On March 4, 2008, the Pennsylvania State Employees’ Retirement System (“SERS”) and the Pennsylvania Public School Employees’ Retirement System (“PSERS”), court-appointed lead plaintiffs in In re Royal Dutch/Shell Transport Securities Litigation (D.N.J.), entered into an agreement in principle with Royal Dutch Shell plc (“Shell”) to settle the pending United States class action arising from the company’s recategorization of its proved oil and gas reserves in 2004.

The agreement in principle resolves all claims asserted in the case against all defendants, and has a value of more than $160 million, including the fees and expenses that Shell has agreed to pay.

Bernstein Liebhard LLP has represented the lead plaintiffs since it was appointed lead counsel by the Court in June 2004. The action is pending before the Honorable Joel A. Pisano in the United States District Court for the District of New Jersey (the “U.S. Action”).

The proposed settlement complements and enhances a previously announced proposed settlement of $340 million reached on behalf of non-U.S. persons and entities (the “Non-U.S. Purchasers”) that purchased the securities of Royal Dutch Petroleum Company and The “Shell” Transport and Trading Company plc on non-U.S. exchanges and markets between April 8, 1999 and March 18, 2004 (the “Class Period”). That earlier proposed settlement is pending in The Netherlands, before the Amsterdam Court of Appeals (the “Dutch Settlement”).

The proposed settlement in the U.S. Action covers all purchasers of Shell securities on U.S. exchanges and markets during the Class Period, as well as all U.S. purchasers of Shell securities on non-U.S. exchanges and markets during the Class Period (the “U.S. Purchasers”).

The agreement in principle in the U.S. Action includes the following terms:

    • U. S. Purchasers of Shell securities during the Class Period will receive $79.9 million, to be distributed based on the size of their losses in Shell securities;
    • Shell will distribute $2.95 million to all persons entitled to receive monies under the U.S. Settlement on an equal basis – regardless of the size of their loss;
    • The U.S. Purchasers and the Non-U.S. Purchasers will receive an additional payment of $35 million, to be divided in accordance with a provision of the Dutch Settlement. The U.S. Purchaser class will thereby receive an additional $6,658,000;
    • The U.S. Purchasers settlement fund (and the $340 million non-U.S. Purchasers settlement fund) will receive interest from April 1, 2008, based upon the one-year LIBOR rate, until funding is made at the time of the District Court (or Dutch Court) approval;
    • The U.S. Purchasers will receive additional monies if the number of U.S. Purchasers who purchased on non-U.S. exchanges or markets exceeds 3% of the total foreign purchases. If the number exceeds 3%, then Shell will pay an amount not to exceed $10.5 million
    • The U.S. Purchasers will receive additional protection if within three years class members who opt out of the settlement receive a higher percentage of their losses than they would under the proposed settlement. In that event, the U.S. Purchasers would receive an additional amount, up to $50 million; and
    • The U.S. Purchasers will receive additional protection if within three years Shell agrees to pay more monies to the Non-U.S. Purchasers in the Dutch Settlement.

The value of the proposed settlement, including the legal fees and expenses that Shell has agreed to pay, exceeds $160 million.

Lead Plaintiff’s attorney Stanley D. Bernstein stated that he was pleased with the result: “The proposed settlement provides fair compensation to the U.S. purchasers of Shell securities, and requires Shell to pay additional compensation to the non-U.S. purchasers, as well. This is an outstanding result.”

The agreement in principle is subject to specified conditions, including the execution of a definitive settlement agreement, the approvals of the relevant governmental authorities of the Commonwealth of Pennsylvania and the Boards of Directors of Shell Petroleum NV and The Shell Transport and Trading Company Limited, and the approval of the United States District Court for the District of New Jersey.

The settlement will be submitted to Judge Pisano for preliminary and final approval to Judge Pisano in the coming months.