the same as the act of such corporation for the purposes and
consideration therein expressed and in the capacity therein stated.



     GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 23rd day of February,
1989.



	 	 	 	 
	 

	 	/s/ Virginia Barazotti
	 

	 	 
	 

	 	Notary Public, in and for
	 

	 	New York
	 

	 	My Commission Expires:
	 
	 	 
	 

	 	VIRGINIA
BARAZOTTI

	 

	 	Notary Public, State of New York
	 

	 	No. 41-4734647

	 

	 	Qualified
in Queens County

	 

	 	Certificate filed in New York County
	 

	 	Commission
Expires Nov. 30, 1989







 









 





	 	 	 	 	 
	STATE OF DELAWARE

	)           )SS
	 
	COUNTY OF NEW CASTLE

	)	 	 	 






     BEFORE ME, the undersigned authority, a Notary Public in and for said
County and State, on this day personally appeared James Hutchinson, known to me
to be the person whose name is subscribed to the foregoing instrument and
acknowledged before me that he is a resident of the State of Delaware and that
he executed the same as his free and voluntary act for the purposes and
consideration therein expressed and in the capacity therein stated.



     GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 17th day February, 1989.



	 	 	 
	 

	 	/s/ Lisa M. Harrison
	[SEAL]

	 	Notary Public
	 
	 	 
	 

	 	My commission expires:
	 
	 	 
	 

	 	MY COMMISSION EXPIRES
	 

	 	     AUGUST 8, 1990






 









 





EXHIBIT A




[OMITTED]




     See Exhibits 4.2 and 4.3 to the Annual Report on Form 10-K of the BP
Prudhoe Bay Royalty Trust for the fiscal year ended December 31, 2006 (File No.
1-10243)



 









 





EXHIBIT B




PPN 056663* 207




			
	 	 	 
	Number ___
	 	___Units






CERTIFICATE FOR UNITS OF BENEFICIAL INTEREST

IN BP PRUDHOE BAY ROYALTY TRUST



Created by, Issued Under and Subject to the BP Prudhoe Bay Royalty Trust
Agreement effective as of February 28, 1989. This Certificate of Beneficial
Interest is transferable in the City of New York, New York.




___




     THE UNITS REPRESENTED BY THIS CERTIFICATE MAY BE SUBJECT TO MANDATORY
REDEMPTION BY THE TRUSTEE OR MANDATORY PURCHASE AND TRANSFER UNDER CERTAIN
CIRCUMSTANCES IF A PROCEEDING IS COMMENCED SEEKING FORFEITURE OF TRUST
PROPERTIES DUE TO A UNIT HOLDER’S INELIGIBILITY TO OWN UNITS BY REASON OF THE
NATIONALITY OR OTHER STATUS OF SUCH HOLDER.



___




     UNTIL THE UNITS REPRESENTED BY THIS CERTIFICATE HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND QUALIFIED UNDER THE
SECURITIES LAWS OF VARIOUS STATES, THEY MAY NOT BE TRANSFERRED UNLESS THE
TRUSTEE AND THE COMPANY HAVE RECEIVED (1) AN OPINION OF COUNSEL SATISFACTORY TO
THE TRUSTEE AND THE COMPANY TO THE EFFECT THAT THE PROPOSED TRANSFER MAY BE
EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS
AND (2) AN INSTRUMENT FROM THE TRANSFEREE AGREEING TO PROVIDE CERTAIN
INFORMATION FROM TIME TO TIME WITH REGARD TO ERISA, AS DEFINED IN THE ROYALTY
TRUST AGREEMENT.



     THIS CERTIFIES THAT ___is the owner of ___Units of
Beneficial Interest (“Units”) in that certain Trust known and designated as the
BP Prudhoe Bay Royalty Trust, created and established under the terms of the
above referenced Royalty Trust Agreement by and among The Standard Oil Company,
an Ohio corporation with its principal office in Cleveland, Ohio, BP Exploration
(Alaska) Inc., a Delaware corporation having its principal office in Anchorage,
Alaska (the “Company”), The Bank of New York, a New York corporation, authorized
to do a banking business and having a principal corporate trust office in New
York, New York, as Trustee (the “Trustee”), and F. James Hutchinson, a resident
of the State of Delaware as Co-Trustee, a duplicate original of which Royalty
Trust Agreement is, for the



 









 




information of all concerned, held by said Trustee at its principal corporate
trust office in New York, New York. Said Royalty Trust Agreement is hereby
referred to and made a part of this Certificate for all purposes, and the owner
of this Certificate by accepting the same consents to, and becomes bound by, all
the terms and provisions of said Royalty Trust Agreement and the provisions
herein. The Units represented by this Certificate are transferable on the
records of the Trustee by the holder hereof in person, or by duly authorized
attorney, upon surrender of this Certificate, properly endorsed, to the Trustee.
This Certificate shall not be valid until countersigned and registered by the
Transfer Agent and Registrar.




     WITNESS the seal of the Trustee and the signature of its duly authorized
signatory.



Date:                                        




	 	 	 
	 

	 	                                        , as Trustee
	 
	 	 
	 

	 	By                                                             
	 

	 	               Authorized Signatory






Countersigned and Registered:




Transfer Agent and Registrar




By                                                             




          Authorized Signatory




- 2 -




 









 





ASSIGNMENT




     For value received                                          hereby sell(s),
assign(s) and transfer(s)unto                                                             Units of Beneficial Interest represented
by the within Certificate,
and do(es) hereby constitute and appoint irrevocably                     
Attorney to transfer said Units on the records of within named The Bank of New
York, Trustee, with full power of substitution in the premises.



     Date:                                        



	 	 	 
	 
	 	 
	 

	 	 

	 
	 	 
	 
	 	 
	Signature Guaranteed:


 

Bank or Broker located 

or having a correspondent 

located within New York City

	 	 

NOTICE — The signature to this
assignment must correspond with
the name as written upon the face
of the Certificate, in every
particular, without alteration or
enlargement, or any change
whatsoever.
	 
	By:                                                             

          Authorized Officer
	 	 






- 3 -




 









 





EXHIBIT C




COMPENSATION OF THE BANK OF NEW YORK

(As Trustee and Transfer Agent and Registrar)



I. Introductory Note. The Bank of New York (the “Bank”) is serving as a Trustee
of the BP Prudhoe Bay Royalty Trust and as Transfer Agent and Registrar of the
Units issued pursuant thereto. Capitalized terms which are not otherwise defined
in this Exhibit C shall have the meanings ascribed to them in the BP Prudhoe Bay
Royalty Trust Agreement (the “Agreement”). The fee described in Part III hereof
is intended to compensate the Bank for all services rendered in its capacity as
Trustee. Fees for the Bank’s services as Transfer Agent and Registrar are
provided for in Part IV hereof.



II. Certain Definitions




     (1) “Administrative Services” means the duties of the Bank, as Trustee, to
(a) receive, collect and account for payments in respect of the Royalty, (b)
invest all collected cash balances as required by the Agreement, (c) pay all
expenses and fees of the Trust, (d) calculate and distribute quarterly all
Quarterly Income Amounts, (e) file such state and federal income tax returns as
the Trustee considers necessary or appropriate to comply with applicable law,
(f) supply all data to Unit Holders necessary to enable them to prepare their
Alaska and federal income tax returns, (g) respond to inquiries from Unit
Holders concerning the Trust and refer those concerning the Royalty to the
Company, (h) secure the hiring and consulting with experts to the extent the
Trustee is required or chooses to do so, (i) secure the preparation of and file
all reports, notices and statements as may be required to comply with applicable
securities laws and regulations and the rules of any stock exchange on which the
Units may be listed and (j) maintain communications with the Company respecting
the Trust.



     (2) “Extraordinary Services” means substantially increased administrative
duties or responsibilities including, without limitation, (a) any requirement
for the establishment of record dates more frequently than once a Quarter, or
more than one distribution per Quarter (b) expanded tax or regulatory
requirements, (c) the sale of assets by or the dissolution and liquidation of
the Trust, (d) except as otherwise provided in the Agreement with respect to any
period prior to the Opinion Date, which is not an Insignificant Investor Period,
enforcing through any action, suit, proceeding or arbitration the terms and
conditions of the Support Agreement or the Conveyance, defending litigation
against the Trustee or the Trust and in connection with any governmental audit



 









 




or investigation and other matters which increase the obligations of the Trustee
beyond those contemplated by the Agreement which are not the result of
discretionary action on the part of the Trustee, and (e) meetings pursuant to
Article V of the Agreement.



III. Quarterly Fees




     The Bank, as Trustee, shall be entitled to receive on each Quarterly Record
Date a Quarterly Fee calculated as follows:



     The Quarterly Fee for Administrative Services shall be the sum of (i)
$.0011 per Unit outstanding on such Quarterly Record Date and (ii) $10.00 for
each payment by wire transfer to a Unit Holder. Such Quarterly Fee shall be
increased for each calendar year commencing after December 31, 1990 by the
proportionate increase, if any, during the preceding calendar year in the
Consumer Price Index as defined in the Overriding Royalty Conveyance during the
preceding calendar year.



     The Quarterly Fee for Extraordinary Services shall be the Bank’s current
fee for similar or analogous services at the time such Extraordinary Services
are rendered.


IV. Transfer Service Fees




     An additional fee will be charged by the Bank, as Transfer Agent and
Registrar, for services related to the transfer and registration of Units. The
fees to be paid and services to be rendered by the Bank, as Transfer Agent and
Registrar, pursuant to this Part IV are as follows:



     A fee of $1.50 per Quarter times the number of Unit Holder accounts as of
the Quarterly Record Date for:




(1) Issuance and registration of all certificates.




(2) The complete maintenance of all Unit Holder accounts.




(3) The processing of all transfers including those requiring special
handling, i.e., regular, irregular, non-legal items, legal items and
documentary transfers.




(4) The processing of all stop transfer orders including placement,
maintenance and removal.




(5) The posting of all Certificates’issued and cancelled.




(6) The processing of the distributions of the Quarterly Income Amounts to
Unit Holders.




(7) The distribution of all required tax forms and returns and the
solicitation of taxpayer identification numbers or social security numbers
as required.




(8) The mailing of quarterly and annual reports to the Unit Holders as
required by Section 4.04 of the Agreement.



- 2 -




 









 





     Certificates issued each month in excess of 1/12th of the number of holders
at the end of the previous year will be billed at $1.25 each.



     Any additional transfer services will be charged on the Bank’s current fee
schedule in effect at the time such services are rendered.



     The fee for transfer services will remain as stated herein until December
31, 1990 and thereafter, shall be increased in the same manner as the Trustee’s
Quarterly Fee for Administrative Services.



     The fees set forth herein of the Trustee, Registrar, and Transfer Agent
shall be in addition to any amounts payable as indemnification or reimbursement
under the Agreement or the Support Agreement.



- 3 -




 









 





     IN WITNESS WHEREOF, SOC has caused this Agreement to be executed by its
duly authorized Chairman and Chief Executive Officer and its seal to be hereunto
affixed and attested by its duly authorized Secretary and the Company has caused
this Agreement to be executed by its duly authorized Treasurer and its seal to
hereunto affixed and attested by its duly authorized Secretary and the Trustee
has caused this Agreement to be executed by its duly authorized Assistant Vice
President and its seal to be hereunto affixed and attested by its duly
authorized Assistant Vice President and the Co-Trustee has executed this
Agreement as of the 28th day of February, 1989.



	 	 	 	 	 	 
	ATTEST:	 	THE STANDARD OIL COMPANY
	 
	 	 	 	 
	/s/ J. M. Casarik

	 	By:
	 	/s/ James H. Ross
	 

	 	 	 	 
	Secretary
	 	 	 	 
	 
	 	 	 	 
	ATTEST:	 	BP EXPLORATION (ALASKA) INC.
	 
	 	 	 	 
	/s/ J. M. Casarik

	 	By:
	 	/s/ E. Whitehead
	 

	 	 	 	 
	Secretary
	 	 	 	 
	 
	 	 	 	 
	ATTEST:	 	THE BANK OF NEW YORK, Trustee
	 
	 	 	 	 
	/s/ David A. Sampson

	 	By:
	 	/s/ W. N. Gitlin
	 

	 	 	 	 
	 
	 	 	 	 
	/s/ Eric A. Mazie

	 	 	 	/s/ F. James Hutchinson
	 

	 	 	 	 
	Witness

	 	 	 	F. James Hutchinson, Co-Trustee






 









 





	 	 	 	 	 
	STATE OF OHIO

	 	)	 	 
	 

	 	)     SS

	COUNTY OF CUYAHOGA 

	 	)	 	 






     BEFORE ME, the undersigned authority, a Notary Public in and for said
County and State, on this day personally appeared J. H. Ross, known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged before me that the same was the act of The Standard Oil Company, an
Ohio corporation, and that he executed the same as the act of such corporation
for the purposes and consideration therein expressed and in the capacity therin
stated.



     GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 28th day of February,
1989.



	 	 	 
	 

	 	/s/ JoAnn Motuza
	 

	 	 
	 

	 	Notary Public
	 

	 	My commission expires:
	 
	 	 
	 

	 	JoANN
MOTUZA

	 

	 	Notary
Public, State of Ohio

	 

	 	Recorded in Cuyahoga County
	 

	 	My
Comm. Expires 9-14-92







 









 





	 	 	 	 	 
	STATE OF OHIO

	 	)	 	 
	 

	 	)     SS

	COUNTY OF CUYAHOGA

	 	)	 	 






     BEFORE ME, the undersigned authority, a Notary Public in and for said
County and State, on this day personally appeared E. Whitehead, known to me to
be the person and officer whose name is subscribed to the foregoing instrument
and acknowledged before me that the same was the act of the said BP Exploration
(Alaska) Inc., a Delaware corporation, and that he executed the same as the act
of such corporation for the purposes and consideration therein expressed and in
the capacity therein stated.



     GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 28th day of February,
1989.



	 	 	 
	 

	 	/s/ JoAnn Motuza
	 

	 	 
	 

	 	Notary Public
	 

	 	My commission expires:
	 
	 	 
	 

	 	JoANN
MOTUZA

	 

	 	Notary
Public, State of Ohio

	 

	 	Recorded in Cuyahoga County
	 

	 	My
Comm. Expires 9-14-92







 









 





	 	 	 	 	 
	STATE OF NEW YORK

	)	 	 	 
	 

	      ss.:
	 
	COUNTY OF NEW YORK

	)	 	 	 






     Before me, a notary public in and for said County, personally appeared
Walter N. Gitlin, known to me to be the person who, as Assistant Vice President
of The Bank of New York, the corporation which executed the foregoing
instrument, signed the same, and acknowledged to me that he did so sign said
instrument in the name and upon behalf of said corporation as such officer and
that he executed the same as the act of such corporation for the purposes and
consideration therein expressed and in the capacity therein stated.



     GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 23rd day of February,
1989.



	 	 	 	 
	 

	 	/s/ Virginia Barazotti
	 

	 	 
	 

	 	Notary Public, in and for
	 

	 	New York
	 

	 	My Commission Expires:
	 
	 	 
	 

	 	VIRGINIA
BARAZOTTI

	 

	 	Notary
Public, State of New York

	 

	 	No. 41-4734647

	 

	 	Qualified
in Queens County

	 

	 	Certificate filed in New York County
	 

	 	Commission
Expires Nov. 30, 1989







 









 






	 	 	 	 	 
	STATE OF DELAWARE

	)           )SS
	 
	COUNTY OF NEW CASTLE

	)	 	 	 






     BEFORE ME, the undersigned authority, a Notary Public in and for said
County and State, on this day personally appeared James Hutchinson, known to me
to be the person whose name is subscribed to the foregoing instrument and
acknowledged before me that he is a resident of the State of Delaware and that
he executed the same as his free and voluntary act for the purposes and
consideration therein expressed and in the capacity therein stated.



     GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 17th day February, 1989.



	 	 	 
	 

	 	/s/ Lisa M. Harrison
	[SEAL]

	 	Notary Public
	 
	 	 
	 

	 	My commission expires:
	 
	 	 
	 

	 	MY COMMISSION EXPIRES
	 

	 	     AUGUST 8, 1990