exv10w2






Exhibit 10.2




     Execution Copy



PLEDGE AND COLLATERAL AGREEMENT




     PLEDGE AND COLLATERAL AGREEMENT (as amended, modified, restated and/or supplemented from time
to time, this “Agreement”), dated as of September 30, 2010, made by BP Exploration & Production
Inc., a Delaware corporation (“Pledgor”), in favor of JOHN S. MARTIN, JR., and KENT D. SYVERUD, as
individual trustees (each (together with any successor to such Trustee), a “Trustee” and,
collectively (together with any successors to such Trustees), the
“Trustees”), solely in their
capacity as Trustees of The Deepwater Horizon Oil Spill Trust (the “Trust”), for the benefit of the
Trust. The Trustees are also collectively referred to herein as “Pledgee”.



RECITALS




     A. Pledgor has established the Trust pursuant to a Trust Agreement dated as of
August 6, 2010 (the “Trust Agreement”) in order to provide funds for the satisfaction of
resolved damage claims as more fully provided therein.



     B. To secure its agreement to make contributions to the Trust pursuant to the Trust
Agreement, Pledgor has agreed to pledge to the Trustees, and grant to the Trustees a security
interest in, the Collateral (as defined below) in accordance with this Agreement.



     NOW, THEREFORE, for and in consideration of the covenants and provisions set forth herein, and
for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
Pledgor and Pledgee hereby agree as follows:



     1. Security For Obligations. This Agreement is made by Pledgor for the benefit of
the Trustees to secure the obligations of Pledgor to make Contributions to the Trust in
accordance with the Trust Agreement (the “Obligations”).



     2. Definitions. The following capitalized terms used herein shall have the
definitions specified below:



     “Agreement” shall have the meaning set forth in the first paragraph hereof.



     “Available Cash” means cash which is available in the accounts of Verano less such
amounts as Verano reasonably deems necessary to retain for payment of current and future
expenses.



     “Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy,” as now
and hereafter in effect, or any successor stature.



     “Certificated Security” shall have the meaning given such term in Section 8.102(a)(4) of the
UCC.



     “Collateral” shall have the meaning set forth in Section 3.1 hereof.



     “Contribution” shall have the meaning given to such term in the Trust Agreement.



 









 





     “Conveyance Document” means that certain Conveyance of Overriding Royalty Interest dated of
even date herewith from Pledgor to Verano and any other document by which Pledgor conveys to Verano
any Production Payment.



     “Event of Default” shall mean the occurrence of any of the following: (a) any Contribution
under the Trust Agreement is not made by Pledgor when due (after giving effect to any cure period
in the Trust Agreement), (b) Pledgor shall fail to observe or perform any agreement (other than the
agreement to make Contributions) contained in any Pledgor Agreement and such non-observance or
non-performance continues for a period of thirty (30) days after the earlier of (i) written notice
from Pledgee of such failure or (ii) actual knowledge of an executive officer of Pledgor of such
failure, or (c) Verano shall fail to observe or perform any agreement contained in any Verano
Agreement and such non-observance or non-performance continues for a period of thirty (30) days
after the earlier of (i) written notice from Pledgee of such failure or (ii) actual knowledge of an
executive officer of Pledgor of such failure.



     “Hydrocarbons Sales Agreement” means the Hydrocarbon Sales Agreement of even date herewith
between Pledgorand the Beneficiary.



     “Indemnitees” shall have the meaning set forth in Section 11 hereof.



     “Limited Liability Company Interests” shall mean the entire limited liability company
membership interest at any time owned by Pledgor in Verano.



     “LLC Agreement” means the Limited Liability Company Agreement of Verano LLC dated as of
September 30, 2010.



     “Location” of Pledgor has the meaning given such term in Section 9.307 of the UCC.



     “Mortgage” means that certain document titled Deed of Trust, Mortgage, Multiple Indebtedness
Mortgage, Fixture Filing, Assignment of As-Extracted Collateral, Security Agreement And Financing
Statement to be entered into by Verano as mortgagor in favor of the Trustees as security for the
Obligations



     “Obligations” shall have the meaning set forth in Section 1 hereof.



     “Person” means an individual, corporation, partnership, joint venture, trust, unincorporated
organization, government, sovereign state or any agency, authority or political subdivision
thereof, international organization, agency or authority (in each case, whether or not having
separate legal personality or any two or more of the foregoing).



     “Pledgee” shall have the meaning set forth in the first paragraph hereof.


     “Pledgor” shall have the meaning set forth in the first paragraph hereof.



     “Pledgor Agreements” shall mean the Trust Agreement, this Agreement, any Conveyance
Document and the Hydrocarbons Sales Agreement.



     “Proceeds” shall have the meaning given such term in Section 9.102(a)(65) of the UCC.



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     “Production Payment” means, at any time and from time to time, all overriding royalty
interests granted by Pledgor to Verano and owned by Verano at such time.



     “Property” means any interest in any kind of property or asset, whether real, personal or
mixed, or tangible or intangible, including, without limitation, cash, securities, accounts and
contract rights.



     “Release Collateral” shall have the meaning set forth in Section 16(d) hereof.



     “Securities Act” shall mean the Securities Act of 1933, as amended from time to time, and any
successor statute.



     “Security” and “Securities” shall have the meaning given such term in
Section 8.102(a)(15) of the UCC.



     “Substitute Collateral” shall have the meaning set forth in Section 16(d) hereof.



     “Termination Date” shall have the meaning set forth in Section 19 hereof.



     “Trust”
shall have the meaning given in the first paragraph hereof.



     “Trust Agreement”
shall have the meaning set forth in Recital A hereof.



     “UCC” shall mean the Uniform Commercial Code as in effect in the State of Texas from time to
time; provided, however, that in the event that, by reason of mandatory provisions of law, any or
all of the perfection or priority of, or remedies with respect to, any Collateral is governed by
the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of
Texas, the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions hereof relating to such perfection, priority or
remedies; and provided, further, that all references herein to
specific Sections or sub-sections of
the UCC are references to such Sections or subsections, as the case may be, of the applicable
Uniform Commercial Code as in effect on the date hereof.



     “Verano” means Verano Collateral Holdings LLC, a Delaware limited liability company.



     “Verano Agreements” shall mean any Conveyance Document, the Hydrocarbons Sales Agreement and
the Mortgage.



     3. Pledge of Securities, etc.



     3.1 Pledge. To secure the Obligations now or hereafter owed or to be performed
by Pledgor, Pledgor does hereby grant, pledge and assign to Pledgee for the benefit of the Trust,
and does hereby create a continuing security interest in favor of Pledgee for the benefit of the
Trust in, all of its right, title and interest in and to the following, whether now existing or
hereafter from time to time acquired (collectively, the “Collateral”):




	 	(a)	 	the Limited Liability Company Interests;






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	 	(b)	 	all books and records pertaining to the Limited Liability Company
Interest;
	 
	 	(c)	 	all certificates and instruments representing or evidencing the Limited
Liability Company Interests; and
	 
	 	(d)	 	all Proceeds of any and all of the foregoing.





     3.2 Procedures. To the extent that Pledgor at any time or from time to time owns,
acquires or obtains any right, title or interest in any Collateral, such Collateral shall
automatically (and without the taking of any action by Pledgor) be pledged pursuant to Section 3.1 of this
Agreement and, in addition thereto, Pledgor shall, if such Collateral is represented by
certificate (within 10 days after it obtains such certificate), physically deliver such certificate to
Pledgee, indorsed in blank by an “effective indorsement” (as defined in Section 8-107 of the UCC).



     3.3 Certain Representations, Warranties And Covenants Regarding the Collateral.




     (a) Pledgor represents and warrants on the date hereof: (i) the Limited
Liability Company Interests held by Pledgor consist of 100% of the limited liability
membership interests of Verano; (ii) such Limited Liability Company Interests are not
and do not represent interests (x) in an issuer that is registered as an investment
company, (y) that are dealt in or traded on securities or exchanges or markets, or (z) the terms
of which expressly provide that they are a security governed by Article 8 of the UCC;
(iii) such Limited Liability Company Interests are not subject to any security interest other
than the security interest in favor of the Trustees under this Agreement; (iv) Pledgor
has complied with the respective procedures set forth in Section 3.2 hereof with respect to
any Limited Liability Company Interest which is represented by a certificate; and (v)
Pledgor owns no other Securities or Limited Liability Company Interests which are
required to be pledged under Section 3.2 hereof.




     (b) Pledgor covenants and agrees that, until payment in full of the
Obligations, it shall at all times cause the statements contained in clauses 3.3(a)(i)
-(v) to be true and correct.



     3.4 Pledgor Remains Liable. Anything herein to the contrary notwithstanding:




     (a) Pledgor shall remain liable under the LLC Agreement and/or any Pledgor
Agreement, to the extent set forth therein, to perform all of its agreements thereunder
to the same extent as if this Agreement had not been executed;




     (b) the exercise by Pledgee of any of its rights hereunder shall not release
Pledgor from any of its agreements under the LLC Agreement and the Pledgor
Agreements; and




     (c) Pledgee shall not have any obligation under the LLC Agreement or any
Pledgor Agreement by reason of this Agreement, nor shall Pledgee be obligated to
perform any of the obligations or duties of Pledgor thereunder.



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     3.5 Covenants and Agreements. Pledgor hereby covenants and agrees that:




     (a) The exercise by Pledgee of any of its rights hereunder shall not release
Pledgor from any of its agreements under the LLC Agreement and the Pledgor
Agreements; and




     (b) Pledgee shall not have any obligation under the LLC Agreement or any
Pledgor Agreement by reason of this Agreement, nor shall Pledgee be obligated to
perform any of the obligations or duties of Pledgor thereunder.



     4. Appointment Of Agents; Endorsements, Etc. Pledgee shall have the right to
appoint an agent for the purpose of retaining physical possession of the Collateral, which may
be held (in the reasonable discretion of Pledgee) in the name of Pledgor, endorsed or assigned
in blank or in favor of Pledgee or any nominee or nominees of Pledgee or an agent appointed by
Pledgee. The fees and expenses of any such agent shall be paid by the Trust.



     5. Voting, Etc., While No Event Of Default. Unless and until there shall have
occurred and be continuing any Event of Default, Pledgor shall be entitled to exercise any and
all voting and other consensual rights pertaining to the Collateral, and to give consents, waivers
or ratifications in respect thereof; provided that, in each case, no vote shall be cast or any
consent, waiver or ratification given or any action taken or omitted to be taken which would violate or
result in a breach of any covenant contained in this Agreement, or which could reasonably be
expected to have the effect of impairing the position or interests of Pledgee in the
Collateral, unless expressly permitted by the terms of this Agreement. All such rights of Pledgor to vote
and to give consents, waivers and ratifications shall cease if an Event of Default has
occurred and is continuing, and during such continuance, Section 7 hereof shall be applicable.



     6. Distributions and Payments of Amounts due under the Conveyance Documents.




     (a) Pledgor will not permit Verano to declare or make, or agree to pay or make,
directly or indirectly, any distribution (whether in cash, securities or other Property)
with respect to any membership interests in Verano, or any payment (whether in cash,
securities or other Property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, acquisition, cancellation or termination of any such
member interests in Verano or any option, warrant or other right to acquire any such member
interests in Verano, make any other return of capital to Pledgor or make any other
distribution of its Property to Pledgor, except that so long as an Event of Default has not
occurred and is not continuing, or would not exist after giving effect thereto, on and at
any time after the date of the payment in full by Pledgor of all Contributions due on or
before March 31, 2011, Verano may declare and pay cash distributions to Pledgor to the
extent of Available Cash . All cash distributions once made by Verano to Pledgor in
accordance with this Section 6 shall no longer constitute Proceeds or Collateral. All
distributions or other payments which are received by Pledgor contrary to the provisions of
this Section 6 shall be received in trust for the benefit of the Pledgee, shall be
segregated from other Property or funds of Pledgor and shall be forthwith delivered to the
Pledgee as Collateral in the same form as so received (with any necessary endorsement).



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     (b) Pledgor shall pay all amounts due Verano under and in connection with
the Conveyance Documents and the Hydrocarbons Sales Agreement to an account which Pledgor
will cause to be established by Verano prior to January 1, 2011.



     7. Remedies In Case Of an Event Of Default. If there shall have occurred and be
continuing an Event of Default, then and in every such case, Pledgee shall be entitled to exercise
all of the rights, powers and remedies (whether vested in it by this Agreement or by law) for the
protection and enforcement of its rights in respect of the Collateral, and Pledgee shall be
entitled to exercise all the rights and remedies of a secured party under the UCC as it may be in
effect in any relevant jurisdiction and also shall be entitled, without limitation, to exercise any
or each of the following rights:




     (a) to receive all amounts payable in respect of the Collateral, including
amounts otherwise payable to the Pledgor pursuant to Section 6(a) hereof;




     (b) to have all or any part of the Limited Liability Company Interests
registered in the name of Pledgee or its nominee;




     (c) to vote (and exercise all rights and powers in respect of voting) all or any
part of the Limited Liability Company Interests (whether or not transferred into the
name of Pledgee) and give all consents, waivers and ratifications in respect of the Limited
Liability Company Interests and otherwise act with respect thereto as though it were
the outright owner thereof (Pledgor hereby irrevocably constituting and appointing Pledgee
the proxy and attorney-in-fact of such Pledgor, with full power of substitution to do
so); and




     (d) at any time and from time to time to sell, assign and deliver, or grant
options to purchase, all or any part of the Collateral, or any interest therein, at any
public or private sale, without demand of performance, advertisement or notice of intention to
sell or of the time or place of sale or adjournment thereof or to redeem or otherwise
purchase or dispose (all of which are hereby waived by Pledgor), for cash, on credit or
for other Property, for immediate or future delivery without any assumption of credit risk,
and for such price or prices and at such time or times, at such place or places and on
such terms as Pledgee may, in compliance with any mandatory requirements of applicable law,
determine to be commercially reasonable, provided at least 10 days’ written notice of
the time and place of any such sale shall be given to Pledgor. Pledgee shall not be
obligated to make any such sale of Collateral regardless of whether any such notice of sale has
theretofore been given. Pledgor hereby waives and releases to the fullest extent
permitted by law any right or equity of redemption with respect to the Collateral, whether before
or after sale hereunder, and all rights, if any, of marshalling the Collateral and any
other security or the Obligations or otherwise. At any such sale, unless prohibited by
applicable law, Pledgee on behalf of the Trust may bid for and purchase all or any part
of the Collateral so sold free from any such right or equity of redemption and for
purposes of any such bid shall be permitted to use and apply any unpaid part of the Obligations
as a credit on account of the purchase price in such sale. Pledgee shall not be liable for
failure to collect or realize upon any or all of the Collateral or for any delay in so
doing



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nor shall any of them be under any obligation to take any action whatsoever with regard
thereto.




     (e) Pledgee may sell the Collateral without giving any warranties as to the
Collateral and may specifically disclaim or modify any warranties of title to the
Collateral.



     Pledgor and Pledgee agree, to the fullest extent permitted by applicable law, that Pledgee
shall have the right to “credit bid” any or all of the Obligations in connection with any sale or
foreclosure proceeding in respect of the Collateral, including without limitation, sales occurring
pursuant to Section 363 of the Bankruptcy Code or included as part of any plan subject to
confirmation under Section 1129(b)(2)(A)(iii) of the Bankruptcy Code.



     Pledgor recognizes that, by reason of certain prohibitions contained in the Securities Act and
applicable State securities laws, Trustees may be compelled, with respect to the sale of all or any
part of the Collateral conducted without prior registration or qualification of such Collateral
under the Securities Act and/or such State securities laws, to limit purchasers to those who will
agree, among other things, to acquire the Collateral for their own account, for investment and not
with a view to the distribution or resale thereof. Pledgor agrees that Trustees shall have no
obligation to engage in any public sale of any Limited Liability Company Interests or Securities
included in the Collateral, even if a public sale would result in a higher price.



     8. Remedies, Cumulative, Etc. Each and every right, power and remedy of Pledgee
provided for in this Agreement, or now or hereafter existing at law or in equity or by statute
shall be cumulative and concurrent and shall be in addition to every other such right, power or
remedy. The exercise or beginning of the exercise by Pledgee of any one or more of the rights,
powers or remedies provided for in this Agreement or now or hereafter existing at law or in
equity or by statute or otherwise shall not preclude the simultaneous or later exercise by
Pledgee of all such other rights, powers or remedies, and no failure or delay on the part of Pledgee
to exercise any such right, power or remedy shall operate as a waiver thereof. Notice to or
demand on Pledgor in any case shall not entitle it to any other or further notice or demand in
similar or other circumstances or constitute a waiver of any of the rights of Pledgee to any other or
further action in any circumstances without notice or demand.



     9. Application Of Proceeds.




     (a) All monies collected by Pledgee upon any sale or other disposition of the
Collateral pursuant to the terms of this Agreement, together with all other monies received
by Pledgee hereunder, shall be applied as follows:




     (i) first, to the payment of all reasonable costs, fees and expenses of Pledgee and its
agents, representatives and attorneys incurred in connection with such sale or with the retaking,
holding, handling, preparing for sale (or other disposition) of the Collateral or otherwise in
connection with this Agreement or any of the Obligations, including but not limited to, the
reasonable fees and expenses of Pledgee’s agents and attorneys’ and court costs (whether at trial,
appellate or administrative levels), if any, incurred by Pledgee in so doing;




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     (ii) second, to pay all Obligations then due;




     (iii) third, to be held as cash collateral securing any remaining unpaid
Obligations (but only in an amount equal to the aggregate amount of Obligations,
whether or not then due, remaining to be performed) unless and until any such
Obligation has been paid; and




     (iv) fourth, to Pledgor or as a court of competent jurisdiction may
direct.




     (b) It is understood and agreed that Pledgor shall remain liable with respect to its
Obligations to the extent of any deficiency between the amount of the proceeds of the
Collateral pledged by it hereunder and the aggregate amount of such Obligations.



     10. Purchasers Of Collateral. Upon any sale of the Collateral by Pledgee hereunder
(whether by virtue of the power of sale herein granted, pursuant to judicial process or
otherwise),
the receipt of Pledgee or the officer making such sale shall be a sufficient discharge to the
purchaser or purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid over to Pledgee or
such officer or be answerable in any way for the misapplication or nonapplication thereof.



     11. Indemnity. Pledgor agrees (i) to indemnify, reimburse and hold harmless Pledgee
and their respective successors, assigns, employees, agents and affiliates (individually an
“Indemnitee” and collectively, the “Indemnitees”) from and against any and all obligations,
damages, injuries, penalties, claims, demands, losses, judgments and liabilities of whatsoever
kind or nature, and (ii) to reimburse each Indemnitee for all reasonable costs, expenses and
disbursements, including reasonable attorneys’ fees and expenses, in each case arising out of
or resulting from this Agreement or the exercise by any Indemnitee of any right or remedy granted
to it hereunder (but excluding any obligations, damages, injuries, penalties, claims, demands,
losses, judgments and liabilities or expenses and disbursements of whatsoever kind or nature
to the extent incurred or arising by reason of gross negligence or willful misconduct of the
respective Indemnitee). In no event shall Pledgee hereunder be liable, in the absence of gross
negligence or willful misconduct on its part, for any matter or thing in connection with this
Agreement other than to account for monies or other Property actually received by it in
accordance with the terms hereof. The indemnity obligations of Pledgor contained in this
Section 11 shall continue in full force and effect notwithstanding the payment of all
Obligations and notwithstanding the discharge or other termination of this Agreement.



     12. Pledgee Not A Limited Liability Company Member.




     (a) Nothing herein shall be construed to make Pledgee liable as a member of any
limited liability company and Pledgee by virtue of this Agreement or otherwise shall not
have any of the duties, obligations or liabilities of a member of any limited liability
company. Unless and until Pledgee shall purchase the Limited Liability Company Interest,
Pledgee shall not be a member of Verano. The parties hereto expressly agree that this
Agreement shall not be construed as creating a partnership or joint venture among Pledgee,
Pledgor and/or any other Person.
 

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     (b) Except as provided in the last sentence of paragraph (a) of this Section 12,
Pledgee, by accepting this Agreement, does not intend to become a member of any
limited liability company or otherwise be deemed to be a co-venturer with respect to
Pledgor, any limited liability company and/or any other Person either before or after
an Event of Default shall have occurred.




     (c) Pledgee shall not be obligated to perform or discharge any obligation of
Pledgor as a result of the pledge hereby effected.




     (d) The acceptance by Pledgee of this Agreement, with all the rights, powers,
privileges and authority so created, shall not at any time or in any event obligate
Pledgee to appear in or defend any action or proceeding relating to the Collateral to which it
is not a party, or to take any action hereunder or thereunder.



     13. Further Assurances; Power-Of-Attorney.




     (a) Pledgor agrees that it will join with Pledgee in executing and, at Pledgor’s
expense, file and refile under the UCC or other applicable law such financing
statements, continuation statements and other documents, in form reasonably acceptable to Pledgee,
in such offices as Pledgee may reasonably deem necessary or appropriate and wherever
required by law in order to perfect and preserve Pledgee’s security interest in the
Collateral hereunder and hereby authorizes Pledgee to file financing statements
relative to all or any part of the Collateral without the signature of Pledgor where permitted
by law, and agrees to do such further acts and things and to execute and deliver to
Pledgee such additional conveyances, assignments, agreements and instruments as Pledgee may
reasonably require or deem advisable to carry into effect the purposes of this
Agreement or to further assure and confirm unto Pledgee its rights, powers and remedies hereunder
or thereunder.




     (b) Pledgor hereby constitutes and appoints Pledgee its true and lawful
attorney-in-fact, irrevocably, with full authority in the place and stead of Pledgor
and in the name of such Pledgor or otherwise, from time to time after the occurrence and
during the continuance of an Event of Default, in Pledgee’s discretion, to act, require,
demand, receive and give acquittance for any and all monies and claims for monies due or to
become due to Pledgor under or arising out of the Collateral, to endorse any checks or
other instruments or orders in connection therewith and to file any claims or take any
action or institute any proceedings and to execute any instrument which Pledgee may
deem reasonably necessary or advisable to accomplish the purposes of this Agreement to
the fullest extent permitted by applicable law, which appointment as attorney is
coupled with an interest.



     14. Pledgee As Holder Of The Collateral. Pledgee will hold in accordance with this
Agreement all items of the Collateral at any time received by Pledgee pursuant to this
Agreement. It is expressly understood, acknowledged and agreed that the obligations of Pledgee
as holder of the Collateral and interests therein and with respect to the disposition thereof,
and otherwise under this Agreement, are only those expressly set forth in this Agreement. Pledgee
shall act hereunder on the terms and conditions set forth herein.



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     15. Transfer By Pledgor. Pledgor will not sell or otherwise dispose of, grant any
option with respect to, or (except for the security interests granted to Pledgee) mortgage,
pledge or otherwise encumber any of the Collateral or any interest therein.



     16. Representations, Warranties And Covenants Of Pledgor.




     (a) Pledgor represents and warrants that:




     (i) it is the legal, beneficial and record owner of, and has good and
valid title to, all of the Collateral and that it has sufficient interest in all of
the Collateral in which a security interest is purported to be created hereunder for
such security interest to attach thereto;




     (ii) it has full power, authority and legal right to pledge all the
Collateral pledged by it pursuant to this Agreement;




     (iii) this Agreement has been duly authorized, executed and delivered by
Pledgor and constitutes a legal, valid and binding obligation of Pledgor enforceable
against Pledgor in accordance with its terms, subject to the effects of bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting creditors’
rights generally and by general equitable principles (regardless of whether
enforcement is sought in equity or at law);




     (iv) except to the extent already obtained or made, no consent of any
other party (including, without limitation, any stockholder, partner, member or
creditor of Pledgor) and no material consent, license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority is required to be obtained by Pledgor
in connection with (A) the execution, delivery or performance of this Agreement by
Pledgor, (B) the validity or enforceability of this Agreement against Pledgor, (C)
the perfection or enforceability of Pledgee’s security interest in the Collateral or
(D) except for compliance with or as may be required by applicable securities laws,
the exercise by Pledgee of any of its rights or remedies provided herein;




     (v) neither the execution, delivery or performance by Pledgor of this
Agreement or compliance by it with the terms and provisions hereof nor the
consummation of the transactions contemplated herein: (A) will contravene any
provision of any applicable law, statute, rule or regulation, or any applicable
order, writ, injunction or decree of any court, arbitrator or governmental
instrumentality, domestic or foreign, applicable to Pledgor; (B) will conflict or be
inconsistent with or result in any breach of any of the terms, covenants, conditions
or provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any lien upon any of the
properties or assets of Pledgor pursuant to the terms of any indenture, lease,
mortgage, deed of trust, credit agreement, loan agreement or any other material
agreement, contract or other instrument to which Pledgor is otherwise bound, or
 

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by which it or any of its properties or assets is bound or to which it may be subject; or
(C) will violate any provision of the certificate of incorporation or by-laws of Pledgor or
of the LLC Agreement; and




     (vi) the Limited Liability Company Interests have been duly and validly issued,
are fully paid and non-assessable and are not subject to any options to purchase or similar
rights;




     (vii) Pledgor is a corporation organized and existing under the laws of the State
of Delaware and the principal executive office of Pledgor is located at the address for
Pledgor given in Section 20 hereof;




     (viii) upon the filing with the Secretary of State of the State of Delaware of a
UCC-1 financing statement naming Pledgor as “debtor,” Pledgee as “secured party” and
describing the Collateral as the collateral, the security interest of Pledgee in the
Collateral will be a valid and perfected, first priority security interest.



     (b) Pledgor covenants and agrees that it will defend Pledgee’s right, title and
security interest in and to Pledgor’s Collateral and the proceeds thereof against the claims
and demands of all persons whomsoever.



     (c) Pledgor shall not change its legal name, its type of organization, its
jurisdiction of organization, or its Location, except that any such changes shall be
permitted if (i) it shall have given to Pledgee not less than 30 days’ prior written notice of
each change and (ii) in connection with the respective such change or changes, it shall
have taken all action reasonably requested by Pledgee to maintain the security interests of
Pledgee in the Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.



     (d) So long as no Event of Default has occurred and is continuing, Pledgor or
its affiliates shall have the right, upon at least thirty (30) days’ prior written notice to
Pledgee, to obtain the release of any collateral securing the Obligations, provided
that Pledgor or one or more of its affiliates shall concurrently execute and deliver to Pledgee
an additional or supplemental mortgage or security agreement, in form similar to the
Mortgage or otherwise satisfactory to Pledgee in its reasonable discretion, granting to
Pledgee a lien on Property (the “Substitute
Collateral”) of the same or greater value as
the collateral securing the obligations being concurrently released
(the “Release
Collateral”). Concurrently with such substitution of collateral (a) Pledgor or its affiliate,
as applicable, shall execute and deliver to Pledgee all documents, instruments and
financing statements necessary to perfect the lien and security interest in the Substitute
Collateral and (b) Pledgee shall execute and deliver to Pledgor all documents,
instruments, releases and financing statement amendments or terminations necessary to
release Pledgee’s lien and security interest in the Release Collateral. Pledgor shall pay all
costs and expenses of substituting and releasing collateral pursuant to this Section 16(d),
including filing and recording expenses, and the reasonable fees and disbursements of
Pledgee’s legal counsel incurred in connection with such substitution of collateral.





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     17. Pledgor’s Obligations Absolute, Etc. The obligations of Pledgor under this
Agreement shall be absolute and unconditional and shall remain in full force and effect without
regard to, and shall not be released, suspended, discharged, terminated or otherwise affected by,
any circumstance or occurrence whatsoever (other than termination of this Agreement or release of
the Collateral pursuant to Section 19 hereof), including, without limitation:




     (a) any waiver, consent, extension, indulgence or other action or inaction under or in
respect of any such agreement or instrument including, without limitation, this Agreement
(other than a waiver, consent or extension with respect to this Agreement in accordance with
its terms);




     (b) any furnishing of any additional Collateral to Pledgee or its assignee or any
acceptance thereof or any release of any Collateral by Pledgee or its assignee;




     (c) any limitation on any party’s liability or obligations under any such instrument or
agreement or any invalidity or unenforceability, in whole or in part, of any such instrument
or agreement or any term thereof; or




     (d) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to Pledgor, or any action taken with respect
to this Agreement by any trustee or receiver, or by any court, in any such proceeding,
whether or not Pledgor shall have notice or knowledge of any of the foregoing.



     18. Severability. Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.



     19. Termination; Release. On the Termination Date (as defined below), this Agreement
shall terminate (provided that all indemnities set forth herein including, without limitation, in
Section 11 hereof shall survive any such termination) and Pledgee, at the request and expense of
Pledgor, will execute and deliver to Pledgor a proper instrument or instruments (including UCC
termination statements) acknowledging the satisfaction and termination of this Agreement
(including, without limitation, UCC termination statements and instruments of satisfaction and
discharge of the Obligations and of release, termination and/or reconveyance of the Collateral),
and will duly release from the security interest created hereby and assign, transfer and deliver to
Pledgor (without recourse and without any representation or warranty) such of the Collateral as may
be in the possession of Pledgee or any of its sub-agents hereunder and as has not theretofore been
sold or otherwise applied or released pursuant to this Agreement, together with any moneys at the
time held by Pledgee or any of its sub-agents hereunder. As used in
this Agreement, “Termination
Date” shall mean the date upon which all Obligations have been paid in full.



     20. Notices, Etc. Except as otherwise specified herein, all notices, requests, demands
or other communications to or upon the respective parties hereto shall be sent or delivered by







12









 







mail, telecopy or courier service. Any such notice or other communication shall be deemed
received, if mailed, on the date received by the addressee, if sent by telecopy, on the date sent
as evidenced by machine-generated transmission confirmation; provided that if any such date is on a
weekend or holiday observed by governmental offices of the state (or District of Columbia) in which
the recipient is located, then such date will be deemed to be on the next date which is not a
weekend or such holiday; when by courier, the date delivered by the courier to the recipient
thereof. All notices and other communications shall be in writing and addressed as follows:





	 	(a)	 	if to Pledgor, at:
	 
	 	 	 	BP Exploration & Production Inc.

501 Westlake Park Blvd
 Fax No.:
(281)366-5901
 Attention: Mark
Holstein
	 
	 	(b)	 	if to Pledgee, at:
	 
	 	 	 	John S. Martin, Jr.,

a Trustee of The Deepwater Horizon Oil Spill Trust

c/o Martin & Obermaier, LLC
565 Fifth Avenue
New York, NY 10017
Fax No.: 212-883-7688
	 
	 	 	 	Kent D. Syverud,

a Trustee of The Deepwater Horizon Oil Spill Trust

One Brookings Drive
Anheuser Busch Hall
Campus Box 1120

St. Louis, MO 63130
Fax No.: 314-935-6493
	 
	 	 	 	with a copy (which shall not constitute notice) to:
	 
	 	 	 	James L. Rice, III

1111 Louisiana St., 44th Floor

Houston, TX 77002

Fax No.: 713-236-0832




or at such other address or addressed to such other individual as shall have been furnished in
writing by any Person described above to the party required to give notice hereunder.




     21. Waiver; Amendment. None of the terms and conditions of this Agreement may be
changed, waived, modified or varied in any manner whatsoever except in writing duly signed by
Pledgee and Pledgor.








13









 











     22. Successors And Assigns. This Agreement shall create a continuing security interest
in the Collateral and shall (i) remain in full force and effect, subject to release and/or
termination as set forth in Section 19, (ii) be binding upon Pledgor, its successors and assigns;
provided, however, that Pledgor shall not assign any of its rights or obligations hereunder without
the prior written consent of Pledgee, and (iii) inure, together with the rights and remedies of
Pledgee hereunder, to the benefit of Pledgee and its respective successors, transferees and
assigns. All agreements, statements, representations and warranties made by Pledgor herein or in
any certificate or other instrument delivered by Pledgor or on its behalf under this Agreement
shall be considered to have been relied upon by Pledgee and shall survive the execution and
delivery of this Agreement regardless of any investigation made by Pledgee or on its behalf.



     23. Headings Descriptive. The headings of the several Sections of this Agreement are
inserted for convenience only and shall not in any way affect the meaning or construction of any
provision of this Agreement.



     24. Governing Law; Submission To Jurisdiction; Venue; Waiver Of Jury Trial.




     (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF TEXAS. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF TEXAS OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF TEXAS, IN EACH CASE
WHICH ARE LOCATED IN THE COUNTY OF HARRIS, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS. EACH SUCH PARTY HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH
COURTS LACK PERSONAL JURISDICTION OVER IT, AND AGREES NOT TO PLEAD OR CLAIM IN ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN
ANY OF THE AFORESAID COURTS THAT ANY SUCH COURT LACKS PERSONAL JURISDICTION OVER IT. EACH
SUCH PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ANY SUCH PARTY AT ITS ADDRESS FOR NOTICES
AS PROVIDED IN SECTION 20 ABOVE, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING. EACH SUCH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS
AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING
COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT THAT SUCH SERVICE OF PROCESS WAS IN
ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY SUCH PARTY TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL








14









 












     PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY OTHER PARTY IN ANY OTHER JURISDICTION.




     (b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN
THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES
NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.




     (c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.



     25. Pledgor’s Duties. It is expressly agreed, anything herein contained to the
contrary notwithstanding, that Pledgor shall remain liable to perform all of the obligations, if
any, assumed by it with respect to the Collateral, and Pledgee shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this Agreement, except
for the safekeeping of Collateral actually in Pledgee’s possession and return of such Collateral
upon the termination of this Agreement, nor shall Pledgee be required or obligated in any manner to
perform or fulfill any of the obligations of any Pledgor under or with respect to any Collateral.



     26. Counterparts. This Agreement may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so executed and delivered
shall be an original, but all of which shall together constitute one and the same instrument. A set
of counterparts executed by all the parties hereto shall be lodged with Pledgor and Pledgee.


     27. Construction. The words “herein,” “hereof,” “hereunder” and other words of similar import
when used in this Agreement refer to this Agreement as a whole, and not to any particular article,
section or subsection. Any reference herein to a Section shall be deemed to refer to the applicable
Section of this Agreement unless otherwise stated herein. Any reference herein to an exhibit or
schedule shall be deemed to refer to the applicable exhibit or schedule attached hereto unless
otherwise stated herein. The words “include”, “includes” and “including” as used in this
Agreement shall be deemed to be followed by the phrase “without limitation”. Unless the context
requires otherwise any definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other document as from time
to time amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth in this Agreement.). Any reference herein to any
law shall be construed as referring to such law as amended, modified, codified or reenacted, in
whole or in part, and in effect from time to time.





15












 





[Signature Page Follows]






16









 








     IN WITNESS WHEREOF, Pledgor and Pledgee have caused this Agreement to be executed by
their duly elected officers duly authorized as of the date first above written.



	 	 	 	 	 
	 	BP EXPLORATION & PRODUCTION INC.

 	 
	 	By:  	/s/ Peter A. Zwart
 	 
	 	 	Name:  	Peter A. Zwart 	 
	 	 	Title:  	VP 	 
	 



	 	 	 	 	 
	Accepted and Agreed to:





JOHN S. MARTIN, JR., as Trustee

 	 	 
	
 	 	 
	 	 	 	 
	 	 	 	 
	 
	KENT D. SYVERUD, as Trustee

 	 	 
	
 	 	 
	 	 	 	 
	 	 	 	 
	 



Pledge Agreement Signature Page





 









 









     IN WITNESS WHEREOF, Pledgor and Pledgee have caused this Agreement to be executed
by their duly elected officers duly authorized as of the date first above written.



	 	 	 	 	 
	 	BP EXPLORATION & PRODUCTION INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	Accepted and Agreed to:





JOHN S. MARTIN, JR., as Trustee

 	 	 
	
 	 	 
	 	 	 	 
	 	 	 	 
	 
	KENT D. SYVERUD, as Trustee

 	 	 
	/s/ Kent D. Syverud
 	 	 
	Sept 30, 2010 	 	 
	 	 	 	 
	 



Pledge Agreement Signature Page