Exhibit 99.2 -45-
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
IN THE MATTER OF NORTH CONSOLIDATED
EUROPEAN OIL CORPORATION Civil Action No. 753
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SARAH JACKSON, Escheator of the )
State of Delaware, )
)
Plaintiff, )
)
v. ) Civil Action No. 8731
)
NORTH EUROPEAN OIL ROYALTY Trust, )
and ROBERT P. ADELMAN, ROBERT J. )
CASTLE, WILLARD B. TAYLOR and )
JOHN H. VAN KIRK, Its Trustees, )
)
Defendants. )
NOTICE
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Notice is hereby given that Sarah Jackson, in her capacity as Escheator of
the State of Delaware ("Escheator"), and the North European Oil Royalty
Trust (the "Trust), and Robert P. Adelman, Robert J. Castle, Willard B.
Taylor and John H. Van Kirk (collectively, the "Trustees"), being all the
Trustees of the Trust, have filed a Joint Petition for Approval of
Settlement of Pending Litigation (the "Joint Petition") with the Court.
Hearing
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A hearing on the aforesaid Joint Petition will be held on the ____ day
of ______, 1995 at ______ before the Court of Chancery, Daniel L. Herrmann
Courthouse, 11th and King Streets, Wilmington, Delaware.
The Court has ordered that all holders of certificates for units
("Certificate Holders") of the North European Oil Royalty Trust ("NEORT"),
the Solicitor ad litem and any unlocated stockholders of the North European
Oil Corporation ("Corporation") or the North European Oil Company
("Company") may appear at such hearing in person or by counsel and be heard
with respect to the Joint Petition. The right to appear is conditioned on
compliance with the terms set forth below. Any person who wishes to object
or comment upon the Petition may do so, provided, however, that no such
objections or comments shall be considered by the Court (unless the Court in
its discretion shall otherwise direct, upon application of such persons and
for good cause shown), unless no later than ten (10) days prior to the
hearing (i) a written statement of such person's objections and/or comments,
(ii) a written statement of the grounds thereof, (iii) all other documents
or writings that such person desires the Court to consider and (iv) a notice
of such person's intent to appear personally or through counsel at the
hearing shall have been filed with the Register in Chancery, Daniel L.
Herrmann Courthouse, 11th and King Streets, Wilmington, Delaware 19801 and,
before such filing shall have been served upon Leonard S. Togman, Esquire,
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Potter Anderson & Corroon, 350 Delaware Trust Building, P.O. Box 951,
Wilmington, Delaware 19899, counsel for the North European Oil Royalty
Trust, Joseph Patrick Hurley, Esquire, Division of Revenue, 820 North French
Street, Wilmington, Delaware 19801, counsel for the Escheator of the State
of Delaware, and the Solicitor ad litem, [name and address].
Description of Pending Litigation
and Proposed Settlement
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Background of Civil Action No. 8731
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1. On November 20, 1986, the Escheator, as plaintiff, filed a
complaint against the Trust and its Trustees, as defendants, seeking an
order directing them, inter alia, to deliver to the Escheator all property
escheatable to the State of Delaware, including all Trust units, dividends
and distributions attributable to unlocated or unknown stockholders of
Company or Corporation. At various times since then, the Escheator and the
Trust have engaged in settlement negotiations leading to agreement on the
settlement terms presented for approval by the Court.
Terms of Proposed Settlement in Civil Action 8731
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2. The settlement between the Trust and the State of Delaware will
cover the Trust units, dividends and distributions attributable to each
stockholder listed on the books and records of the Trust who (i) is a
brokerage firm or other nominee which has been unable to locate its stock
certificate, with the beneficial owner unknown to the Trust or to said
brokerage house or nominee ("Broker Units"), (ii) has no name or address, or
(iii) has a last known address in Delaware or a foreign country ((i) through
(iii) collectively, "Category I Unlocated Stockholders"). The parties agree
that the Trust units attributable to all Category I Unlocated Stockholders,
if subject to escheat, will at some time in the future escheat to the State
of Delaware either as the domicile of the Trust or as the domicile of the
beneficial owner. See Delaware v. New York, 113 S. Ct. 1550 (1993); Texas
v. New Jersey, 379 U.S. 674 (1965). The Broker Units, which constitute the
vast majority of Trust units attributable to the Category I Unlocated
Stockholders (approximately 97%), will at some time in the future escheat to
the State of Delaware as the domicile of NEORT under the "secondary rule" of
escheat set forth in Delaware v. New York, 113 S.Ct. at 1556. Those
unlocated stockholders (representing 116,046, or approximately 13%, of the
total of 876,606 Trust units not issued as of September 30, 1995) which are
not included in the Category I Unlocated Stockholders shall collectively be
referred to as "Category II Unlocated Stockholders."
3. Under the proposed settlement, the Trust will issue to the
Escheator certificates for all of the Trust units attributable to the
Category I Unlocated Stockholders, according to the following schedule:
a. Within thirty (30) days after the Court's order approving
the Settlement becomes final and non-appealable (or in the event of appeal,
within thirty (30) days after final determination of all appeals), the Trust
shall issue to the Escheator a certificate or certificates for fifty percent
(50%) of the Trust units attributable to Category I Unlocated Stockholders.
b. On or before July 1, 2000, the Trust shall issue to the
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Escheator a certificate or certificates for fifty percent (50%)(1) of the
then-remaining units attributable to Category I Unlocated Stockholders.
c. On or before July 1, 2005, the Trust shall issue to the
Escheator a certificate for all of the then-remaining Trust units
attributable to Category I Unlocated Stockholders. The parties have agreed
that until June 30, 2005, the Trust units so delivered to the Escheator
shall be fully entitled to all future distributions and included in the
computation base for such distributions.
4. Beginning on the date when the Trust issues to the Escheator
the first certificate for Trust units attributable to Category I Unlocated
Stockholders, if any shares of the Category I Unlocated Stockholders are
tendered in exchange for Trust units, the Trust shall continue to administer
such claims. In computing the amounts to be paid to any such claimants, the
amounts of distributions made after the time of this settlement until claim
allowance and payment shall be added to the amount required to be paid to
such allowed claimant. Nevertheless, the obligation to issue Trust units
and pay dividends and distributions with respect to such shares in
accordance with Section 3.10 of the Royalty Trust Agreement shall be borne
by and between the Trust and the Escheator in the following proportion: (i)
from the date the Trust first issues certificates for units to the Escheator
to June 30, 2000, the Trust and Escheator shall each pay fifty percent (50%)
of all claims; (ii) from July 1, 2000 to June 30, 2005, the Trust shall pay
twenty-five percent (25%) and the Escheator shall pay seventy-five percent
(75%) of all claims. At all stages of this settlement following the
initial date at which the Escheator receives the first certificates for
Trust units and continuing through June 30, 2005, the Escheator's liability
under this paragraph for allowed claims shall be limited to the total value
of Trust units and distributions it has received from the Trust and any
shortfall shall be paid by the Trust. Based on the past historic experience
with such claims, the Trustees and the Escheator believe that the Escheator
will not be presented with requests for Trust units, dividends or
distributions in excess of amounts received from the Trust.
5. Upon entry of an order confirming this settlement, Section 3.10
of the Royalty Trust Agreement shall be deemed amended to provide that,
effective July 1, 2005, after certificates for all Trust units attributable
to Category I Unlocated Stockholders have been issued to the Escheator, the
Trustees shall have no further obligation to issue Trust units or pay
dividends or distributions to Category I Unlocated Stockholders included in
this settlement. From and after that date, all claims by Category I
Unlocated Stockholders against the Trust under Section 3.10 shall be barred,
and any Category I Unlocated Stockholder with evidence of ownership or
entitlement to Corporation or Company shares shall be entitled only to file
a claim with the Escheator in accordance with 12 Del.C. Sec. 1206.
6. Upon entry of an order confirming this settlement, section 4.7
of the Royalty Trust Agreement shall be deemed amended to provide that,
effective July 1, 2005, after certificates for all Trust units owed to the
Category I Unlocated Stockholders have been issued to the Escheator, the
Trust shall no longer be required to set aside any amount for claims by the
Category I Unlocated Stockholders upon termination of the Trust and any
amounts remaining at the time of termination of the Trust may be disbursed
or distributed as if the shares of the Category I Unlocated Stockholders had
never existed.
7. In the view of the petitioner Trust, the Category II Unlocated
Stockholders are in the same position with respect to other potential
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escheator states, as are the Category I Unlocated Stockholders with respect
to the State of Delaware. For that reason, petitioner Trust is prepared to
effect substantially the same arrangement with each such state,
notwithstanding the absence of present property covered by escheat. If
authorized by this Court, the Trust would enter into a similar arrangement
with those states which accept the settlement arrangements proposed for
Delaware.
8. Section 3.10 of the Royalty Trust Agreement shall be deemed
amended to provide that effective at the earlier of July 1, 2005 or after
the certificates for all Trust units attributable to Category II Unlocated
Stockholders have been issued to the appropriate state Escheator, the
Trustees shall have no further obligation to issue Trust units or pay
dividends or distributions to Category II Unlocated Stockholders. From and
after that date, all claims by Category II Unlocated Stockholders against
the Trust under Section 3.10 shall be barred and any Category II Unlocated
Stockholders with evidence of ownership or entitlement to Corporation or
Company shares shall be entitled only to file a claim with the appropriate
state Escheator.
9. Similarly, upon entry of an order confirming the settlement,
Section 4.7 of the Royalty Trust Agreement shall be deemed amended to
provide that, effective at the earlier of July 1, 2005 or after certificates
for all Trust units owed to the Category II Unlocated Stockholders have been
escheated to the states of their respective last known addressees, the Trust
shall no longer be required to set aside any amount for claims by the
Category II Unlocated Stockholders upon the termination of the Trust, and
any amounts remaining at the time of termination of the Trust may be
disbursed or distributed as if the shares of the Category II Unlocated
Stockholders had never existed.
Evaluation of Settlement Terms
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10. The Escheator and the Trust have concluded that the proposed
settlement terms represent a fair and reasonable compromise for the State of
Delaware, the Trust, the certificate holders and the unlocated stockholders,
and will avoid further litigation, with attendant costs and risks for all
concerned interests.
11. The settlement is beneficial to the State of Delaware, because
it eliminates the risks of litigation, and results in the transfer of
substantial property to the State of Delaware.
12. The settlement will also resolve potentially conflicting
obligations of the Trustees to Trust unit owners on one hand, and to
unlocated stockholders on the other. The conflict is inherent in the terms
of the Royalty Trust Agreement. At the time termination of the Trust is
contemplated under Article Four of the Royalty Trust Agreement, it would be
impossible to satisfy the possible indicated scope of the amount which would
then be required to be set aside from the then future revenue of the Trust
or the sale of the Trust's assets. As of October 31, 1994, the amount which
would be required would be $25,145,456. In 1975, when the Royalty Trust
Agreement was created, the future growth of the set aside and the origin of
this conflict was not foreseeable.
13. While the early transfer of Trust units to the State of
Delaware as part of the settlement will result in a substantial dilution of
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issued and outstanding units of the Trust, the settlement will allow the
orderly liquidation of the Trust's contingent liability to unlocated
stockholders by the year 2005, eliminate the financial uncertainty which
flowed from that contingency, and permit the orderly termination of the
Trust at some future date.
14. The unlocated stockholders have benefitted greatly from the
growth of the Company and subsequently the Trust. While the Company in 1975
or earlier could have pursued a course that would have significantly reduced
the amount the unlocated stockholders might have received and in the process
eliminated the issue of contingent liability, it chose instead to fully
protect their rights. The Company and, later, the Trust have expended
substantial sums in attempting to find unlocated stockholders and to advise
them how to exchange their shares for Trust units. Through such search
efforts and by resisting claims by nominee record owners, who were not
beneficial owners, and potential and actual escheat claims, the Company and
the Trustees have significantly increased the amounts received by unlocated
stockholders who presented claims. The settlement will preserve for
unlocated stockholders who appear before July 1, 2005, all dividends and
distributions attributable as of the date of submission of claims. In the
unlikely event that any further unlocated stockholders should appear after
July 1, 2005, they will still be entitled to claim the value of the Trust
units as of the date of escheat under the escheat law.
The Joint Petition is open for inspection by any interested
person during the regular business hours at the office of the Register in
Chancery, Daniel L. Herrmann Courthouse, 11th and King Streets, Wilmington,
Delaware. No further notice of these proceedings will be given.
Respectfully,
NORTH EUROPEAN OIL ROYALTY TRUST
BY: /s/John H. Van Kirk
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John H. Van Kirk, Managing Trustee