Exhibit 3.1
Execution Version
AMENDED AND RESTATED
TRUST AGREEMENT
OF
ECA MARCELLUS TRUST I
Among
ENERGY CORPORATION OF AMERICA
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
and
CORPORATION TRUST COMPANY
Dated: As of July 7, 2010
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS
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2
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ARTICLE II NAME AND PURPOSE OF THE TRUST; DECLARATION OF TRUST
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9
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Section 2.01
Name; Certificate of Trust
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9
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Section 2.02
Purpose
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9
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Section 2.03
Transfer of Trust Property to the Trust
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10
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Section 2.04
Creation of the Trust
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11
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Section 2.05
Principal Offices
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12
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ARTICLE III ADMINISTRATION OF THE TRUST AND POWERS OF THE TRUSTEE AND THE DELAWARE TRUSTEE
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12
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Section 3.01
General Authority
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12
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Section 3.02
Limited Power of Disposition of the Trust
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12
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Section 3.03
No Power to Engage in Business or Make Investments or Issue Additional Securities
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14
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Section 3.04
Interest on Cash Reserves
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15
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Section 3.05
Power to Settle Claims
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15
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Section 3.06
Power to Contract for Services
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15
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Section 3.07
Payment of Liabilities of Trust
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16
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Section 3.08
Income and Principal
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16
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Section 3.09
Term of Contracts
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17
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Section 3.10
Transactions with Entity Serving as the Trustee or the Delaware Trustee
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17
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Section 3.11
No Security Required
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17
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Section 3.12
Filing of Securities Act Registration Statement, Exchange Act
Registration Statement and Other Reports, Listing of Trust Units, etc.; Certain
Fees and Expenses
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17
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Section 3.13
Reserve Report
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18
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Section 3.14
No Liability for Recordation
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18
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Section 3.15
Quarterly Cash Distributions
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18
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Section 3.16
Entity-Level Taxation
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19
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ARTICLE IV TRUST UNITS AND UNCERTIFICATED BENEFICIAL INTEREST
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20
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Section 4.01
Creation and Distribution
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20
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Section 4.02
Rights of Trust Unitholders; Limitation on Personal Liability of Trust Unitholders
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20
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Section 4.03
Effect of Transfer
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21
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Section 4.04
Determination of Ownership
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21
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ARTICLE V ACCOUNTING AND DISTRIBUTIONS; REPORTS
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22
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Section 5.01
Fiscal Year and Accounting Method
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22
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Section 5.02
Quarterly Cash Distribution Amount
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22
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Section 5.03
Reports to Trust Unitholders and Others
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22
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i
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Page
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Section 5.04
Reports from ECA to the Trustee
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22
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Section 5.05
Federal Income Tax Provisions
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23
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ARTICLE VI LIABILITY OF DELAWARE TRUSTEE AND TRUSTEE AND METHOD OF SUCCESSION
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23
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Section 6.01
Liability of Delaware Trustee, Trustee and Agents
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23
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Section 6.02
Indemnification of Trustee or Delaware Trustee
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24
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Section 6.03
Resignation of Delaware Trustee and Trustee
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26
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Section 6.04
Removal of Delaware Trustee and Trustee
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26
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Section 6.05
Appointment of Successor Delaware Trustee or Trustee
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26
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Section 6.06
Laws of Other Jurisdictions
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27
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Section 6.07
Reliance on Experts
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28
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Section 6.08
Force Majeure
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28
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Section 6.09
Failure of Action by ECA
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28
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Section 6.10
Action Upon Instructions
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29
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Section 6.11
Management of Trust Estate
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29
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Section 6.12
Validity
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29
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Section 6.13
Rights and Powers; Litigation
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29
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Section 6.14
No Duty to Act Under Certain Circumstances
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29
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ARTICLE VII COMPENSATION OF THE TRUSTEE AND THE DELAWARE TRUSTEE
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30
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Section 7.01
Compensation of Trustee and Delaware Trustee
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30
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Section 7.02
Reimbursement of ECA
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30
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Section 7.03
Source of Funds
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30
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Section 7.04
Ownership of Units by ECA, the Delaware Trustee and the Trustee
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30
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ARTICLE VIII MEETINGS OF TRUST UNITHOLDERS
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31
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Section 8.01
Purpose of Meetings
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31
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Section 8.02
Call and Notice of Meetings
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31
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Section 8.03
Method of Voting and Vote Required
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31
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Section 8.04
Conduct of Meetings
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32
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ARTICLE IX DURATION, REVOCATION AND TERMINATION OF TRUST
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32
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Section 9.01
Revocation
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32
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Section 9.02
Termination
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32
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Section 9.03
Disposition and Distribution of Assets and Properties
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32
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Section 9.04
Reorganization or Business Combination
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34
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ARTICLE X AMENDMENTS
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35
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Section 10.01
Prohibited Amendments
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35
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Section 10.02
Permitted Amendments
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35
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ARTICLE XI ARBITRATION
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36
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ARTICLE XII MISCELLANEOUS
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38
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Section 12.01
Inspection of Books
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38
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Section 12.02
Disability of a Trust Unitholder
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38
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ii
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Page
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Section 12.03
Merger or Consolidation of Delaware Trustee or Trustee
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39
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Section 12.04
Change in Trust Name
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39
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Section 12.05
Filing of this Agreement
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39
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Section 12.06
Choice of Law
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39
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Section 12.07
Separability
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40
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Section 12.08
Notices
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40
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Section 12.09
Counterparts
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41
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Annex A
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Subordination and Incentive Thresholds
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Exhibit A
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Federal Income Tax Provisions
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Exhibit B
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Common Units Issued to Private Investors
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Schedule A
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Fee Schedule of Trustee
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iii
AMENDED AND RESTATED
TRUST AGREEMENT
OF
ECA MARCELLUS TRUST I
This Amended and Restated Trust Agreement of ECA Marcellus Trust I (the
Trust
) is
entered into effective as of the 7th day of July, 2010, by and among ENERGY CORPORATION OF AMERICA,
a West Virginia corporation with its principal office in Denver, Colorado (
ECA
) as
trustor, CORPORATION TRUST COMPANY, a corporation organized under the laws of the State of Delaware
with its principal office in Wilmington, Delaware (
Corporation Trust
), as Delaware
Trustee (as hereinafter defined), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national
banking association organized under the laws of the State of New York with its principal place of
business in New York, New York (the
Bank
), as Trustee (as hereinafter defined).
WITNESSETH:
WHEREAS, ECA is engaged in the exploration, development, production, transportation and
marketing of natural gas and oil and owns oil and gas leasehold interests in properties located in
Greene County, Pennsylvania containing proved reserves of natural gas; and
WHEREAS, ECA, Eastern Marketing Corporation, a West Virginia corporation (
ECA Sub
),
and the Private Investors (hereinafter defined) have determined to convey to the Trust the Royalty
Interests (hereinafter defined) pursuant to the Conveyances (hereinafter defined) and the Floor
Agreements (hereinafter defined) pursuant to the Assignment of Floor Agreements (hereinafter
defined) in exchange for cash, 4,401,250 Common Units (hereinafter defined), 4,401,250 Subordinated
Units (hereinafter defined) and the right of ECA to receive Incentive Distributions (hereinafter
defined) and the Reimbursement Amount (hereinafter defined) on the terms set forth herein; and
WHEREAS, ECA and the Trust have determined to enter into the Swap Agreement (hereinafter
defined) to provide the Trust with the benefit of swap contracts entered into between ECA and third
parties; and
WHEREAS, ECA and the Trust have determined to enter into the Administrative Services Agreement
(hereinafter defined) outlining ECAs provision of administrative services to the Trust and its
compensation therefor and a Development Agreement (hereinafter defined) outlining ECAs drilling
obligation to the Trust; and
WHEREAS, ECA has determined to grant the Drilling Support Lien to the Trust to secure its
drilling obligation to the Trust and the Royalty Interest Lien to provide protection to the trust
in the event of a bankruptcy of ECA; and
WHEREAS, ECA, Corporation Trust and the Acting Trustee have previously formed the Trust
pursuant to the Organizational Trust Agreement (hereinafter defined) in accordance with the
provisions of the Trust Act (hereinafter defined) and, in connection therewith, ECA has previously
delivered to the Acting Trustee, on behalf of the Trust, good and valuable
consideration, which the Acting Trustee has accepted, to have and to hold, in trust, such
consideration, for the purposes and subject to the terms and conditions hereinafter provided; and
WHEREAS, on May 7, 2010, ECA, the Acting Trustee, Corporation Trust and the Bank agreed to
amend the Organizational Trust Agreement and remove the Acting Trustee from his service as trustee
and replace the Acting Trustee with the Bank; and
WHEREAS, ECA, ECA Sub and the Private Investors have agreed to deliver to the Bank, on behalf
of the Trust, good and valuable consideration, which the Bank has agreed to accept, to have and to
hold, in trust, such consideration and all other properties that may hereafter be acquired
hereunder, for the purposes and subject to the terms and conditions hereinafter provided; and
NOW, THEREFORE, ECA, the Acting Trustee, Corporation Trust and the Bank hereby amend and
restate the Organizational Trust Agreement of ECA Marcellus Trust I in its entirety.
ARTICLE I
DEFINITIONS
As used herein, the following terms have the meanings indicated:
Acting Trustee
means the natural person acting as Trustee before the Organizational
Trust Agreement was amended on May 7, 2010.
Administrative Services Agreement
means the Administrative Services Agreement dated
July 7, 2010 entered into between ECA and the Trust.
Affiliate
means, for any specified Person, another Person that, directly or through
one or more intermediaries, controls, is controlled by, or is under common control with, the
specified Person.
Control
, in the preceding sentence, refers to the possession, directly
or indirectly, of the power to direct or cause the direction of the management and policies of
another Person, whether through the ownership of voting securities, by contract, or otherwise.
Agent
means, with respect to a Person, an agent, employees, officer, director,
custodian, nominee or attorney of such Person.
Agreement
means this Amended and Restated Trust Agreement of ECA Marcellus Trust I,
as it may be further amended, supplemented or restated from time to time.
Assignment of Floor Agreements
means the Novation dated July 7, 2010 among BP Energy
Company, ECA and the Trustee on behalf of the Trust and the Novation dated July 7, 2010 by and
among the Company, the Trust and Wells Fargo Capital Finance, Inc.
Assignment of Royalty Interest
means the Assignment of Royalty Interest dated July
7, 2010 between ECA Sub and the Trustee on behalf of the Trust.
Bank
means The Bank of New York Mellon Trust Company, N.A., a national banking
association organized under the laws of the State of New York, and its successors and assigns.
2
Beneficial Interest
means the aggregate beneficial ownership interest of all Trust
Unitholders in the Trust Estate, including without limitation the proceeds from the conversion of
the Royalty Interests to cash, which beneficial interest is expressed in Trust Units, but such
beneficial interest does not include any ownership interest, legal or equitable, in or to the
Royalty Interests, or any part thereof, or in or to any other asset of the Trust Estate to the
extent that an interest in such asset would cause the interest of a Trust Unitholder to be treated
as other than an intangible personal property interest.
Business Day
means any day that is not a Saturday, Sunday, a holiday determined by
the NYSE Regulation, Inc. as affecting ex dates or any other day on which national banking
institutions in New York, New York are closed as authorized or required by law.
Closing
means the first closing of the initial public offering of Common Units
contemplated by the Securities Act Registration Statement.
Closing Date
means the date of Closing.
Commission
means the Securities and Exchange Commission.
Common Unit
means a fractional part of the Beneficial Interest having the rights and
obligations specified with respect to a Common Unit in this Agreement. The term Common Unit does
not refer to or include any Subordinated Unit prior to its conversion into a Common Unit pursuant
to the terms hereof.
Conveyances
means (a) that certain Term Overriding Royalty Interest Conveyance (PDP)
dated July 7, 2010 among ECA Sub and ECA and that certain Term Overriding Royalty Interest
Conveyance (PUD) dated July 7, 2010 among ECA Sub and ECA (collectively, the
Term Royalty
Conveyances
), and (b) that certain Perpetual Overriding Royalty Interest Conveyance (PDP)
dated July 7, 2010 among ECA and the Trustee on behalf of the Trust, that certain Perpetual
Overriding Royalty Interest Conveyance (PUD) dated July 7, 2010 among ECA and the Trustee on behalf
of the Trust and that certain Perpetual Overriding Royalty Interest Conveyance (PDP) dated July 7,
2010 among the Private Investors and the Trustee on behalf of the Trust (collectively, the
Perpetual Royalty Conveyances
).
Corporation Trust
means Corporation Trust Company, a corporation organized under the
laws of the State of Delaware, and its successors and assigns.
Delaware Trustee
means the Entity serving as a trustee (other than as the Trustee)
hereunder having its principal place of business in Delaware, not in its individual capacity but
solely in its fiduciary capacity, and having the rights and obligations specified with respect to
the Delaware Trustee in this Agreement. Furthermore, any benefit, indemnity, release or protection
granted to the Delaware Trustee herein shall extend to and shall be fully applicable and effective
with regard to any Entity serving as the Delaware Trustee, including, without limitation,
Corporation Trust Company.
Development Agreement
means the Development Agreement dated July 7, 2010 entered
into between ECA and the Trust.
3
Drilling Obligation Completion Date
has the meaning assigned to such term in the
Development Agreement.
Drilling Support Lien
means that certain Mortgage, Assignment of Leases, Security
Agreement, Fixture Filing and Financing Statement from Energy Corporation of America, as Mortgagor,
to The Bank of New York Mellon Trust Company, N.A., as trustee of ECA Marcellus Trust I, as
Mortgagee, dated as of July 7, 2010 securing ECAs obligations under the Development Agreement.
ECA
means Energy Corporation of America, a West Virginia corporation and its
successors and permitted assigns.
ECA Sub
means Eastern Marketing Corporation, a West Virginia corporation, and its
successors and permitted assigns.
Entity
means a corporation, partnership, limited liability company, trust, estate or
other entity, organization or association.
Environmental Laws
means all laws relating to pollution or protection of the
environment, including laws relating to emissions, discharges, releases or threatened releases,
treatment, storage or disposal of pollutants, contaminants, hazardous substances or industrial or
hazardous wastes into the environment (including ambient air, surface water, groundwater, land
surface or subsurface strata), including laws relating to the protection, preservation, or
enhancement of endangered or threatened species, historic and archaeological resources, or wetlands
and tidelands, as well as all codes, decrees, injunctions, judgments, orders, rules or regulations
issued, entered, promulgated or approved thereunder pursuant to the requirements of applicable
administrative procedures, acts and agency procedural rules.
Estimated Incremental Quarterly Tax Amount
has the meaning assigned such term in
Section 3.16
.
Exchange Act
means the Securities Exchange Act of 1934, as amended.
Exchange Act Registration Statement
means the registration statement on Form 8-A
pursuant to which the Trust Units may be registered under Section 12 of the Exchange Act.
Expenses
has the meaning assigned to that term in
Section 6.02(a
).
Fair Value
means, with respect to any portion of the Royalty Interests to be
released or sold pursuant to
Section 3.02(c)
in connection with a sale of Underlying
Properties, an amount of net proceeds which could reasonably be expected to be obtained from the
sale of such portion of the Royalty Interests to a party that is not an Affiliate of either ECA or
the Trust on an arms-length negotiated basis, taking into account relevant market conditions and
factors existing at the time of any such proposed sale or release, such net proceeds to be
determined by deducting the Trusts proportionate share of sales costs, commissions and brokerage
fees, if any (based on the ratio of (a) the fair market value of the portion of the Royalty
Interest being released to (b) the fair market value of the Underlying Properties being transferred
including the value of the Royalty Interests being released).
4
Floor Agreements
the natural gas floor price contracts for the sale of volumes of
natural gas subject to the Royalty Interests assigned by ECA to the Trust pursuant to the
Assignment of Floor Agreements.
Hedge Agreements
means the Swap Agreement together with the Floor Agreements.
Incentive Distributions
means, with respect to each Quarterly Period during the
Subordination Period, distributions made pursuant to
Section 3.15(a)(i)(D)(x)
and
Section 3.15(a)(i)(E)(x)
.
Incentive Threshold
means, with respect to each Quarterly Period during the
Subordination Period, the amount shown under the heading Incentive Threshold for such Quarterly
Period on
Annex A
or calculated in accordance with the formula set forth on
Annex
A
.
Incremental Income Tax
has the meaning assigned to that term in
Section
3.16
.
Independent Reserve Engineers
means Ryder Scott Company, L.P., independent petroleum
engineers, or any other petroleum engineering consultants employed by the Trust to provide
information and reports with respect to the Royalty Interests.
Initial Common Units
means the Common Units sold to the Underwriters on the Closing
Date.
Liquidation Date
means March 31, 2030.
Organizational Trust Agreement
means the Trust Agreement of ECA Marcellus Trust I,
entered into and effective as of March 19, 2010, by and among ECA, the Acting Trustee and
Corporation Trust, as amended.
Overallotment Option
means the overallotment option granted to the Underwriters by
the Trust pursuant to the Underwriting Agreement.
Overallotment Option Closing
means any closing of the exercise of the Overallotment
Option.
Overallotment Option Closing Date
means the date on which any Overallotment Option
Closing occurs.
Overallotment Option Common Units
means the Common Units sold to the Underwriters on
the Overallotment Option Closing Dates (other than the Initial Common Units).
Perpetual Royalty Interests
means the Royalty Interests conveyed to the Trust by the
Perpetual Royalty Conveyances.
Person
means a natural person or an Entity.
5
Private Investors
means those private investors identified in that certain Perpetual
Overriding Royalty Interest Conveyance (PDP) dated July 7, 2010 among the Private Investors and the
Trustee on behalf of the Trust and set forth on
Exhibit B
hereto.
Prospectus
means the final prospectus constituting a part of the Securities Act
Registration Statement, as filed pursuant to Rule 424(b) of the Commission.
Quarterly Cash Distribution Amount
means, for each Quarterly Period prior to the
Liquidation Date, without duplication:
(a) the sum of (i) all cash received by the Trust on or before the 45th calendar day following
the end of such Quarterly Period under the Conveyances and the Hedge Agreements made with respect
to such Quarterly Period, plus (ii) all other cash receipts of the Trust received during such
Quarterly Period (excluding Sales Proceeds Amounts), plus (iii) any cash released on or before the
45th calendar day following the end of such Quarterly Period from any cash reserve established in a
prior Quarterly Period by the Trustee for the payment of liabilities, including contingent
liabilities, of the Trust, and plus (iv) any interest earned on cash reserves invested pursuant to
Section 3.04
that is received by the Trust on or before the 45th calendar day following the
end of such Quarterly Period, less
(b) the sum of (i) the liabilities of the Trust paid during such Quarterly Period, plus (ii)
any cash added on or before the 45th calendar day following the end of such Quarterly Period to any
cash reserve for the payment of liabilities, including contingent liabilities, of the Trust.
Quarterly Payment Date
means, for each Quarterly Period, the 60
th
day
following the end of the previous Quarterly Period, or if such day is not a Business Day, on the
next Business Day.
Quarterly Period
means each of the calendar quarters ending on the last day of
March, June, September and December of each year.
Quarterly Record Date
means, for each Quarterly Period, the close of business on the
45th day following the end of such Quarterly Period (or the Business Day next following such day if
such day is not a Business Day) or such other date established by the Trustee in order to comply
with applicable law or the rules of any securities exchange or quotation system on which the Common
Units may be listed or admitted to trading, in which event Quarterly Record Date means such other
date.
Record Date Trust Unitholders
has the meaning assigned to that term in
Section
8.02
hereof.
Registration Rights Agreement
means the Registration Rights Agreement dated July 7,
2010 entered into among ECA, certain of the Private Investors and the Trust.
Reimbursement Amount
has the meaning assigned to that term in
Section 3.15(a)(i)(D)
.
6
Responsible Officer
means (a) with respect to the Delaware Trustee, any officer in
the Corporate Trust Administration office of the Delaware Trustee having direct responsibility for
the administration of this Agreement, and with respect to a particular corporate trust matter, any
officer of the Delaware Trustee to whom such matter is referred because of his or her knowledge of
and familiarity with the particular subject, and (b) with respect to the Trustee, any officer in
the Corporate Trust Administration office of the Trustee having direct responsibility for the
administration of this Agreement, and with respect to a particular corporate trust matter, any
officer of the Trustee to whom such matter is referred because of his or her knowledge of and
familiarity with the particular subject.
Royalty Interests
means, collectively, the Perpetual Royalty Interests and the Term
Royalty Interests.
Royalty Interest Lien
means that certain Mortgage, Assignment, Security Agreement,
Fixture Filing and Financing Statement from Energy Corporation of America, as Mortgagor, to ECA
Marcellus Trust I, as Mortgagee, dated as of July 7, 2010 to provide protection to the Trust in the
event of a bankruptcy of ECA against the risk that the Royalty Interests are not considered a real
property interest.
Sales Proceeds Amounts
means any cash paid to the Trust upon the sale of Royalty
Interests or other assets of the Trust pursuant to
Section 3.02
or
Section 9.03
hereof after deduction of Trust expenses related to such sale or the establishment by the Trustee
of cash reserves in such amounts as the Trustee in its discretion deems appropriate for contingent
liabilities related thereto in accordance with Section 3808 of the Trust Act.
Sarbanes-Oxley Act
means the Sarbanes-Oxley Act of 2002, as amended.
Securities Act
means the Securities Act of 1933, as amended.
Securities
Act Registration Statement
means the Registration Statement on Form S-1
(Registration No. 333-165833) as it has been or as it may be amended or supplemented from time to
time, filed by ECA and the Trust with the Commission under the Securities Act to register the
offering and sale of the Common Units.
Sponsor Units
has the meaning assigned to such term in
Section 2.03
.
Subordinated Unit
means a fractional part of the Beneficial Interest having the
rights and obligations specified with respect to a Subordinated Unit in this Agreement.
Subordination Period
means the period beginning April 1, 2010 and ending on the last
day of the fourth full calendar quarter following the Drilling Obligation Completion Date (as
defined in the Development Agreement); provided that ECA has delivered to the Trustee a certificate
executed by the President or any Vice President of ECA certifying that ECAs drilling obligation
was satisfied as of the Drilling Obligation Completion Date.
Subordination Threshold
means, with respect to each Quarterly Period during the
Subordination Period, the amount shown under the heading Subordination Threshold for such
Quarterly Period on
Annex A
or calculated in accordance with the formula set forth on
Annex A
.
7
Swap Agreement
means the Swap Agreement dated July 7, 2010 entered into between ECA
and the Trust.
Target Distribution
means, with respect to each Quarterly Period during the
Subordination Period, the amount shown under the heading Target Distribution for such Quarterly
Period on
Annex A
.
Term Royalty Interests
means the royalty interests conveyed to the Trust by the Term
Royalty Conveyance.
Transaction Documents
means this Agreement, the Underwriting Agreement, the
Securities Act Registration Statement, the Prospectus, the Assignment of Royalty Interest, the
Conveyances, the Development Agreement, the Administrative Services Agreement, the Hedge
Agreements, the Assignment of Floor Agreements, the Registration Rights Agreement and the Drilling
Support Lien and the Royalty Interest Lien.
Transferee
means, as to any Trust Unitholder or former Trust Unitholder, any Person
succeeding to the interest of such Trust Unitholder or former Trust Unitholder in one or more Trust
Units, whether as purchaser, donee, legatee or otherwise.
Trust
means ECA Marcellus Trust I, the Delaware statutory trust created pursuant to
the Organizational Trust Agreement and continued by and administered under the terms of this
Agreement.
Trust Act
means the Delaware Statutory Trust Act, Title 12, Chapter 38 of the
Delaware Code, Sections 3801 et seq., as amended from time to time during the term of this
Agreement.
Trust Estate
means the assets held by the Trust under this Agreement, including both
income and principal.
Trust Units
means Subordinated Units and Common Units, collectively, which are
uncertificated, undivided pro rata fractional interests in the Beneficial Interest, determined as
hereinafter provided.
Trust Unitholder
means the owner of one or more Trust Units as reflected on the
books of the Trustee pursuant to
Section 4.01
or in the records of The Depository Trust
Company.
Trustee
means the Entity serving as a trustee (other than the Delaware Trustee)
under this Agreement, not in its individual capacity but solely in its fiduciary capacity.
Furthermore, any benefit, indemnity, release or protection granted to the Trustee herein shall
extend to and shall be fully applicable and effective with regard to any Entity serving as Trustee,
including, without limitation, the Bank. The term principal office of the Trustee shall mean the
principal office of the Trustee in Austin, Texas, or the principal office at which at any
particular time its institutional or corporate trust business may be administered.
8
Underlying Properties
means the Subject Interests, Development Wells and Wells
subject to the Royalty Interests, as Subject Interests, Development Wells and Wells are
defined in the Conveyances.
Underwriters
means each Person named as an underwriter in Schedule I to the
Underwriting Agreement who purchases Common Units pursuant thereto.
Underwriting Agreement
means the Underwriting Agreement dated as of June 30, 2010
among the Underwriters, the Trustee on behalf of the Trust and ECA, providing for the purchase of
the Initial Common Units and the Overallotment Option Common Units.
Unit Majority
means (i) with respect to a transaction or agreement resulting in a
material disproportionate benefit to ECA or its Affiliates compared to other owners of Common
Units, a majority of the outstanding Trust Units and a majority of the outstanding Common Units
(excluding Common Units owned by ECA and its Affiliates) and (ii) with respect to a transaction or
agreement not resulting in a material disproportionate benefit to ECA or its Affiliates compared to
other owners of Common Units, a majority of the outstanding Trust Units.
ARTICLE II
NAME AND PURPOSE OF THE TRUST; DECLARATION OF TRUST
Section 2.01
Name; Certificate of Trust
. The Trust continued by this Agreement shall remain a
Delaware statutory trust under the Trust Act. The Trust shall continue to be known as the ECA
Marcellus Trust I, and the Trustee may transact the Trusts affairs in that name. The continuation
and operation of the Trust shall be in accordance with this Agreement, which shall constitute the
governing instrument of the Trust within the meaning of Section 3801(f) of the Trust Act. In the
event that a Responsible Officer of either the Delaware Trustee or the Trustee becomes aware that
any statement contained or matter described in the Trusts Certificate of Trust has changed, making
it false in any material respect, it will notify the other trustee and the Delaware Trustee shall
promptly file or cause to be filed in the office of the Secretary of State of Delaware an amendment
of same at the written direction of the Trustee, duly executed in accordance with Section 3811 of
the Trust Act, in order to effect such change thereto, such filing to be in accordance with Section
3810(b) of the Trust Act.
Section 2.02
Purpose
. The purposes of the Trust are, and the Trust (and the Trustee on behalf
of the Trust) shall have the power and authority and is hereby authorized:
(a) to acquire, hold, protect and conserve the Trust Estate for the benefit of the Trust
Unitholders;
(b) to receive and hold the Royalty Interests, the Hedge Agreements, the Development
Agreement, the Administrative Services Agreement, the Drilling Support Lien, the Royalty Interest
Lien and the other assets of the Trust Estate;
(c) to issue the Subordinated Units and the Initial Common Units on the Closing Date and, if
the Underwriters exercise the Overallotment Option, to issue the Overallotment Option Units on the
Overallotment Option Closing Date, and to perform its obligations with respect thereto;
9
(d) to use the net proceeds from any issuance of Overallotment Option Units to repurchase from
ECA an equal number of Common Units, at which time such repurchased Common Units shall be cancelled
and no longer issued and outstanding;
(e) to receive payments with respect to the Royalty Interests as provided in the Conveyances;
(f) to receive or make payments with respect to the Hedge Agreements as provided in the Hedge
Agreements;
(g) to invest cash reserves as provided in
Section 3.04;
(h) to pay, or provide for the payment of, any liabilities incurred in carrying out the
purposes of the Trust;
(i) to distribute the Quarterly Cash Distribution Amount and any Sales Proceeds Amounts in
accordance with
Section 3.15
;
(j) to incur indebtedness in order to pay the liabilities of the Trust as they become due, if
necessary, any such indebtedness to be unsecured except as provided in
Section 7:03
;
(k) to sell Royalty Interests in accordance with
Sections 3.02, 9.02 and 9.03
;
(l) to enter into, execute, deliver and perform its obligations and enforce its rights under
the Transaction Documents to which it is a party;
(m) to cause to be prepared and file (i) reports required to be filed under the Exchange Act,
(ii) any reports required by the rules of any securities exchange or quotation system on which the
Trust Units are listed or admitted to trading, and (iii) any reports, forms or returns required to
be filed pursuant to tax laws and other applicable laws and regulations, and to establish, evaluate
and maintain a system of internal control over financial reporting in compliance with the
requirements of Section 404 of the Sarbanes-Oxley Act;
(n) to conduct or wind up its business as described in the Securities Act Registration
Statement; and
(o) to engage in such other activities as are necessary or convenient for the attainment of
any of the foregoing or are incident thereto and which may be engaged in or carried on by a
statutory trust under the Trust Act.
The Trust hereby authorizes the Transaction Documents and the activities contemplated therein.
Section 2.03
Transfer of Trust Property to the Trust
. Upon the formation of the Trust, ECA
paid good and valuable consideration to the Trust, in trust, for the uses and purposes provided in
the Organizational Trust Agreement and in this Agreement. At (and subject to the occurrence of)
the Closing the following transactions will occur:
10
(a) ECA and the Private Investors shall convey to the Trust the Perpetual Royalty Interests in
exchange for 3,087,371 Common Units and 4,401,250 Subordinated Units to be issued to ECA and
1,313,879 Common Units to be issued to the Private Investors as set forth on
Exhibit B
hereto (collectively, the
Sponsor Units
);
(b) the Trust shall issue the Initial Common Units to the Underwriters for the cash
consideration and on the terms set forth in the Underwriting Agreement;
(c) ECA shall assign the Floor Agreements to the Trust pursuant to the Assignment of Floor
Agreements;
(d) ECA shall enter into the Swap Agreement with the Trust;
(e) ECA Sub shall convey to the Trust the Term Royalty Interests in exchange for $160,500,000
in cash;
(f) ECA and the Trust shall enter into the Development Agreement and the Administrative
Services Agreement;
(g) ECA, certain of the Private Investors and the Trust shall enter into the Registration
Rights Agreement; and
(h) ECA shall grant the Drilling Support Lien and the Royalty Interest Lien to the Trust.
If the Underwriters exercise the Overallotment Option, on any Overallotment Option Closing Date the
Trust shall issue the applicable number of Overallotment Option Common Units to the Underwriters
for the cash consideration and on the terms set forth in the Underwriting Agreement. The issuance
of the Initial Common Units, the Overallotment Option Units, the Sponsor Units and the 4,401,250
Subordinated Units is hereby duly authorized and, upon issuance at the Closing or the Overallotment
Option Closing, as applicable, such Trust Units shall be duly and validly issued and outstanding
and, upon receipt by the Trust at the Closing or the Overallotment Option Closing of the
consideration described above, the Trust Units will be fully paid and nonassessable without the
requirement of any further consideration.
Section 2.04
Creation of the Trust
. The Trustee declares that it shall hold the Trust Estate
in trust for the benefit of the Trust Unitholders, upon the terms and conditions set forth in this
Agreement. 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 Interests, the Hedge Agreements and
the distribution of such revenues, after payment of or provision for Trust expenses and
liabilities, to the Trust Unitholders. It is not the intention of the parties hereto to create,
and nothing in this Agreement shall be construed as creating, for purposes other than tax purposes,
a joint venture, joint stock company or similar business association, between or among Trust
Unitholders, present or future, or between or among Trust Unitholders, or any of them, the Delaware
Trustee, the Trustee, ECA, ECA Sub and/or the Private Investors. Neither the Trustee nor the
Delaware Trustee, in its individual capacity, or otherwise, makes any representation as to the
validity or sufficiency of this Trust Agreement.
11
Section 2.05
Principal Offices
. Unless and until changed by the Trustee, the address of the
principal office of the Trustee is 919 Congress Avenue, Suite 500, Austin, Texas 78701. Unless
and until changed by the Delaware Trustee, the principal place of business of the Delaware Trustee
is 1209 Orange Street, Wilmington, Delaware 19801, Attention: Corporate Trust Administration. The
Trust may maintain offices at such other place or places within or without the State of Delaware as
the Trustee deems advisable.
ARTICLE III
ADMINISTRATION OF THE TRUST AND POWERS OF THE TRUSTEE
AND THE DELAWARE TRUSTEE
Section 3.01
General Authority
.
(a) The Trustee accepts the trust hereby continued and agrees to perform its duties hereunder
with respect to the same, but only upon the express terms of this Agreement. Subject to the
limitations set forth in this Agreement, the Trustee, acting alone, without the approval or consent
of, or notice to, the Delaware Trustee or any Trust Unitholder, is authorized to take such action
as in its judgment is necessary, desirable or advisable to best achieve the purposes and powers of
the Trust set forth in
Section 2.02
hereof. The Trustee shall not (i) dispose of any part
of the Trust Estate except as expressly provided herein or (ii) except as permitted by
Section
10.02
of this Agreement, agree to amend or waive any provision of, give any consent or release
with respect to, or terminate the Transaction Documents to which the Trust is a party without the
Trust Unitholder approval, if any, required by
Section 10.02
.
(b) The Delaware Trustee accepts the Trust hereby continued and agrees to perform its duties
hereunder with respect to the same, but only upon the express terms of this Agreement. The
Delaware Trustee is authorized to take only such actions, and shall be required to perform only
such duties and obligations, with respect to the Trust as are specifically set forth in this
Agreement, and no implied duties, obligations or powers shall be read into this Agreement in
respect to the Delaware Trustee. The Delaware Trustee shall not otherwise manage or take part in
the business or affairs of the Trust in any manner.
(c) Notwithstanding any other provision of this Agreement, unless specifically authorized in
writing by the Trustee and consented to by the Delaware Trustee, the Delaware Trustee shall not
participate in any decisions or possess any authority with respect to the administration of the
Trust, the investment of the Trusts property or the payment of distributions of income or
principal to the Trust Unitholders. The Delaware Trustee shall have the power and authority to
execute, deliver, acknowledge and file all necessary documents and to maintain all necessary
records of the Trust as required by the Trust Act. The Delaware Trustee shall provide prompt
written notice to the Trustee of its performance of any of the foregoing acts. The Trustee shall
reasonably keep the Delaware Trustee informed of any material action taken by the Trustee with
respect to the Trust.
Section 3.02
Limited Power of Disposition of the Trust
. The Trustee may sell all or part of
the Royalty Interests only in the following circumstances.
12
(a) An election by the Trustee to sell all or part of the Trust Estate, at any time and from
time to time, that is approved by the holders of a Unit Majority at a meeting duly called and held
in accordance with Article VIII, subject to ECAs right of first refusal as provided in
Section
9.03
of this Agreement.
(b) After the Drilling Obligation Completion Date, ECA may at any time, and from time to time
sell, but only in accordance with the terms of the Conveyances, a divided or undivided portion of
its interests in the Underlying Properties, free from and unburdened by the Royalty Interests,
without the consent of the Trustee or the Trust Unitholders except as set forth below; provided the
following conditions are met:
(i) the Trust receives Fair Value for the Royalty Interests to be released by the
Trustee in connection with the sale of the Underlying Properties;
(ii) the aggregate Fair Value to be received by the Trust with respect to such Royalty
Interests to be released by the Trustee and any other Royalty Interests previously released
by the Trustee pursuant to this
Section 3.02(b)
during the most recently completed
12 calendar months would not exceed $5,000,000; and
(iii) the Trustee shall have received (A) in the event that the gross purchase price to
be received by ECA for the sale of Underlying Properties in a single transaction or a series
of related transactions is less than $5,000,000, a certificate from ECA executed by the
President or any Vice President thereof certifying to the Trustee and the Trust that the
cash to be received by the Trust pursuant to this
Section 3.02(b)
above represents
the Fair Value to the Trust for the Royalty Interests to be released by the Trustee in
connection therewith (and the Trustee is hereby authorized and directed to rely thereon) or
(B) in the event that the gross purchase price to be received by ECA for the sale of
Underlying Properties in a single transaction or a series of related transactions is more
than $5,000,000, at the expense of ECA, an appraisal of such Underlying Properties from an
independent appraiser in the business of evaluating or appraising natural gas properties
selected by mutual agreement of ECA and the Trustee, which appraisal confirms that the cash
to be received by the Trust pursuant to this
Section 3.02(b)
represents the Fair
Value to the Trust for the Royalty Interests to be released by the Trust in connection
therewith (and the Trustee is hereby authorized and directed to rely thereon).
Notwithstanding the foregoing, any sale of Underlying Properties pursuant to this
Section 3.02(b)
, in a single transaction or a series of related transactions, where
the gross purchase price to be received by ECA is greater than $5,000,000 shall require the
consent of at least a majority of the then outstanding Trust Units.
(c) In the event that a portion of the Royalty Interests is to be released pursuant to
Section 3.02(b)
of this Agreement, upon receipt of (i) funds equal to the required payment,
(ii) an accurate description of said portion of the Royalty Interests and (iii) sufficient
information to evidence conclusively that the conditions to purchase referred to in
Section
3.02(b)
and in the applicable section of the Conveyances have been satisfied, then within a
reasonable time thereafter, and upon advice of such experts as may be retained by the Trustee with
the written consent of ECA, the Trustee shall execute and deliver a conveyance covering said
Royalty Interests to ECA or its assignee and upon receipt of written notice of such a sale given by
ECA,
13
the Trustee shall execute and deliver at the closing of such sale a partial release and
consent, and such other instruments, agreements and documents as ECA may reasonably request, to
evidence or effect the transfer of such portion of ECAs interests in the Underlying Properties,
free from and unburdened by the Royalty Interests. Except as provided herein, any other sale of
all or any portion of the Underlying Properties will not relieve ECA of its obligations with
respect to the Royalty Interests.
(d) In addition to the sales permitted by
Section 3.02(c)
and subject to the terms of
the Conveyances, ECA may at any time or from time to time after the Drilling Obligation Completion
Date sell a divided or undivided portion of its interest in the Underlying Properties,
provided,
however,
that such sale is subject to and burdened by the Royalty Interests that burden such
portion of ECAs interest, without the consent of the Trust Unitholders. Promptly after completion
of any such sale, ECA shall so notify the Trustee in writing. Any purchaser of such Underlying
Properties shall be the assignee of ECA to the extent of the interest sold and shall be bound by
the obligations of ECA under this Agreement and the Conveyances to such extent.
(e) Subject to the terms of the Conveyances, ECA may at its option at any time prior to the
Drilling Obligation Completion Date, cause the Trust to exchange leased acreage subject to the
Royalty Interests, fee and clear of such Royalty Interests, for other leased acreage within the AMI
(as defined in the Conveyances). Such leased acreage exchanged to the Trust shall then be subject
to the Royalty Interests as set forth in the Conveyances. Additionally, the Conveyances provide
that, in the event ECA acquires any additional leases in the AMI prior to the Drilling Obligation
Completion Date, ECA may at its option make such additional lease subject to the Royalty Interests.
Provided, however
, in no event may any additional lease be made subject to the Royalty
Interests, or any exchange of acreage be effected, unless ECA certifies to the Trust that, among
other things, all of the aggregate acreage attributable to the additional leases and exchange
leases shall not exceed 5% of the Subject Lands (as defined in the Conveyances) as such exist as of
the date of this Agreement and, in the case of an exchange, the reasonable projected quantity of
proved undeveloped reserves attributable to the exchange acreage does not significantly differ from
the acreage exchanged therefor.
(f) Anything herein to the contrary notwithstanding, the Trustee shall not agree to any
distribution of the Royalty Interests or any other asset of the Trust that would cause the interest
of a Trust Unitholder to be treated as other than an intangible personal property interest. Unless
required to sell pursuant to this
Section 3.02
, or pursuant to
Section 9.03
hereof,
or to distribute the Quarterly Cash Distribution Amount or Sales Proceeds Amount pursuant to
Section 3.15
hereof, the Trustee is authorized to retain any part of the Trust Estate in
the form in which such property was transferred to the Trustee, without regard to any requirement
to diversify investments or other requirements.
Section 3.03
No Power to Engage in Business or Make Investments or Issue Additional
Securities
. Neither the Trustee nor the Delaware Trustee shall cause or permit the Trust to (a)
acquire any asset other than the assets conveyed or transferred to the Trust pursuant to
Section 2.03,
the rights of the Trust to enforce the terms and provisions of the
Transaction Documents to which it is a party, and other amounts paid to the Trust as set forth
herein, or (b) engage in any business or investment activity of any kind whatsoever, except for the
activities permitted herein or issue Trust Units or other securities after the Closing Date other
than Overallotment Option
14
Units. Neither the Trustee nor the Delaware Trustee shall have any responsibility or
authority relating to the development or operations of the Underlying Properties or the marketing
of any production therefrom or any other business decision affecting the assets of the Trust.
Section 3.04
Interest on Cash Reserves
. Cash being held by the Trustee as a reserve for a
payment of the Quarterly Cash Distribution Amount or Sales Proceeds Amounts or for the payment of
any liabilities, other than current routine administrative costs, shall be placed by the Trustee
with one or more banks or financial institutions (which, to the extent to which authorized pursuant
to the Trust Act and other applicable laws, may be, or may include, any bank serving as the Trustee
or the Delaware Trustee) and invested in (a) accounts payable on demand without penalty (which may
be non-interest bearing), (b) interest bearing obligations issued by (or unconditionally guaranteed
by) the United States of America or any agency or instrumentality thereof (provided such agency or
instrumentality obligations are guaranteed by the full faith and credit of the United States of
America), (c) repurchase agreements secured by obligations qualifying under (b) above or (d)
certificates of deposit of any bank or banks having combined capital, surplus and undivided profits
in excess of $100,000,000 which, in the case of (b), (c) and (d) above, mature prior to the date on
which such Quarterly Cash Distribution Amount or any Sales Proceeds Amount is to be distributed or
any such liability is to be paid. Any government obligation, repurchase agreement or certificate
of deposit held by the Trustee shall be held until maturity. The interest rate on reserves placed
with any bank or financial institution serving as the Trustee or the Delaware Trustee shall be the
interest rate that such bank pays in the normal course of business on amounts placed with it,
taking into account the amount involved, the period held and other relevant factors. Subject to
Section 6.01
, the Trustee shall not be liable for its selection of permitted investments or
for any investment losses resulting from such investments. Notwithstanding anything herein to the
contrary, the Delaware Trustee shall not be obligated to accept any such cash or other assets for
investment or otherwise. To the extent that the Delaware Trustee decides in its sole and absolute
discretion to accept cash for investment pursuant to this
Section 3.04
, the Delaware
Trustee shall invest such cash pursuant to the written instructions of the Trustee, and the
Delaware Trustee shall not be liable to the Trust for any losses resulting from such investments
absent its own fraud or acts or omissions in bad faith or which constitute gross negligence.
Section 3.05
Power to Settle Claims
. Subject to the rights and obligations of the Tax Matters
Partner under Subsection 6(c) of
Exhibit A
hereto, the Trustee is authorized to prosecute
or 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, to settle any dispute with ECA
or any other Person, and to pay or satisfy any debt, tax or claim upon any evidence by it deemed
sufficient, without the joinder or consent of any Trust Unitholder, including enforcing the rights
of the Trust under the Transaction Documents to which it is a party. The Trust Unitholders shall
have no power to prosecute any claim of the Trust or the Trust Estate against any Person other than
to prosecute a claim to compel performance by the Trustee on behalf of the Trust or the Trust
Estate.
Section 3.06
Power to Contract for Services
. In the administration of the Trust, the Trustee
is empowered to employ oil and natural gas consultants (which may include the Independent Reserve
Engineers), accountants (with the consent of ECA, which consent shall not be unreasonably withheld
or delayed), attorneys (who may, but need not be, counsel to ECA) and
15
other professional and expert Persons, to employ or contract for clerical and other
administrative assistance (including assistance from ECA), to delegate to Agents any matter,
whether ministerial or discretionary, and to act through such Agents and to make payments of all
fees for services or expenses in any manner thus incurred out of the Trust Estate.
Section 3.07
Payment of Liabilities of Trust
. Except as otherwise provided herein, the
Trustee may and shall use all money received by it for the payment or reimbursement of all
liabilities of the Trust, including but without limiting the generality of the foregoing, all
expenses, taxes, compensation to it for its services hereunder, as provided for in
Article
VII
, and compensation to such parties as may be employed as provided for in
Section
3.06
hereof. With respect to any liability that is contingent or uncertain in amount or that
otherwise is not currently due and payable, the Trustee may, but is not obligated to, establish a
cash reserve for the payment of such liability. Except to the extent permitted under applicable
law, the Trustee shall not pay any liability of the Trust with funds set aside pursuant to
Section 5.02
hereof for the payment of a Quarterly Cash Distribution Amount of Sales
Proceeds Amount. If at any time the cash on hand and to be received by the Trustee and available
to pay liabilities is not, or will not be, in the judgment of the Trustee, sufficient to pay
liabilities of the Trust as they become due, the Trustee is authorized to cause the Trust to borrow
the funds required to pay such liabilities. In such event, no further distributions will be made
to Trust Unitholders (except in respect of any previously determined Quarterly Cash Distribution
Amount or Sales Proceeds Amount) until the indebtedness created by such borrowings, including
interest thereon, has been paid in full. Such funds may be borrowed from any Person, including,
without limitation, the Bank while serving as Trustee or any other Entity serving as a fiduciary
hereunder, on an unsecured basis only;
provided
,
however
, that neither the Bank nor any other
Entity shall be required to make any such loan. Under no circumstances shall the Trustee or the
Delaware Trustee be personally liable for any indebtedness or other liability of the Trust. If
such funds are loaned to the Trust by the Trustee or any other such Entity while the Trustee or
such other Entity is serving as a fiduciary hereunder, the terms of such indebtedness shall be
similar to the terms which the Trustee or such other Entity would grant to a similarly situated
commercial customer with whom it did not have, directly or indirectly, a fiduciary relationship,
and the Trustee or such other Entity shall be entitled to enforce its rights with respect to any
such indebtedness as if it were not, directly or indirectly, and had never been, directly or
indirectly, the Trustee or a fiduciary hereunder. No provision of this Trust Agreement shall
require either the Delaware Trustee, the Trustee or any other Entity serving as a fiduciary
hereunder, to expend or risk its own funds or otherwise incur personal financial liability in the
performance of any of its duties hereunder or in the exercise of any of its rights or powers, if
there is reasonable ground for believing that the repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it. In any event, the Trustee and the
Delaware Trustee or any other Entity serving as fiduciary hereunder, shall be indemnified and held
harmless by ECA for any liability incurred in the performance of any of its duties hereunder. In
no event shall the Trustee be responsible for the payment of any Quarterly Cash Distribution Amount
or Sales Proceeds Amount or other amount except to the extent that it has sufficient cash on hand
on behalf of the Trust to make such payment.
Section 3.08
Income and Principal
. The Trustee shall not be required to keep separate
accounts or records for income and principal. However, if the Trustee does keep such separate
accounts or records, then the Trustee is authorized to treat all or any part of the receipts from
the Royalty Interests or the Hedge Agreements as income or principal, without having to maintain
16
any reserve therefor, and in general to determine all questions as between income and
principal and to credit or charge to income or principal or to apportion between them any receipt
or gain and any charge, disbursement or loss as is deemed advisable under the circumstances of each
case.
Section 3.09
Term of Contracts
. In exercising the rights and powers granted hereunder, the
Trustee is authorized to make the term of any transaction or contract or other instrument extend
beyond the term of the Trust.
Section 3.10
Transactions with Entity Serving as the Trustee or the Delaware Trustee
. To the
extent such conduct is not prohibited by applicable law and except as otherwise provided herein,
each of the Trustee and the Delaware Trustee is authorized in exercising its powers under this
Agreement to make contracts and have dealings with itself or its Affiliates, directly and
indirectly, in any other fiduciary or individual capacity.
Section 3.11
No Security Required
. No Entity serving as a trustee hereunder shall be required
to furnish any bond or security of any kind.
Section 3.12
Filing of Securities Act Registration Statement, Exchange Act Registration
Statement and Other Reports, Listing of Trust Units, etc.; Certain
Fees and Expenses
.
(a) The Trustee, on behalf of the Trust and acting upon the advice of counsel, shall cause the
Trust to comply with all applicable rules, orders and regulations of the Commission and the
national securities exchange on which the Common Units are listed or admitted for quotation and to
take all such other actions necessary for the Common Units to remain registered under the Exchange
Act and listed on such national securities exchange until the Trust is terminated. In addition,
the Trustee is authorized to make, and the Trustee shall take, all actions to prepare and, to the
extent required by this Agreement or by law, mail to Trust Unitholders any reports, press releases
or statements, financial or otherwise, that the Trustee determines are required to be provided to
Trust Unitholders by applicable law or governmental regulation or the requirements of any
securities exchange or quotation system on which the Trust Units are listed or admitted to trading.
In addition, the Trustee, on behalf of the Trust and acting upon the advice of counsel, shall
cause the Trust to comply with all of the provisions of the Sarbanes-Oxley Act and the rules and
regulations of the Commission related thereto, including but not limited to, establishing,
evaluating and maintaining a system of internal control over financial reporting in compliance with
the requirements of Section 404 thereof and making all required certifications pursuant to the
Sarbanes-Oxley Act and the rules and regulations adopted by the Commission related thereto.
(b) The Trustee shall execute, by and on behalf of the Trust, any documents incidental or
related to the objectives specified in
Section 3.12(a)
.
(c) The Trust is hereby authorized and empowered to take all steps, make all filings and
applications and pay all fees necessary, customary or appropriate to the accomplishment of the
objectives set forth in
Section 3.12(a)
.
(d) Except as otherwise provided in
Article VI
of this Agreement, the fees, charges,
expenses, disbursements and other costs incurred by the Trustee or the Delaware Trustee in
17
connection with the discharge of its duties pursuant to this Agreement, including, without
limitation, trustee fees, engineering, audit, accounting and legal fees, printing and mailing
costs, amounts reimbursed or paid to ECA pursuant to
Section 3.06
or
Section 7.02
hereof, and the fees and expenses of legal counsel for the Trustee, the Delaware Trustee, and the
Trust (including legal fees and expenses incurred by the Trustee or the Delaware Trustee in
connection with the formation of the Trust and issuance of Trust Units), shall be paid out of the
Trust Estate as an administrative expense of the Trust;
provided, however
, that the Trustees and
the Delaware Trustees acceptance fees paid by ECA upon execution hereof shall be reimbursed to
ECA. All other organizational expenses of the Trust will be paid by ECA, and ECA shall not be
entitled to reimbursement thereof.
Section 3.13
Reserve Report
. The Trustee shall cause a reserve report to be prepared by or
for the Trust by the Independent Reserve Engineers as of December 31 of each year in accordance
with criteria established by the Commission showing estimated proved natural gas reserves
attributable to the Royalty Interests as of December 31 of such year and other reserve information
required to comply with
Section 5.03
of this Agreement. ECA, to the extent it is the
operator of the Underlying Properties, shall use commercially reasonable efforts to cooperate with
the Trust and the Independent Reserve Engineers in connection with the preparation of any such
reserve report, and to the extent it is not operator of the Underlying Properties and has not sold
its interest in the same pursuant to
Section 3.02(d)
, shall use commercially reasonable
efforts to obtain and provide to the Trustee and the Independent Reserve Engineers such information
as may be reasonably necessary in connection with the preparation of the reserve report. The
Trustee shall cause each reserve report prepared pursuant to this
Section 3.13
to be
completed and delivered to it within 60 days of the last day of the prior calendar year or such
shorter period as may be required to enable the Trustee to comply with the provisions of
Section 5.03
.
Section 3.14
No Liability for Recordation
. ECA shall be solely responsible, and the Trustee
and the Delaware Trustee shall have no responsibility, for the filing of the Conveyances, the
Drilling Support Lien and the Royalty Interest Lien in the real property records of any
jurisdiction in which the Underlying Properties are located. Neither the Trustee, the Delaware
Trustee, the Bank nor any of their respective Agents shall be liable to the Trust Estate or any
Trust Unitholder for any loss, claim or damage resulting from, or arising out of, the failure to
file, or failure to properly file, the Conveyances, the Drilling Support Lien and The Royalty
Interest Lien in any real property records of any jurisdiction.
Section 3.15
Quarterly Cash Distributions
.
(a) all payments of Quarterly Cash Distribution Amounts, regardless of the source or character
of the assets to be distributed, shall be made in the following order of priority:
(i) During the Subordination Period:
(A) First, 100% to the Common Unitholders on a pro rata basis with respect to
each Common Unit until there has been distributed with respect to each
Common Unit for such quarterly period an amount equal to the Subordination
Threshold for such Quarterly Period as set forth on
Annex A
hereto;
18
(B) Second, 100% to the Subordinated Unitholders on a pro rata basis with
respect to each Subordinated Unit until there has been distributed with respect to
each Subordinated Unit for such quarterly period an amount equal to the
Subordination Threshold for such Quarterly Period set forth on
Annex A
hereto;
(C) Third, 100% to the Trust Unitholders on a pro rata basis with respect to
each Trust Unit until aggregate per Unit distributions to holders of Trust Units for
such Quarterly Period equal the Incentive Threshold for such Quarterly Period;
(D) Fourth, (x) 50% to ECA in respect of its right to receive Incentive
Distributions and (y) 50% to ECA until ECA has received aggregate distributions
pursuant to this Section 3.15(a)(i)(D)(y) of $4,957,920 (representing ECAs costs in
establishing the Floor Agreements), plus compound interest on the unreimbursed
amount accrued from April 8, 2010 at 10% per annum (such aggregate amount described
in this clause (y) the
Reimbursement Amount
); and
(E) Thereafter, (x) 50% to ECA in respect of its right to receive Incentive
Distributions and (y) 50% to the Trust Unitholders on a pro rata basis with respect
to each Trust Unit.
(ii) After the Subordination Period, 100% to the holders of Common Units (including
Subordinated Units converted to Common Units) on a pro rata basis with respect to each
Common Unit.
(b) At the expiration of the Subordination Period, all Subordinated Units shall automatically
convert to Common Units on a one-for-one basis.
(c) All Sales Proceeds Amounts shall be distributed 100% to the holders of Trust Units on a
pro rata basis on the Quarterly Payment Date following the Quarterly Period in which such sale
occurred.
(d) All distributions made under this
Section 3.15
to Trust Unitholders shall be made
to the holders of record of the applicable Trust Units on the Quarterly Record Date and ECA, as
applicable.
Section 3.16
Entity-Level Taxation
. If legislation is enacted or the official interpretation
of existing legislation is modified by a governmental authority, which after giving effect to such
enactment or modification, results in the Trusts becoming subject to U.S. federal, state or local
or non-U.S. income or withholding taxes in excess of the amount of such taxes due from the Trust
prior to such enactment or modification (including, for the avoidance of doubt, any increase in the
rate of such taxation applicable to the Trust), then the Trustee may, in its sole discretion,
reduce the Target Distribution by the amount of such income or withholding taxes
that are payable by reason of any such new legislation or interpretation (the
Incremental
Income Tax
), or any portion thereof selected by the Trustee, in the manner provided in this
Section 3.16
. If the Trustee elects to reduce the Target Distribution for any Quarterly
Period
19
with respect to all or a portion of the Incremental Income Taxes, the Trustee shall estimate
for such Quarterly Period the Trusts liability (the
Estimated Incremental Quarterly Tax
Amount
) for all (or the relevant portion of) such Incremental Income Taxes; provided that any
difference between such estimate and the actual liability for Incremental Income Taxes (or the
relevant portion thereof) for such Quarterly Period may, to the extent determined by the Trustee,
be taken into account in determining the Estimated Incremental Quarterly Tax Amount with respect to
each Quarterly Period in which any such difference can be determined. For each such Quarterly
Period, the Target Distribution shall be the product obtained by multiplying (a) the amount
therefor that is set out herein prior to the application of this
Section 3.16
times (b) the
quotient obtained by dividing (i) cash and cash equivalents available for distribution with respect
to such Quarterly Period by (ii) the sum of cash and cash equivalents available for distribution
with respect to such Quarterly Period and the Estimated Incremental Quarterly Tax Amount for such
Quarterly Period, as determined by the Trustee. For purposes of the foregoing, cash and cash
equivalents available for distribution with respect to a Quarterly Period will be deemed reduced by
the Estimated Incremental Quarterly Tax Amount for that Quarterly Period. After reducing the
Target Distribution in accordance with this
Section 3.16
, the Subordination Threshold shall
be adjusted to 80% of the reduced Target Distribution and the Incentive Threshold shall be adjusted
to 120% of the reduced Target Distribution.
ARTICLE IV
TRUST UNITS AND UNCERTIFICATED BENEFICIAL INTEREST
Section 4.01
Creation and Distribution
. Ownership of the entire Beneficial Interest shall be
divided into 17,605,000 Trust Units, of which 13,203,750 shall be Common Units and 4,401,250 shall
be Subordinated Units. The Trust Units shall be uncertificated and ownership thereof evidenced by
entry of a notation in an ownership ledger maintained for such purpose by the Trustee or a transfer
agent designated by the Trustee. The holders of the Trust Units from time to time shall be the
sole beneficiaries of principal and interest of the Trust.
Section 4.02
Rights of Trust Unitholders; Limitation on Personal Liability of Trust
Unitholders
. Each Trust Unit shall represent pro rata undivided ownership of the Beneficial
Interest and shall entitle its holder to participate pro rata, subject to the distinctions between
Subordinated Units and Common Units provided in
Section 3.15
hereof, in the rights and
benefits of Trust Unitholders under this Agreement. A Trust Unitholder (whether by assignment or
otherwise) shall take and hold each Trust Unit subject to all the terms and provisions of the
Transaction Documents which shall be binding upon and inure to the benefit of the successors,
assigns, legatees, heirs and personal representatives of such Trust Unitholder. By an assignment
or a transfer of one or more Trust Units, the assignor thereby shall, with respect to such assigned
or transferred Trust Unit or Trust Units, part with, except as required by federal or state tax
laws and as provided in
Section 4.03
hereof in the case of a transfer after a Quarterly
Record Date and prior to the corresponding Quarterly Payment Date, (a) all of its Beneficial
Interest attributable to such Trust Unit or Trust Units and (b) all interests, rights and benefits
of a Trust Unitholder under the Trust and this Agreement that are attributable to such Trust Unit
or Trust Units as against all other Trust Unitholders, the Trust and the Trustee, including,
without limiting the
generality of the foregoing, any and all rights to receive cash distributions pursuant to
Section 3.15
with respect to the Trust Units so assigned or transferred, for any Quarterly
Period or Quarterly Periods subsequent to the Quarterly Period which relates to the last Quarterly
Record
20
Date on which the assignor owned such Trust Units. The Trust Units and the rights, benefits
and interests evidenced thereby (including, without limiting the foregoing, the entire Beneficial
Interest) are and, for all purposes, shall be construed, to be in all respects intangible personal
property, and the Trust Units shall be bequeathed, assigned, disposed of and distributed as
intangible personal property. No Trust Unitholder as such shall have any title, legal or
equitable, in or to any real property interest or tangible personal property interest that may be
considered a part of the Trust Estate, including, without limiting the foregoing, the Royalty
Interests or any part thereof, or in or to any asset of the Trust Estate to the extent that an
interest in such asset would cause the interest of a Trust Unitholder to be treated as other than
an intangible personal property interest, but the sole interest of each Trust Unitholder shall be
his ownership in the Beneficial Interest. No Trust Unitholder shall have the right to call for or
demand or secure any partition or distribution of the Royalty Interests or any other asset of the
Trust Estate or any accounting during the continuance of the Trust or during the period of
liquidation and winding up under
Section 9.03
of this Agreement. Pursuant to Section
3803(a) of the Trust Act, the Trust Unitholders shall be entitled, to the fullest extent permitted
by law, to the same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State of Delaware.
Section 4.03
Effect of Transfer
. As to matters affecting the title, ownership, warranty or
transfer of Trust Units, 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 is adopted and then in force in the State of Delaware, shall govern
and apply. The death of any Trust Unitholder shall not entitle the Transferee of such Trust
Unitholder to an accounting or valuation for any purpose pursuant to the terms hereof.
Section 4.04
Determination of Ownership
. In the event of any disagreement between Persons
claiming to be Transferees of any Trust Unit, or in the event of any question on the part of the
Trustee when presented with a request for transfer of a Trust Unit, which the Trustee believes is
not fully resolved by opinions of counsel or other documents obtained in connection therewith,
then, in addition to other rights which it may have under applicable law, the Trustee shall be
entitled at its option to refuse to recognize any such claim so long as such disagreement or
question shall continue. In so refusing, the Trustee, and any Entity serving in such capacity, may
elect to refrain or refuse to act with respect to the interest represented by the Trust Unit
involved, or any part thereof, or of any sum or sums of money accrued or accruing thereunder, and,
in so doing, the Trustee shall not be or become liable to any Person for the failure or refusal of
the Trustee to comply with such conflicting claims or requests for transfer, and shall be entitled
to continue so to refrain and refuse so to act, until:
(a) the rights of the adverse claimants or the questions of the Trustee have been adjudicated
by a final nonappealable judgment of a court assuming and having jurisdiction of the parties and
the interest and money involved or
(b) all differences have been adjusted by valid agreement between said parties and the
Trustee shall have been notified thereof in writing signed by all of the interested parties.
21
ARTICLE V
ACCOUNTING AND DISTRIBUTIONS; REPORTS
Section 5.01
Fiscal Year and Accounting Method
. The Trust shall adopt the calendar year as
its fiscal year and shall maintain its books on an appropriate basis to comply with
Sections
5.03
and
5.04
, except to the extent such books must be maintained on any other basis
pursuant to applicable law or pursuant to
Exhibit A
.
Section 5.02
Quarterly Cash Distribution Amount
. On (or, to the extent reasonably
practicable, prior to) the Quarterly Record Date, the Trustee shall, in the manner required by the
rules of any securities exchange or quotation system on which the Trust Units are listed or
admitted to trading, communicate to the Trust Unitholders the amount of the Quarterly Cash
Distribution Amount or any Sales Proceeds Amount for the relevant Quarterly Period.
Section 5.03
Reports to Trust Unitholders and Others
.
(a) Within 45 days following the end of each of the first three Quarterly Periods of each
calendar year or such shorter period of time as may be required by the rules and regulations of the
Commission adopted with respect to the Exchange Act or by the rules of any securities exchange or
quotation system on which the Trust Units are listed or admitted to trading, the Trustee shall mail
to each Person who was a Trust Unitholder of record on the Quarterly Record Date for such Quarterly
Period a report, which may be a copy of the Trusts Quarterly Report on Form 10-Q under the
Exchange Act, which shall show in reasonable detail the assets and liabilities and receipts and
disbursements of the Trust for such Quarterly Period;
provided, however,
the obligation to mail a
report to each Trust Unitholder of record shall be deemed to be satisfied if the Trustee files a
copy of the Trusts quarterly report on Form 10-Q on the Electronic Data Gathering, Analysis, and
Retrieval system (EDGAR) maintained by the Commission or any successor system or otherwise makes
such report publicly available on an Internet website that is generally accessible to the public.
Within 90 days following the end of each fiscal year or such shorter period of time as may be
required by the rules and regulations of the Commission adopted with respect to the Exchange Act or
by the rules of any securities exchange or quotation system on which the Trust Units are listed or
admitted to trading, the Trustee shall mail to each Person who was a Trust Unitholder of record on
a date to be selected by the Trustee an annual report, containing financial statements audited by a
independent registered public accounting firm selected by the Trustee, plus such annual reserve
information regarding the Royalty Interests as may be required by any regulatory authority having
jurisdiction.
(b) Notwithstanding any time limit imposed by
Section 5.03(a)
, if, due to a delay in
receipt by the Trustee of information necessary for preparation of a report or reports required by
such paragraphs, the Trustee shall be unable to prepare and mail such report or reports within such
time limit, the Trustee shall prepare and mail such report or reports as soon thereafter as
practicable.
Section 5.04
Reports from ECA to the Trustee
. Promptly at the end of each Quarterly Period
and following the completion of each fiscal year, ECA shall deliver to the Trustee a statement of
the computation of the proceeds for each Quarterly Period or fiscal year, as the case
22
may be, as well as an update on the number of development wells that have been drilled
pursuant to the Development Agreement and production information for such Quarterly Period.
Section 5.05
Federal Income Tax Provisions
. The provisions attached hereto as Exhibit A (the
Tax Provisions
) are intended to comply with federal income tax law governing the
allocation of such items of income, gain, loss and deduction of the Trust (in its status as a
partnership for tax purposes) and the maintenance of the capital accounts of the Trust Unitholders
and are incorporated herein by reference. Any conflict between the provisions of this Agreement
and the Tax Provisions shall be governed by the Tax Provisions.
ARTICLE VI
LIABILITY OF DELAWARE TRUSTEE AND TRUSTEE AND
METHOD OF SUCCESSION
Section 6.01
Liability of Delaware Trustee, Trustee and Agents
.
(a) Notwithstanding any other provision of this Agreement, each of the Delaware Trustee and
the Trustee, in carrying out its powers and performing its duties, may act directly or in its
discretion, at the expense of the Trust, through Agents pursuant to agreements entered into with
any of them, and each Entity serving as Delaware Trustee or Trustee shall be personally or
individually liable only for (i) its own fraud or acts or omissions in bad faith or which
constitute gross negligence and (ii) taxes, fees or other charges on, based on or measured by any
fees, commissions or compensation received by it in connection with any of the transactions
contemplated by this Agreement, and shall not otherwise be individually or personally liable under
any circumstances whatsoever, including but not limited to any act or omission of any Agent unless
such Entity has acted with fraud or in bad faith or with gross negligence in the selection,
retention or supervision of such Agent. Notwithstanding any other provision of this Agreement,
each Agent of the Delaware Trustee and the Trustee (including ECA and any of the Affiliates when
acting as Agents), in carrying out its powers and performing its duties, may act directly or in its
discretion, at the expense of the Trust, through agents or attorneys engaged by such Agent, and
shall not otherwise be individually or personally liable for any act or omission unless such Agent
has acted with fraud or in bad faith or with gross negligence. Neither the Trustee nor the
Delaware Trustee shall have any liability to any Persons other than the Trust Unitholders in
accordance with Section 3803 of the Trust Act and, for the avoidance of any doubt, shall not have
any liability hereunder to the Trust Unitholders absent its own fraud or acts or omissions in bad
faith or which constitute gross negligence. No Entity serving as Trustee or Delaware Trustee shall
be individually liable by reason of any act or omission of any other Entity serving as Trustee or
Delaware Trustee.
(b) Each of the Delaware Trustee and the Trustee, and each Entity serving in any such
fiduciary capacity or as an Agent of the Delaware Trustee or the Trustee (including ECA and any of
its Affiliates when acting as Agents), shall be protected in relying or reasonably acting upon any
notice, certificate, assignment, opinion or advice of counsel or tax advisors, report of certified
accountant, petroleum engineer, geologist, auditor or other expert, credential, or any other
document or instrument. Each of the Delaware Trustee and the Trustee, and each Entity serving in
any such fiduciary capacity or as an Agent of the Delaware Trustee or the Trustee (including ECA
and any of its Affiliates when acting as Agents), is specifically
23
authorized to rely upon the application of Article 8 of the Uniform Commercial Code, the
application of the Uniform Act for Simplification of Fiduciary Security Transfers and the
application of other statutes and rules with respect to the transfer of securities, each as adopted
and then in force in the State of Delaware, as to all matters affecting title, ownership, warranty
or transfer of the Trust Units, without any personal liability for such reliance, and the indemnity
granted under
Section 6.02
of this Agreement shall specifically extend to any matters
arising as a result thereof. Further, and without limiting the foregoing, each of the Delaware
Trustee, the Trustee and each Entity serving in either such capacity is specifically authorized and
directed to rely upon the validity of each of the Conveyances and the title held by the Trust in
the Royalty Interests pursuant thereto and the validity of the Hedge Agreements, and is further
specifically authorized and directed to rely upon opinions of counsel in the Commonwealth of
Pennsylvania where the Underlying Properties are located, and on any notice, certificate or other
statement of ECA or information furnished by ECA without any liability in any capacity for such
reliance.
Section 6.02
Indemnification of Trustee or Delaware Trustee.
(a) Each Entity serving as the Trustee or the Delaware Trustee, as well as each of their
respective Agents (including ECA and any of its Affiliates when acting as Agents) and
equityholders, shall be indemnified and held harmless by, and receive reimbursement from, the Trust
Estate against and from any and all liabilities, obligations, actions, suits, costs, expenses,
claims, damages, losses, penalties, taxes, fees and other charges (collectively,
Expenses
, excluding, however, any taxes and fees payable by the Trustee and the Delaware
Trustee on, based on or measured by any fees, commissions or compensation received by the Trustee
and the Delaware Trustee for their services hereunder) incurred by it individually 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 Delaware
Trustee, as applicable, except such Expenses as to which it is liable under
Section 6.01
of
this Agreement (it being understood that each Entity serving as the Trustee or the Delaware Trustee
(and their respective Agents and (including ECA and any of its Affiliates when acting as Agents)
and equityholders) shall be indemnified by, and receive reimbursement from, the Trust Estate
against such Entitys own negligence which does not constitute gross negligence). Each Entity
serving as the Trustee or the Delaware Trustee shall have a lien upon the Trust Estate for payment
of such indemnification and reimbursement (including, without limitation, repayment of any funds
borrowed from any Entity serving as a fiduciary hereunder), as well as for compensation to be paid
to such Entity, in each case entitling such Entity to priority as to payment thereof over payment
to any other Person under this Agreement. Neither the Trustee, the Delaware Trustee nor any Entity
serving in either of such capacities, nor any Agent thereof shall be entitled to any reimbursement
or indemnification from any Trust Unitholder for any Expense incurred by the Delaware Trustee or
the Trustee or any such Entity or Agent thereof, their right of reimbursement and indemnification,
if any, except as provided in
Section 6.02(b
) below, being limited solely to the Trust
Estate, whether or not the Trust Estate is exhausted without full reimbursement or indemnification
of the Trustee, the Delaware Trustee or any such Entity or Agent thereof. All legal or other
expenses reasonably incurred by the Trustee or the Delaware Trustee in connection with the
investigation or defense of any Expenses as to which such Entity is entitled to indemnity under
this
Section 6.02(a)
shall be paid out of the Trust Estate.
24
(b) ECA shall indemnify and hold harmless each Entity serving as the Delaware Trustee or the
Trustee (but not the Trust Estate or Trust Unitholders), and any Agents and stockholders thereof,
individually and as trustee, against any Expenses to which such Entity or Agent thereof may become
subject as a result of its position and service as trustee under or with respect to any
Environmental Law, insofar as such Expenses arise out of, are based upon or connected with the
Underlying Properties, except for Expenses arising from any acts of such Entity or Agent (other
than ECA) not contemplated hereunder. The obligations of ECA hereunder may be assigned or
transferred to any Entity acquiring the Underlying Property to which each Expense relates;
provided
,
however
, such Entity unconditionally agrees in writing, reasonably satisfactory to the
Trustee and the Delaware Trustee, to assume ECAs obligations under this
Section 6.02(b)
.
(c) If any action or proceeding shall be brought or asserted against the Trustee or the
Delaware Trustee or any Agent or equityholder thereof (each referred to as an
Indemnified
Party
and, collectively, the
Indemnified Parties
) in respect of which indemnity may
be sought from ECA (the
Indemnifying Party
) pursuant to
Section 6.02(b)
hereof,
of which the Indemnified Party shall have received notice, the Indemnified Party shall promptly
notify the Indemnifying Party in writing, and the Indemnifying Party shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all expenses. The Indemnified Party shall have the right to employ separate counsel
in any such action and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the Indemnified Party unless (i) the Indemnifying Party has
agreed to pay such fees and expenses, (ii) the Indemnifying Party shall have failed to assume the
defense of such action or proceeding and employ counsel reasonably satisfactory (including the
qualifications of such counsel) to the Indemnified Party in respect of any such action or
proceeding or (iii) the named parties to any such action or proceeding include both the Indemnified
Party and the Indemnifying Party, and the Indemnified Party shall have been advised by counsel that
there may be one or more legal defenses available to such Indemnified Party that are different from
or additional to those available to the Indemnifying Party (in which case, if the Indemnified Party
notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense
of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense of
such action or proceeding on behalf of the Indemnified Party and the Indemnified Party may employ
such counsel for the defense of such action or proceeding as is reasonably satisfactory to the
Indemnifying Party; it being understood, however, that the Indemnifying Party shall not, in
connection with any one such action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate firm of attorneys for
the Indemnified Parties at any time). The Indemnifying Party shall not be liable for any
settlement of any such action or proceeding effected without the written consent of the
Indemnifying Party (which consent shall not be unreasonably withheld, conditional or delayed),
but, if settled with such written consent, or if there be a final judgment for the plaintiff in any
such action or proceeding, the Indemnifying Party agrees (to the extent stated above) to indemnify
and hold harmless the Indemnified Party from and against any loss or liability by reason of such
settlement or judgment.
(d) Any claim for indemnification pursuant to this
Section 6.02
shall survive the
termination of this Agreement and the resignation or removal of any Indemnified Party.
25
(e) Except as expressly set forth in this Agreement, none of the Trustee, the Delaware Trustee
or any other Indemnified Party shall have any duties or liabilities, including fiduciary duties, to
the Trust or any Trust Unitholder, and the provisions of this Agreement, to the extent they
restrict, eliminate or otherwise modify the duties and liabilities, including fiduciary duties, of
any Indemnified Party otherwise existing at law or in equity, are agreed by the Trust Unitholders
to replace such other duties and liabilities of such Indemnified Party. To the extent that, at law
or in equity, an Indemnified Party has duties, including fiduciary duties, and liabilities relating
thereto to the Trust or any Trust Unitholder, any Indemnified Party acting in connection with the
Trusts business or affairs shall not be liable to the Trust or to any Trust Unitholder for its
good faith reliance on the provisions of this Agreement.
Section 6.03
Resignation of Delaware Trustee and Trustee
. Any Entity serving as the Delaware
Trustee or the Trustee may resign, as such, with or without cause, at any time by written notice to
ECA, to any other Entity serving as the Delaware Trustee or the Trustee. Upon receiving the notice
of resignation from the Delaware Trustee or the Trustee, as applicable, ECA shall provide notice to
each of the then Trust Unitholders of record in accordance with
Section 12.08
of this
Agreement. Such notice shall specify a date when such resignation shall take effect, which shall
be a Business Day not less than 60 days after the date such notice is mailed;
provided
,
however
,
that in no event shall any resignation of the Trustee be effective until a successor Trustee
(including a temporary trustee appointed pursuant to
Section 6.05
of this Agreement) has
accepted its appointment as Trustee pursuant to the terms hereof; and
provided, further,
that in no
event shall any resignation of the Delaware Trustee be effective until a successor Delaware Trustee
has accepted its appointment as Delaware Trustee pursuant to the terms hereof.
Section 6.04
Removal of Delaware Trustee and Trustee
. Each Entity serving as the Delaware
Trustee or the Trustee may be removed as trustee hereunder, with or without cause, by the vote of
not less than a majority of the then outstanding Trust Units at a meeting held in accordance with
the requirements of
Article VIII
;
provided
,
however
, that any removal of the Delaware
Trustee shall be effective only at such time as a successor Delaware Trustee, fulfilling the
requirements of Section 3807(a) of the Trust Act, has been appointed and has accepted such
appointment; and
provided
,
further
, that any removal of the Trustee shall be effective only at such
time as a successor Trustee has been appointed and has accepted such appointment in accordance with
Section 6.05
.
Section 6.05
Appointment of Successor Delaware Trustee or Trustee
. In the event of the
resignation or removal of the Entity serving as the Delaware Trustee or the Trustee or if any such
Entity has given notice of its intention to resign as the Delaware Trustee or the Trustee, (i) with
respect to the Delaware Trustee, the Trustee may appoint a successor Delaware Trustee, or (ii) with
respect to either the Delaware Trustee or the Trustee, the Trust Unitholders represented at a
meeting held in accordance with the requirements of
Article VIII
may appoint a successor
trustee. Nominees for appointment may be made by (i) ECA, (ii) the resigned, resigning or removed
trustee or (iii) any Trust Unitholder or Trust Unitholders owning of record at least 10% of the
then outstanding Trust Units. Any successor to the Trustee shall be a bank or trust company having
combined capital, surplus and undivided profits of at least $100,000,000. Any successor to the
Delaware Trustee shall be a bank or trust company having its principal place of business in the
State of Delaware and having combined capital, surplus and undivided profits of
26
at least $20,000,000. Notwithstanding any provision herein to the contrary, in the event that
a new trustee has not been approved within 60 days after a notice of resignation, a vote of Trust
Unitholders removing a Trustee or other occurrence of a vacancy, a successor trustee may be
appointed by any State or Federal District Court having jurisdiction in New Castle County,
Delaware, upon the application of any Trust Unitholder, ECA or the Entity tendering its resignation
or being removed as trustee filed with such court, and in the event any such application is filed,
such court may appoint a temporary trustee at any time after such application is filed, which
shall, pending the final appointment of a trustee, have such powers and duties as the court
appointing such temporary trustee shall provide in its order of appointment, consistent with the
provisions of this Agreement. Any such temporary trustee need not meet the minimum standards of
capital, surplus and undivided profits otherwise required of a successor trustee under this
Section 6.05
. Nothing herein shall prevent the same Entity from serving as both the
Delaware Trustee and the Trustee if it meets the qualifications thereof.
Immediately upon the appointment of any successor trustee, all rights, titles, duties, powers
and authority of the predecessor trustee hereunder (except to the predecessor trustees rights to
amounts payable under
Article VII
or
Section 6.02
hereof accruing through the
appointment of such successor trustee) shall be vested in and undertaken by the successor trustee,
which shall be entitled to receive from the predecessor trustee all of the Trust Estate held by it
hereunder and all records and files of the predecessor trustee in connection therewith. Any
resigning or removed trustee shall account to its successor for its administration of the Trust.
All successor trustees shall be fully protected in relying upon such accounting and no successor
trustee shall be obligated to examine or seek alteration of any account of any preceding trustee,
nor shall any successor trustee be personally liable for failing 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 account.
Section 6.06
Laws of Other Jurisdictions
. If notwithstanding the other provisions of this
Agreement (including, without limitation,
Section 12.06
hereof) the laws of jurisdictions
other than the State of Delaware (each being referred to below as such jurisdiction) apply to the
administration of the Trust or the Trust Estate under this Agreement, the following provisions
shall apply. If it is necessary or advisable for a trustee to serve in such jurisdiction and if
the Trustee is disqualified from serving in such jurisdiction or for any other reason fails or
ceases to serve there, the ancillary trustee in such jurisdiction shall be such Entity, which need
not meet the requirements set forth in the third sentence of
Section 6.05
of this
Agreement, as shall be designated in writing by ECA and the Trustee. To the extent permitted under
the laws of such jurisdiction, ECA and the Trustee may remove the trustee in such jurisdiction,
without cause and without necessity of court proceeding, and may or may not appoint a successor
trustee in such jurisdiction from time to time. The trustee serving in such jurisdiction shall, to
the extent not prohibited under the laws of such jurisdiction, appoint the Trustee to handle the
details of administration in such jurisdiction. The trustee in such jurisdiction shall have all
rights, powers, discretions, responsibilities and duties as are delegated in writing by the
Trustee, subject to such limitations and directions as shall be specified by the Trustee in the
instrument evidencing such appointment. Any trustee in such jurisdiction shall be responsible to
the Trustee for all assets with respect to which such trustee is empowered to act. To the extent
the provisions of this Agreement and Delaware law cannot be made applicable to the administration
in such jurisdiction, the rights, powers, duties and liabilities of the trustee in such
jurisdiction shall be the
27
same (or as near the same as permitted under the laws of such jurisdiction if applicable) as
if governed by Delaware law. In all events, the administration in such jurisdiction shall be as
free and independent of court control and supervision as permitted under the laws of such
jurisdiction. The fees and expenses of any ancillary trustee shall constitute an administrative
expense of the Trust payable from the Trust Estate. Whenever the term Trustee is applied in this
Agreement to the administration in such jurisdiction, it shall refer only to the trustee then
serving in such jurisdiction.
Section 6.07
Reliance on Experts
. The Trustee and the Delaware Trustee may, but shall not be
required to, consult with counsel (which may but need not be counsel to ECA), accountants, tax
advisors, geologists, engineers and other parties (including employees of the Trustee or Delaware
Trustee, as applicable) deemed by the Trustee or the Delaware Trustee to be qualified as experts on
the matters submitted to them, and, subject to
Section 6.01
but notwithstanding any other
provision of this Agreement, the opinion or advice of any such party on any matter submitted to it
by the Trustee or the Delaware Trustee shall be full and complete authorization and protection in
respect of any action taken, omitted or suffered by the Trustee or the Delaware Trustee hereunder
in good faith in reliance upon and in accordance with the opinion or advice of any such party.
Each of the Trustee and the Delaware Trustee is authorized to make payments of all reasonable fees
for services and expenses thus incurred out of the Trust Estate. Neither the Delaware Trustee nor
the Trustee shall incur any liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other document or paper
reasonably believed by it to be genuine and reasonably believed by it to be signed by the proper
party or parties. The Delaware Trustee and the Trustee may accept a certified copy of a resolution
of the board of directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in full force and
effect. As to any fact or matter the manner or ascertainment of which is not specifically
prescribed herein, the Delaware Trustee and the Trustee may for all purposes hereof rely on a
certificate, signed by the president or any vice president or by the treasurer or any assistant
treasurer and by the secretary or any assistant secretary of the relevant party (including without
limitation ECA), as to such fact or matter, and such certificate shall constitute full protection
and authorization to the Delaware Trustee and the Trustee for any action taken or omitted to be
taken by it in good faith in reliance thereon.
Section 6.08
Force Majeure
. The Trustee and the Delaware Trustee shall not incur any
liability to any Trust Unitholder if, by reason of any current or future law or regulation
thereunder of the federal government or any other governmental authority, or by reason of any act
of God, war or other circumstance beyond its control (whether or not similar to any of the
foregoing), the Trustee or the Delaware Trustee is prevented or forbidden from doing or performing
any act or thing required by the terms hereof to be done or performed; nor shall the Trustee or the
Delaware Trustee incur any liability to any Trust Unitholder by reason of any nonperformance or
delay caused as aforesaid in the performance of any act or thing required by the terms hereof to be
done or performed, or by reason of any exercise of, or failure to exercise, any discretion provided
for herein caused as aforesaid.
Section 6.09
Failure of Action by ECA
. In the event that ECA shall fail or is unable to take
any action as required under any provision of the Transaction Documents, the Trustee is empowered
(but shall not be required) to take such action.
28
Section 6.10
Action Upon Instructions
. Whenever the Delaware Trustee is unable to decide
between alternative courses of action permitted or required by the terms of this Agreement, or is
unsure as to the application, intent, interpretation or meaning of any provision of this Agreement,
the Delaware Trustee shall promptly give notice (in such form as shall be appropriate under the
circumstances) to the Trustee requesting instruction as to the course of action to be adopted, and,
to the extent the Delaware Trustee acts in good faith in accordance with any such instruction
received, the Delaware Trustee shall not be liable on account of such action to any Person. If the
Delaware Trustee shall not have received appropriate instructions within ten calendar days of
sending such notice to the Trustee (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may, but shall be under no
duty to, take or refrain from taking such action which is consistent, in its view, with this
Agreement, and the Delaware Trustee shall have no liability to any Person for any such action or
inaction.
Section 6.11
Management of Trust Estate
. The Delaware Trustee shall have no duty or
obligation to manage, control, prepare, file or maintain any report, license or registration, use,
sell, dispose of or otherwise deal with the Trust Estate, or otherwise to take or refrain from
taking any action under or in connection with this Agreement, or any other document or instrument,
except as expressly required hereby.
Section 6.12
Validity
. The Delaware Trustee shall not be responsible for or in respect of and
makes no representations as to the validity or sufficiency of any provision of this Agreement or
for the due execution hereof by the other parties hereto or for the form, character, genuineness,
sufficiency, value or validity of any of the Trust Estate, and the Delaware Trustee shall in no
event assume or incur any liability, duty or obligation to ECA, the Trustee or any Trust
Unitholder, other than as expressly provided for herein. The Delaware Trustee shall at no time
have any responsibility or liability for or with respect to the legality, validity and
enforceability of any of the Trust Units.
Section 6.13
Rights and Powers; Litigation
. The Delaware Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation or arbitration under this Agreement or otherwise or in relation to this
Agreement, at the request, order or direction of the Trustee, any Trust Unitholder or ECA unless
the Trustee, Trust Unitholder or ECA, as the case may be, has or have offered to the Delaware
Trustee security or indemnity reasonably satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Delaware Trustee therein or thereby. The Delaware Trustee
shall be under no obligation to appear in, prosecute or defend any action, or to take any other
action other than the giving of notices, which in its opinion may require it to incur any
out-of-pocket expense or any liability unless it shall be furnished with such security and
indemnity against such expense or liability as it may reasonably require. The right of the
Delaware Trustee to perform any discretionary act enumerated in this Agreement shall not be
construed as a duty, and the Delaware Trustee shall not be personally liable or accountable for the
performance of any such act except as specifically provided in
Section 6.01
.
Section 6.14
No Duty to Act Under Certain Circumstances
. Notwithstanding anything contained
herein to the contrary, the Delaware Trustee will not be required to take any action in any
jurisdiction other than in the State of Delaware if the taking of such action would (i) require
29
the consent of approval or authorization or order of or the giving of notice to, or the
registration with or taking of any action in respect of, any state or other governmental authority
or agency of any jurisdiction other than in the State of Delaware, (ii) result in any fee, tax or
governmental charge under the laws of any jurisdiction or any political subdivisions thereof other
than the State of Delaware becoming payable by the Delaware Trustee or (iii) subject the Delaware
Trustee to personal jurisdiction in any jurisdiction other than the State of Delaware for causes of
action arising from acts unrelated to the consummation of the transactions by the Delaware Trustee
contemplated hereby.
ARTICLE VII
COMPENSATION OF THE TRUSTEE AND THE DELAWARE TRUSTEE
Section 7.01
Compensation of Trustee and Delaware Trustee
. The Entity serving as the Trustee
hereunder shall receive compensation for its services as the Trustee as set forth on
Schedule
A
. The Entity serving as the Delaware Trustee hereunder shall receive an annual fee of $2,400
as compensation for its services as the Delaware Trustee hereunder. Entities serving as the
Trustee or the Delaware Trustee hereunder shall be reimbursed for all actual expenditures made in
connection with administration of the Trust, including those made on account of any unusual duties
in connection with matters pertaining to the Trust and the reasonable compensation and expenses of
their counsel, accountants or other skilled persons and of all other persons not regularly in their
employ. Any unusual or extraordinary services rendered by the Entity serving as Trustee or by the
Entity serving as Delaware Trustee in connection with the administration of the Trust shall be
treated as trustee administrative services for purpose of computing the respective administrative
fee to be paid to each Entity serving as trustee hereunder.
Section 7.02
Reimbursement of ECA
. ECA shall be entitled to reimbursement from the Trust for
all out-of-pocket costs and expenses paid by ECA, acting in its capacity as Agent of the Trust
(including without limitation legal, accounting, engineering and printing costs) but excluding
those costs and expenses specified in
Section 3.12(c)
and in
Section 6.02(b)
of
this Agreement as costs and expenses to be paid by ECA and excluding any costs and expenses which
have been or will be reimbursed pursuant to the Administrative Services Agreement, promptly upon
submission of written evidence thereof to the Trustee.
Section 7.03
Source of Funds
. Except as provided in
Section 3.12
and
Section
6.02(b)
of this Agreement, all compensation, reimbursements, and other charges owing to any
Entity as a result of its services as a trustee hereunder shall constitute indebtedness hereunder,
shall be payable by the Trust out of the Trust Estate and such Entity shall have a lien on the
Trust Estate for payment of such compensation, reimbursements and other charges, entitling such
Entity to priority as to payment thereof over payment to any other Person under this Agreement.
Section 7.04
Ownership of Units by ECA, the Delaware Trustee and the Trustee
. Each of the
Delaware Trustee and, the Trustee, in its individual or other capacity, may become the owner or
pledgee of Trust Units with the same rights it would have if it were not a trustee hereunder. ECA
and the Private Investors are owners of Trust Units, and each of them and its Affiliates may become
the owner of additional Trust Units, with the same rights and entitled to
30
the same benefits as any other Trust Unitholder, except to the extent the Subordinated
Unitholders have different rights than Common Unitholders.
ARTICLE VIII
MEETINGS OF TRUST UNITHOLDERS
Section 8.01
Purpose of Meetings
. A meeting of the Trust Unitholders may be called at any
time and from time to time pursuant to the provisions of this
Article VIII
to transact any
matter that the Trust Unitholders may be authorized to transact.
Section 8.02
Call and Notice of Meetings
. Any such meeting of the Trust Unitholders may be
called by the Trustee or by Trust Unitholders owning of record not less than 10% in number of the
then outstanding Trust Units. The Trustee may, but shall not be obligated to, call meetings of
Trust Unitholders to consider amendments, waivers, consents and other changes relating to the
Transaction Documents to which the Trust is a party. In addition, at the written request of the
Delaware Trustee, unless the Trustee appoints a successor Delaware Trustee in accordance with
Section 6.05
, the Trustee shall call such a meeting but only for the purpose of appointing
a successor to the Delaware Trustee upon its resignation. All such meetings shall be held at such
time and at such place as the notice of any such meeting may designate. Except as may otherwise be
required by any applicable law or by the rules of any securities exchange or quotation system on
which the Trust Units may be listed or admitted to trading, written notice of every meeting of the
Trust Unitholders signed by the Trustee or the Trust Unitholders calling the meeting, setting forth
the time and place of the meeting and in general terms the matters proposed to be acted upon at
such meeting, shall be given in person or by mail not more than 60 nor less than 20 days before
such meeting is to be held to all of the Trust Unitholders of record at the close of business on a
record date selected by the Trustee (the
Record Date Trust Unitholders
), which shall be
not more than 60 days before the date of such mailing. If such notice is given to any Trust
Unitholder by mail, it shall be directed to such Trust Unitholder at its last address as shown by
the ownership ledger of the Trustee and shall be deemed duly given when so addressed and deposited
in the United States mail, postage paid. No matter other than that stated in the notice shall be
acted upon at any meeting unless such action is approved by the Trust Unitholders. Only Record
Date Trust Unitholders shall be entitled to notice of and to exercise rights at or in connection
with the meeting. All costs associated with calling any meeting of the Trust Unitholders shall be
borne by the Trust other than a meeting of the Trust Unitholders called by Trust Unitholders owning
of record not less than 10% in number of the then outstanding Trust Units, which costs shall be
borne by the Trust Unitholders that called such meeting of Trust Unitholders.
Section 8.03
Method of Voting and Vote Required
. Each Record Date Trust Unitholder shall be
entitled to one vote for each Trust Unit owned by such Record Date Trust Unitholder, and any Record
Date Trust Unitholder may vote in person or by duly executed written proxy. At any such meeting,
the presence in person or by proxy of Record Date Trust Unitholders holding a majority of the Trust
Units held by all Record Date Trust Unitholders shall constitute a quorum, and, except as otherwise
provided herein, any matter shall be deemed to have been approved by the Trust Unitholders
(including, but not limited to, appointment of a successor trustee) if it is approved by the vote
of Record Date Trust Unitholders holding more than 50% of the Trust Units represented at the
meeting.
31
Section 8.04
Conduct of Meetings
. The Trustee may make such reasonable regulations consistent
with the provisions hereof as it may deem advisable for any meeting of the Trust Unitholders, for
the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of the right to vote, the
preparation and use at the meeting of a list authenticated by or on behalf of the Trustee of the
Trust Unitholders entitled to vote at the meeting and such other matters concerning the conduct of
the meeting as it shall deem advisable.
ARTICLE IX
DURATION, REVOCATION AND TERMINATION OF TRUST
Section 9.01
Revocation
. The Trust is and shall be irrevocable, and ECA, as trustor, after
the Closing, retains no power to alter, amend (except as provided otherwise in this
Article IX
and in
Section 10.02
hereof), revoke or terminate the Trust. The Trust shall be
terminable only as provided in
Section 9.02
of this Agreement, and shall continue until so
terminated.
Section 9.02
Termination
. The Trust shall dissolve and commence winding-up its business and
affairs upon the first to occur of the following events or times:
(a) the disposition of all of the Royalty Interests and other assets (other than cash),
tangible or intangible, including accounts receivable and claims or rights to payment, constituting
the Trust Estate;
(b) an election by the Trustee to dissolve the Trust that is approved by the holders of a Unit
Majority at a meeting duly called and held in accordance with
Article VIII
;
(c) gross proceeds received by the Trust attributable to the Royalty Interests and the Hedge
Agreements (after deducting any amounts owed to ECA pursuant to the Swap Agreements) are less than
$1.5 million for any four consecutive quarters;
(d) the entry of a decree of judicial dissolution of the Trust pursuant to the provisions of
the Trust Act; and
(e) the Liquidation Date.
Section 9.03
Disposition and Distribution of Assets and Properties
. Notwithstanding the
dissolution of the Trust pursuant to
Section 9.02
, the Trustee and the Delaware Trustee
shall continue to act as trustees of the Trust Estate and as such shall exercise the powers granted
under this Agreement until their duties have been fully performed and the Trust Estate finally
distributed so that the affairs of the Trust have been wound up.
Upon the sale of all or a portion of the Trust Estate pursuant to
Section 3.02
of this
Agreement or the dissolution of the Trust pursuant to
Section 9.02
, the Trustee shall sell
for cash in one or more sales all of the properties other than cash then constituting the Trust
Estate after any reconveyance of assets to ECA pursuant to the Conveyances;
provided, however,
ECA
shall have a right of first refusal to acquire the subject properties being offered in each sale
pursuant to the following procedures:
32
(a) Within 30 days of the Liquidation Date, or after the date such sale pursuant to
Section 3.02
, is approved, as applicable, the Trustee shall use commercially reasonable
efforts to retain a third-party advisor to market the subject properties;
(b) If the Trustee receives a bid from a proposed purchaser other than ECA and desires to sell
all or part of the subject properties pursuant to this
Section 9.03
, then the Trustee shall
give notice (the
Offer Notice
) to ECA, identifying the proposed purchaser from whom it
has received a bona fide offer and setting forth the proposed sale price, payment terms and other
material terms under which the Trustee is proposing to sell such subject properties to the proposed
purchaser. ECA shall have 30 days from receipt of the Offer Notice to elect, by notice to the
Trustee, to purchase the subject properties offered for sale on the terms and conditions set forth
in the Offer Notice.
(c) If ECA makes such election, the notice of election shall state a closing date not later
than 60 days after the date of the Offer Notice. Furthermore, if ECA makes such election, the
proposed purchaser identified in the Offer Notice shall be entitled to receive reimbursement of its
reasonable and documented expenses incurred in connection with its review and analysis of the
subject properties and bid preparation. ECA shall pay the proposed purchaser 50 percent of such
reimbursement, and the Trust shall pay the proposed purchaser 50 percent of such reimbursement;
provided, however,
the amount of such reimbursement shall be limited to 5 percent of the sales
price received by the Trust for the subject properties.
(d) If ECA does not give notice within the 30-day period following the Offer Notice that it
elects to purchase such subject properties, the Trustee may, within 60 days after the end of such
30-day period, sell such subject properties to the identified purchaser on terms and conditions
that are substantially the same as those previously set forth in such Offer Notice. In the event
the Trustee shall desire to offer such subject properties for sale on terms and conditions other
than terms and conditions that are substantially the same as those previously set forth in an Offer
Notice, the procedures set forth in this
Section 9.03
must again be initiated and applied
with respect to the terms and conditions as modified.
(e) If, after a reasonable marketing period, no bid is received on any or all of the subject
properties from any party other than ECA, then ECA shall obtain, at
the Trusts expense, and deliver to the Trustee, a fairness opinion from a nationally-recognized valuation firm
with expertise in fairness opinions stating that the proposed sale price to be paid by ECA to the
Trust for the subject properties is fair to the Trust.
The Trustee shall not be required to obtain approval of the Trust Unitholders prior to
performing any of its duties pursuant to this
Section 9.03
. Notwithstanding anything
herein to the contrary, in no event may the Trustee distribute the Royalty Interests to the Trust
Unitholders. Upon completion of the dissolution and winding up of the Trust in accordance with
Sections 9.02
and
9.03
hereof and Section 3808 of the Trust Act, the Trustee shall
direct the Delaware Trustee to execute and file, and the Delaware Trustee shall execute and file or
cause to be filed, a certificate of cancelation of the Trusts Certificate of Trust in accordance
with Section 3811 of the Trust Act. Upon the filing of such certificate of cancellation, neither
the Trustee nor any Entity serving in such capacity shall have any further duty or obligation
hereunder, and
33
neither the Trustee nor the Entity serving in such capacity shall be under further liability
except as provided in
Section 6.01
.
Section 9.04 Reorganization or Business Combination.
(a) The Trust may merge or consolidate with or into one or more limited partnerships, general
partnerships, corporations, statutory trusts, common law trusts, limited liability companies, or
associations, or unincorporated businesses in accordance with Section 3815 of the Trust Act if such
transaction (i) is agreed to by the Trustee, (ii) is approved by the holders of a Unit Majority at
a meeting duly called and held in accordance with
Article VIII
, and (iii) is permitted
under the Trust Act and any other applicable law. The Trustee shall give prompt notice of such
reorganization or business combination to the Delaware Trustee. Pursuant to and in accordance with
the provisions of Section 3815(f) of the Trust Act, and notwithstanding anything else herein, an
agreement of merger or consolidation approved in accordance with this
Section 9.04
and
Section 3815(a) of the Trust Act may effect any amendment to this Agreement or effect the adoption
of a new trust agreement if it is the surviving or resulting trust in the merger or consolidation.
(b) Upon the effective date of a certificate of merger duly filed in accordance with the Trust
Act, the following shall be deemed to occur, in addition to such effects as may be specified under
the Trust Act as then in effect:
(i) all of the rights, privileges and powers of each of the business entities that have
merged or consolidated, and all property, real, personal and mixed, and all debts due to any
of those business entities and all other things and causes of action belonging to each of
those business entities shall be vested in the surviving business entity and, after the
merger or consolidation, shall be the property of the surviving business entity to the
extent they were part of each constituent business entity;
(ii) the title to any real property vested by deed or otherwise in any of those
constituent business entities shall not revert and shall not be in any way impaired because
of the merger or consolidation;
(iii) all rights of creditors and all liens on or security interest in property of any
of those constituent business entities shall be preserved unimpaired;
(iv) all debts, liabilities and duties of those constituent business entities shall
attach to the surviving or resulting business entity, and may be enforced against it to the
same extent as if the debts, liabilities and duties had been incurred or contacted by it;
and
(v) if the Trust is the surviving or resulting entity, the governing instrument of the
Trust shall be amended or a new governing instrument adopted as set forth in the certificate
of merger.
(c) A merger or consolidation effected pursuant to this
Section 9.04
shall not be
deemed to result in a transfer or assignment of assets or liabilities from one entity to another
having occurred.
34
ARTICLE X
AMENDMENTS
Section 10.01
Prohibited Amendments
. After the Closing, no amendment may be made to any
provision of this Agreement that would:
(a) increase the power of the Delaware Trustee or the Trustee to engage in business or
investment activities;
(b) alter the right of the Trust Unitholders vis-a-vis each other, decrease the Incentive
Threshold (except as provided in Section 3.16), increase the Subordination Threshold, or increase
the percentage of the Quarterly Cash Distribution Amount payable as Incentive Distributions or
increase the Reimbursement Amount; or
(c) unless consented to in writing by ECA, have the effect of amending
Sections 3.02
,
6.02
,
7.02
,
9.02
,
9.03
,
10.01
or
10.02
hereof.
Section 10.02
Permitted Amendments
. After the Closing, subject to
Section 10.01
, the
Trustee and the Delaware Trustee may amend the Transaction Documents to which the Trust is a party
as follows:
(a) The Delaware Trustee and the Trustee may, jointly, from time to time supplement or amend
the Transaction Documents to which the Trust is a party without the approval of Trust Unitholders
in order to cure any ambiguity, to correct or supplement any provision contained herein or therein
which may be defective or inconsistent with any other provisions herein or therein, to grant any
benefit to all of the Trust Unitholders, to add collateral to the Drilling Support Lien or the
Royalty Interest Lien or to change the name of the Trust;
provided
,
however
, that such supplement
or amendment does not adversely affect the interests of the Trust Unitholders; and
provided
,
further
, that any amendment to this Agreement made to change the name of the Trust in accordance
with
Section 12.04
hereof or otherwise shall be conclusively deemed not to affect adversely
the interests of the Trust Unitholders or result in a variance of the investment of the Trust or
the Trust Unitholders.
(b) Notwithstanding
Section 10.02(a)
, the Trustee may, from time to time supplement or
amend the Administrative Services Agreement without the approval of the Trust Unitholders;
provided, however
, that such supplement or amendment would not increase the costs or expenses of
the Trust or adversely affect the economic interests of Trust Unitholders.
(c) All other permitted amendments to the provisions of the Transaction Documents to which the
Trust is a party may be made only by a vote of the holders of a Unit Majority at a meeting held in
accordance with the requirements of
Article VIII
.
(d) No amendment that increases the obligations, duties or liabilities or affects the rights
of the Delaware Trustee, the Trustee or any Entity serving in any such capacity shall be effective
without the express written approval of such trustee or Entity.
35
ARTICLE XI
ARBITRATION
THE TRUST UNITHOLDERS, TRUSTEE AND ECA AGREE THAT, EXCEPT AS PROVIDED IN PARAGRAPH (I) OF THIS
ARTICLE XI
, ANY DISPUTE, CONTROVERSY OR CLAIM THAT MAY ARISE BETWEEN OR AMONG ECA (ON THE
ONE HAND) AND THE TRUST OR THE TRUSTEE (ON THE OTHER HAND) IN CONNECTION WITH OR OTHERWISE RELATING
TO THE TRANSACTION DOCUMENTS TO WHICH THE TRUST IS A PARTY, OR THE APPLICATION, IMPLEMENTATION,
VALIDITY OR BREACH OF THE TRANSACTION DOCUMENTS TO WHICH THE TRUST IS A PARTY OR ANY PROVISION OF
THE TRANSACTION DOCUMENTS TO WHICH THE TRUST IS A PARTY (INCLUDING, WITHOUT LIMITATION, CLAIMS
BASED ON CONTRACT, TORT OR STATUTE), SHALL BE FINALLY, CONCLUSIVELY AND EXCLUSIVELY SETTLED BY
BINDING ARBITRATION IN CHARLESTON, WEST VIRGINIA IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION
RULES (THE
RULES
) OF THE AMERICAN ARBITRATION ASSOCIATION OR ANY SUCCESSOR THERETO
(
AAA
) THEN IN EFFECT. THE TRUST UNITHOLDERS, THE TRUSTEE (ON BEHALF OF ITSELF AND ON
BEHALF OF THE TRUST) AND ECA HEREBY EXPRESSLY WAIVE THEIR RIGHT TO SEEK REMEDIES IN COURT,
INCLUDING, WITHOUT LIMITATION, THE RIGHT TO TRIAL BY JURY, WITH RESPECT TO ANY MATTER SUBJECT TO
ARBITRATION PURSUANT TO THIS
ARTICLE XI
. THE TRUST UNITHOLDERS, TRUSTEE AND ECA MAY BRING
AN ACTION, INCLUDING, WITHOUT LIMITATION, A SUMMARY OR EXPEDITED PROCEEDING, IN ANY COURT HAVING
JURISDICTION, TO COMPEL ARBITRATION OF ANY DISPUTE, CONTROVERSY OR CLAIM TO WHICH THIS
ARTICLE
XI
APPLIES. EXCEPT WITH RESPECT TO THE FOLLOWING PROVISIONS (THE
SPECIAL PROVISIONS
)
WHICH SHALL APPLY WITH RESPECT TO ANY ARBITRATION PURSUANT TO THIS
ARTICLE XI
, THE
INITIATION AND CONDUCT OF ARBITRATION SHALL BE AS SET FORTH IN THE RULES, WHICH RULES ARE
INCORPORATED IN THIS AGREEMENT BY REFERENCE WITH THE SAME EFFECT AS IF THEY WERE SET FORTH IN THIS
AGREEMENT.
(a) In the event of any inconsistency between the Rules and the Special Provisions, the
Special Provisions shall control. References in the Rules to a sole arbitrator shall be deemed to
refer to the tribunal of arbitrators provided for under subparagraph (c) below in this
Article
XI
.
(b) The arbitration shall be administered by AAA.
(c) The arbitration shall be conducted by a tribunal of three arbitrators. Within ten days
after arbitration is initiated pursuant to the Rules, the initiating party or parties (the
Claimant
) shall send written notice to the other party or parties (the
Respondent
), with a copy to the East Providence, Rhode Island office of AAA, designating
the first arbitrator (who shall not be a representative or agent of any party but may or may not be
an AAA panel member and, in any case, shall be reasonably believed by the Claimant to possess the
requisite experience, education and expertise in respect of the matters to which the claim relates
to enable such person to completely perform arbitral duties). Within ten days after receipt of
such notice, the Respondent shall send written notice to the Claimant, with a copy to the East
Providence, Rhode Island office of AAA and to the first arbitrator, designating the second
arbitrator (who
36
shall not be a representative or agent of any party, but may or may not be an AAA panel member
and, in any case, shall be reasonably believed by the Respondent to possess the requisite
experience, education and expertise in respect of the matters to which the claim relates to enable
such person to competently perform arbitral duties). Within ten days after such notice from the
Respondent is received by the Claimant, the Respondent and the Claimant shall cause their
respective designated arbitrators to select any mutually agreeable AAA panel member as the third
arbitrator. If the respective designated arbitrators of the Respondent and the Claimant cannot so
agree within said ten day period, then the third arbitrator will be determined pursuant to the
Rules. For purposes of this
Article XI
, ECA (on the one hand) and the Trust and the
Trustee (on the other hand) shall each be entitled to the selection of one arbitrator. Prior to
commencement of the arbitration proceeding, each arbitrator shall have provided the parties with a
resume outlining such arbitrators background and qualifications and shall certify that such
arbitrator is not a representative or agent of any of the parties. If any arbitrator shall die,
fail to act, resign, become disqualified or otherwise cease to act, then the arbitration proceeding
shall be delayed for 15 days and the party by or on behalf of whom such arbitrator was appointed
shall be entitled to appoint a substitute arbitrator (meeting the qualifications set forth in this
Article XI
) within such 15-day period;
provided
,
however
, that if the party by or on behalf
of whom such arbitrator was appointed shall fail to appoint a substitute arbitrator within such
15-day period, the substitute arbitrator shall be a neutral arbitrator appointed by the AAA
arbitrator within fifteen days thereafter.
(d) All arbitration hearings shall be commenced within 120 days after arbitration is initiated
pursuant to the Rules, unless, upon a showing of good cause by a party to the arbitration, the
tribunal of arbitrators permits the extension of the commencement of such hearing;
provided
,
however
, that any such extension shall not be longer than 60 days.
(e) All claims presented for arbitration shall be particularly identified and the parties to
the arbitration shall each prepare a statement of their position with recommended courses of
action. These statements of position and recommended courses of action shall be submitted to the
tribunal of arbitrators chosen as provided hereinabove for binding decision. The tribunal of
arbitrators shall not be empowered to make decisions beyond the scope of the position papers.
(f) The arbitration proceeding will be governed by the substantive laws of the State of
Delaware and will be conducted in accordance with such procedures as shall be fixed for such
purpose by the tribunal of arbitrators, except that (i) discovery in connection with any
arbitration proceeding shall be conducted in accordance with the Federal Rules of Civil Procedure
and applicable case law, (ii) the tribunal of arbitrators shall have the power to compel discovery
and (iii) unless the parties otherwise agree and except as may be provided in this
Article
XI
, the arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§ 1-16,
to the exclusion of any provision of state law or other applicable law or procedure inconsistent
therewith or which would produce a different result. The parties shall preserve their right to
assert and to avail themselves of the attorney-client and attorney-work-product privileges, and any
other privileges to which they may be entitled pursuant to applicable law. No party to the
arbitration or any arbitrator may compel or require mediation and/or settlement conferences without
the prior written consent of all such parties and the tribunal of arbitrators.
37
(g) The tribunal of arbitrators shall make an arbitration award as soon as possible after the
later of the close of evidence or the submission of final briefs, and in all cases the award shall
be made not later than thirty days following submission of the matter. The finding and decision of
a majority of the arbitrators shall be final and shall be binding upon the parties. Judgment upon
the arbitration award or decision may be entered in any court having jurisdiction thereof or
application may be made to any such court for a judicial acceptance of the award and an order of
enforcement, as the case may be. The tribunal of arbitrators shall have the authority to assess
liability for pre-award and post-award interest on the claims, attorneys fees, expert witness fees
and all other expenses of arbitration as such arbitrators shall deem appropriate based on the
outcome of the claims arbitrated. Unless otherwise agreed by the parties to the arbitration in
writing, the arbitration award shall include findings of fact and conclusions of law.
(h) Nothing in this
Article XI
shall be deemed to (i) limit the applicability of any
otherwise applicable statute of limitations or repose or any waivers contained in this Agreement,
(ii) constitute a waiver by any party hereto of the protections afforded by 12 U.S.C. § 91 or any
successor statute thereto or any substantially equivalent state law, (iii) restrict the right of
the Trustee to make application to any state or federal district court having jurisdiction in
Charleston, West Virginia, to appoint a successor Trustee or to request instructions with regard to
any provision in this Agreement when the Trustee is unsure of its obligations thereunder, or (iv)
apply to the Delaware Trustee.
(i) This
Article XI
shall preclude participation by the Trust in any class action
brought against ECA by any Person who is not a Trust Unitholder and the Trustee shall opt out of
any such class action in which the Trust is a purported class member, but shall not preclude
participation by the Trust in any such action brought by a Trust Unitholders or in which Trust
Unitholders holding more than 50% of the Trust Units represented at a duly called and held meeting
of the Trust Unitholders in accordance with
Section 8.02
request the Trustee to
participate.
ARTICLE XII
MISCELLANEOUS
Section 12.01
Inspection of Books
. Each Trust Unitholder and its duly authorized agents and
attorneys shall have the right, at its own expense and during reasonable business hours upon
reasonable prior notice, to examine and inspect the records (including, without limitation, the
ownership ledger) of the Trust and the Trustee in reference thereto for any purpose reasonably
related to the Trust Unitholders interest as a Trust Unitholder. The Trustee and its duly
authorized Agents shall have the right, at the expense of the Trust and during reasonable business
hours upon reasonable prior written notice, to examine and inspect the records of ECA relating to
the Royalty Interests and the Underlying Properties.
Section 12.02
Disability of a Trust Unitholder
. Any payment or distribution to a Trust
Unitholder may be made by check of the Trustee drawn to the order of the Trust Unitholder,
regardless of whether or not the Trust Unitholder is a minor or under other legal disability,
without the Trustee having further responsibility with respect to such payment or distribution.
This
Section 12.02
shall not be deemed to prevent the Trustee from making any payment or
distribution by any other method that is appropriate under law.
38
Section 12.03
Merger or Consolidation of Delaware Trustee or Trustee
. Neither a change of
name of either the Delaware Trustee or the Trustee, nor any merger or consolidation of its
corporate powers with another bank or with a trust company, nor the sale or transfer of all or
substantially all of its institutional and corporate trust operations to a separate bank, trust
company, corporation or other business entity shall adversely affect such resulting or successor
partys right or capacity to act hereunder;
provided
,
however
, that the Delaware Trustee or any
successor thereto shall maintain its principal place of business in the State of Delaware; and
provided
,
further
, that, in the case of any successor Trustee or Delaware Trustee, it shall
continue to meet the requirements of
Section 6.05
of this Agreement.
Section 12.04
Change in Trust Name
. Upon the written request by ECA submitted to the Trustee
and the Delaware Trustee, the Trustee shall, without the vote or consent of any Trust Unitholders,
take all action necessary to change the name of the Trust to a name mutually agreeable to the
Trustee and ECA and, upon effecting such name change, the Delaware Trustee, acting pursuant to the
written instructions of the Trustee, shall amend the Certificate of Trust on file in the office of
the Secretary of State of Delaware to reflect such name change.
Section 12.05
Filing of this Agreement
. There is no obligation on the part of the Trustee
that this Agreement or any executed copy hereof be filed in any county in which any of the Trust
Estate is located or elsewhere, but the same may be filed for record in any county by the Trustee.
In order to avoid the necessity of filing this Agreement for record, each of the Delaware Trustee
and the Trustee agrees that for the purpose of vesting the record title to the Trust Estate in any
successor trustee, the succeeded trustee shall, upon appointment of any successor trustee, execute
and deliver to such successor trustee appropriate assignments or conveyances.
Section 12.06
Choice of Law
. This Agreement and the Trust shall be governed by the laws of
the State of Delaware (without regard to the conflict of laws principles thereof) in effect at any
applicable time in all matters, including the validity, construction and administration of this
Agreement and the Trust, the enforceability of the provisions of this Agreement, all rights and
remedies hereunder, and the services of the Delaware Trustee and Trustee hereunder. Furthermore,
except as otherwise provided in this Agreement, the rights, powers, duties and liabilities of the
Delaware Trustee, the Trustee and the Trust Unitholders shall be as provided under the Trust Act
and other applicable laws of the State of Delaware and the United States of America in effect at
any applicable time;
provided
,
however
, that there shall not be applicable to the Trustee, the
Delaware Trustee, the Trust Unitholders, the Trust or this Agreement any provision of the laws
(common or statutory) of the State of Delaware pertaining to trusts that relate to or regulate, in
a manner inconsistent with the terms hereof, (i) the filing with any court or governmental body or
agency of trustee accounts or schedules of trustee fees and charges, (ii) affirmative requirements
to post bonds for trustees, officers, agents or employees of a trust, (iii) the necessity for
obtaining court or other governmental approval concerning the acquisition, holding or disposition
of real or personal property, (iv) fees or other sums payable to trustees, officers, agents or
employees of a trust, (v) the allocation of receipts and expenditures to income or principal, (vi)
restrictions or limitations on the permissible nature, amount or concentration of trust investments
or requirements relating to the titling, storage or other manner of holding or investing trust
assets or (vii) the establishment of fiduciary or other standards of responsibility or limitations
on the acts or powers of trustees that are inconsistent with the limitations or
39
authorities and powers of the trustees hereunder as set forth or referenced in this Agreement.
Section 3540 of Title 12 of the Delaware Code shall not apply to the Trust.
Section 12.07
Separability
. If any provision of this Agreement or the application thereof to
any Person or circumstances shall be finally determined by a court of proper jurisdiction to be
illegal, invalid or unenforceable to any extent, the remainder of this Agreement or the application
of such provision to Persons or circumstances other than those as to which it is held illegal,
invalid or unenforceable shall not be affected thereby, and every remaining provision of this
Agreement shall be valid and enforced to the fullest extent permitted by law.
Section 12.08
Notices
. Any and all notices or demands permitted or required to be given under
this Agreement shall be in writing and shall be validly given or made if (a) personally delivered,
(b) delivered and confirmed by facsimile or like instantaneous transmission service, or by Federal
Express or other overnight courier delivery service, which shall be effective as of confirmation of
receipt by the courier at the address for notice hereinafter stated, (c) solely in the case of
notice to any Trust Unitholder, by press release in a nationally recognized and distributed media,
or (d) deposited in the United States mail, first class, postage prepaid, certified or registered,
return receipt requested, addressed as follows:
If to the Trustee, to:
The Bank of New York Mellon Trust Company, N.A.
Institutional Trust Services
919 Congress Avenue, Suite 500
Austin, Texas 78701
Attention: Mike J. Ulrich
Facsimile No.: (512) 479-2253
With a copy to:
Bracewell & Giuliani LLP
111 Congress Avenue
Suite 2300
Austin, Texas 78701
Attention: Thomas W. Adkins
Facsimile No.: (512) 479-3940
With a copy to:
Richards, Layton & Finger, P.A.
One Rodney Square
920 North King Street
Wilmington, Delaware 19801
Attention: Tara Hoffner
Facsimile No.: (302) 498-7708
40
If to the Delaware Trustee, to:
Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
Attention: Corporate Trust Administration
Facsimile No.: (302) 658-5459
If to ECA, to:
4643 South Ulster Street
Suite 1100
Denver, Colorado 80237
Attention: Michael S. Fletcher
Facsimile No.: (303) 694-2763
With a copy to:
501 56th Street
Charleston, West Virginia 25304
Attention: Donald C. Supcoe
Facsimile No.: (304) 925-3285
With a copy to:
Vinson & Elkins L.L.P.
1001 Fannin Street, Suite 3500
Houston, Texas 77002
Attention: David P. Oelman
Facsimile No. (713) 615-5861
If to a Trust Unitholder, to:
The Trust Unitholder at its last address as shown on the ownership records maintained by the
Trustee
Notice that is mailed in the manner specified shall be conclusively deemed given three days
after the date postmarked or upon receipt, whichever is sooner. Any party to this Agreement may
change its address for the purpose of receiving notices or demands by notice given as provided in
this
Section 12.08
.
Section 12.09
Counterparts
. This Agreement may be executed in a number of counterparts, each
of which shall constitute an original, but such counterparts shall together constitute but one and
the same instrument.
[
Signature page follows
]
41
IN WITNESS WHEREOF, ECA, the Trustee and the Delaware Trustee have caused this Agreement to be
duly executed the day and year first above written.
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ATTEST:
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ENERGY CORPORATION OF AMERICA
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/s/ Julie Ann Kitano
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By:
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/s/ John Mork
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Name:
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Julie Ann Kitano
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John Mork
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Title:
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Witness
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President and Chief Executive Officer
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ATTEST:
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THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
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/s/ Julie Ann Kitano
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By:
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/s/ Michael J. Ulrich
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Name:
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Julie Ann Kitano
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Michael J. Ulrich
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Title:
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Witness
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Authorized Signatory
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ATTEST:
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CORPORATION TRUST COMPANY
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/s/ Milanie McGrath
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By:
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/s/ Jennifer A Schwartz
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Name:
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Milanie McGrath
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Jennifer A Schwartz
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Title:
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Staffing Specialist
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Assistant Vice President
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[Signature
Page to Amended and Restated Trust Agreement]
ANNEX A
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Target Distributions and Subordination and Incentive Thresholds
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(per unit)
|
Quarter
|
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Subordination
|
|
Target
|
|
Incentive
|
Ending
|
|
Threshold (1)
|
|
Distribution
|
|
Threshold (1)
|
June 30, 2010
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|
$
|
0.1814
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|
|
$
|
0.2267
|
|
|
$
|
0.2721
|
|
September 30, 2010
|
|
|
0.3340
|
|
|
|
0.4175
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|
|
|
0.5010
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|
December 31, 2010
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|
|
0.4776
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|
|
|
0.5970
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|
|
|
0.7164
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|
March 31, 2011
|
|
|
0.4460
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|
|
|
0.5575
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|
|
|
0.6690
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|
June 30, 2011
|
|
|
0.4510
|
|
|
|
0.5637
|
|
|
|
0.6764
|
|
September 30, 2011
|
|
|
0.5503
|
|
|
|
0.6878
|
|
|
|
0.8254
|
|
December 31, 2011
|
|
|
0.5649
|
|
|
|
0.7061
|
|
|
|
0.8473
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|
March 31, 2012
|
|
|
0.5740
|
|
|
|
0.7175
|
|
|
|
0.8609
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|
June 30, 2012
|
|
|
0.6017
|
|
|
|
0.7521
|
|
|
|
0.9025
|
|
September 30, 2012
|
|
|
0.6244
|
|
|
|
0.7804
|
|
|
|
0.9365
|
|
December 31, 2012
|
|
|
0.7010
|
|
|
|
0.8762
|
|
|
|
1.0514
|
|
March 31, 2013
|
|
|
0.7564
|
|
|
|
0.9455
|
|
|
|
1.1346
|
|
June 30, 2013
|
|
|
0.7539
|
|
|
|
0.9424
|
|
|
|
1.1308
|
|
September 30, 2013
|
|
|
0.7011
|
|
|
|
0.8764
|
|
|
|
1.0517
|
|
December 31, 2013
|
|
|
0.6593
|
|
|
|
0.8241
|
|
|
|
0.9889
|
|
March 31, 2014
|
|
|
0.6102
|
|
|
|
0.7627
|
|
|
|
0.9152
|
|
June 30, 2014
|
|
|
0.5885
|
|
|
|
0.7357
|
|
|
|
0.8828
|
|
September 30, 2014
|
|
|
0.5705
|
|
|
|
0.7132
|
|
|
|
0.8558
|
|
December 31, 2014
|
|
|
0.5493
|
|
|
|
0.6866
|
|
|
|
0.8239
|
|
March 31, 2015
|
|
|
0.5192
|
|
|
|
0.6490
|
|
|
|
0.7788
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|
June 30, 2015
|
|
|
|
|
|
|
0.6366
|
|
|
|
|
|
September 30, 2015
|
|
|
|
|
|
|
0.6256
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|
|
|
|
|
December 31, 2015
|
|
|
|
|
|
|
0.6093
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|
|
|
|
March 31, 2016
|
|
|
|
|
|
|
0.5880
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|
|
|
|
|
June 30, 2016
|
|
|
|
|
|
|
0.5750
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|
|
|
|
|
September 30, 2016
|
|
|
|
|
|
|
0.5692
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|
|
|
|
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December 31, 2016
|
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|
|
|
|
|
0.5580
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|
|
|
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March 31, 2017
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|
|
|
|
|
0.5355
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June 30, 2017
|
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|
|
|
|
|
0.5321
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|
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|
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September 30, 2017
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|
|
|
|
|
0.5289
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|
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|
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December 31, 2017
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|
|
|
|
|
0.5201
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|
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March 31, 2018
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|
|
|
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|
0.5004
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June 30, 2018
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|
|
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0.4983
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September 30, 2018
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|
|
|
|
|
0.4963
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|
|
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December 31, 2018
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|
|
|
|
|
0.4888
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March 31, 2019
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|
|
|
|
|
0.4708
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|
|
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June 30, 2019
|
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|
|
|
|
|
0.4692
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|
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|
|
September 30, 2019
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|
|
|
|
|
0.4676
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|
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December 31, 2019
|
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|
|
|
|
|
0.4606
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|
|
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|
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March 31, 2020
|
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|
|
|
|
|
0.4487
|
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|
|
|
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June 30, 2020
|
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|
|
|
|
|
0.4421
|
|
|
|
|
|
September 30, 2020
|
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|
|
|
|
|
0.4405
|
|
|
|
|
|
December 31, 2020
|
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|
|
|
|
|
0.4340
|
|
|
|
|
|
March 31, 2021
|
|
|
|
|
|
|
0.4180
|
|
|
|
|
|
June 30, 2021
|
|
|
|
|
|
|
0.4166
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|
|
|
|
|
September 30, 2021
|
|
|
|
|
|
|
0.4151
|
|
|
|
|
|
December 31, 2021
|
|
|
|
|
|
|
0.4088
|
|
|
|
|
|
March 31, 2022
|
|
|
|
|
|
|
0.3937
|
|
|
|
|
|
June 30, 2022
|
|
|
|
|
|
|
0.3924
|
|
|
|
|
|
Annex
A - 1
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Distributions and Subordination and Incentive Thresholds
|
(per unit)
|
Quarter
|
|
Subordination
|
|
Target
|
|
Incentive
|
Ending
|
|
Threshold (1)
|
|
Distribution
|
|
Threshold (1)
|
September 30, 2022
|
|
|
|
|
|
|
0.3909
|
|
|
|
|
|
December 31, 2022
|
|
|
|
|
|
|
0.3850
|
|
|
|
|
|
March 31, 2023
|
|
|
|
|
|
|
0.3708
|
|
|
|
|
|
June 30, 2023
|
|
|
|
|
|
|
0.3695
|
|
|
|
|
|
September 30, 2023
|
|
|
|
|
|
|
0.3681
|
|
|
|
|
|
December 31, 2023
|
|
|
|
|
|
|
0.3625
|
|
|
|
|
|
March 31, 2024
|
|
|
|
|
|
|
0.3530
|
|
|
|
|
|
June 30, 2024
|
|
|
|
|
|
|
0.3478
|
|
|
|
|
|
September 30, 2024
|
|
|
|
|
|
|
0.3464
|
|
|
|
|
|
December 31, 2024
|
|
|
|
|
|
|
0.3412
|
|
|
|
|
|
March 31, 2025
|
|
|
|
|
|
|
0.3284
|
|
|
|
|
|
June 30, 2025
|
|
|
|
|
|
|
0.3272
|
|
|
|
|
|
September 30, 2025
|
|
|
|
|
|
|
0.3260
|
|
|
|
|
|
December 31, 2025
|
|
|
|
|
|
|
0.3210
|
|
|
|
|
|
March 31, 2026
|
|
|
|
|
|
|
0.3089
|
|
|
|
|
|
June 30, 2026
|
|
|
|
|
|
|
0.3078
|
|
|
|
|
|
September 30, 2026
|
|
|
|
|
|
|
0.3066
|
|
|
|
|
|
December 31, 2026
|
|
|
|
|
|
|
0.3019
|
|
|
|
|
|
March 31, 2027
|
|
|
|
|
|
|
0.2905
|
|
|
|
|
|
June 30, 2027
|
|
|
|
|
|
|
0.2895
|
|
|
|
|
|
September 30, 2027
|
|
|
|
|
|
|
0.2866
|
|
|
|
|
|
December 31, 2027
|
|
|
|
|
|
|
0.2802
|
|
|
|
|
|
March 31, 2028
|
|
|
|
|
|
|
0.2708
|
|
|
|
|
|
June 30, 2028
|
|
|
|
|
|
|
0.2648
|
|
|
|
|
|
September 30, 2028
|
|
|
|
|
|
|
0.2619
|
|
|
|
|
|
December 31, 2028
|
|
|
|
|
|
|
0.2560
|
|
|
|
|
|
March 31, 2029
|
|
|
|
|
|
|
0.2445
|
|
|
|
|
|
June 30, 2029
|
|
|
|
|
|
|
0.2419
|
|
|
|
|
|
September 30, 2029
|
|
|
|
|
|
|
0.2392
|
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December 31, 2029
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0.2338
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March 31, 2030
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2.8904
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(1)
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For each quarter, the Subordination Threshold equals 80% of the Target Distribution, and the
Incentive Threshold equals 120% of the Target Distribution.
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Annex
A - 2
EXHIBIT A
TO
AMENDED AND RESTATED
TRUST AGREEMENT OF ECA MARCELLUS TRUST I
FEDERAL INCOME TAX PROVISIONS
1.
Purpose and Scope; Definitions; Use of Agents
.
(a) For federal income tax purposes, the ECA Marcellus Trust I (the
Trust
) will be
classified and treated as a partnership and the Trust Unitholders will be treated as the partners
in such partnership. A partnership is not a taxable entity and incurs no federal income tax
liability. Instead, each partner is required to take into account his allocable share of items of
income, gain, loss, deduction and credit of the partnership in computing his federal income tax
liability. This Exhibit A contains provisions necessary to permit the Trust to comply with the
federal income tax law applicable to the Trust, including provisions governing the allocation of
items of income, gain, loss and deduction of the Trust and the maintenance of the Capital Accounts
of the Trust Unitholders.
(b) For purposes of this Exhibit A, the
Partnership
means the Trust,
Partner(s
) means Trust Unitholder(s),
Partnership Interest
means the ownership
interest in the Trust held by a Trust Unitholder, and
Capital Contribution
means a Trust
Unitholders initial investment in the Trust. Other terms used in this Exhibit A have the meanings
set forth in Section 7 below or in the Amended and Restated Trust Agreement of ECA Marcellus Trust
I dated as of July 7, 2010 (the
Trust Agreement
), as applicable.
(c) This Exhibit A provides that under certain circumstances the Trustee is either required to
take or has the discretion to take actions relating to the Trusts status as a partnership for
federal income tax purposes. Pursuant to Section 6.01 of the Trust, the Trustee will generally
take such required actions, and where such actions are discretionary, will generally exercise its
discretion to take such actions, through its Agents, i.e., its accountants (selected pursuant to
Section 3.06) and ECA. Pursuant to Section 3.01 of the Trust, when exercising its discretion under
this Exhibit A, Trustee shall take action as in its judgment is necessary, desirable or advisable
to best achieve the purpose of the trust.
2.
Capital Accounts
.
(a) The Partnership shall maintain for each Partner (or a beneficial owner of Partnership
Interests held by a nominee in any case in which the nominee has furnished the identity of such
owner to the Partnership in accordance with Section 6031(c) of the Code or any other method
acceptable to the Trustee) owning a Partnership Interest a separate capital account (
Capital
Account
) with respect to such Partnership Interest in accordance with the rules of Treasury
Regulation Section 1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i) the amount of
all Capital Contributions made to the Partnership with respect to such Partnership Interest and
(ii) all items of Net Income and other items of Partnership income and gain (including, without
limitation, Simulated Gain and income and gain exempt from tax) computed in accordance with Section
2(b) and allocated with respect to such Partnership Interest pursuant
Exhibit
A - 1
to Section 3, and decreased by (x) the amount of cash distributions made with respect to such
Partnership Interest and (y) all items of Partnership Net Loss and other items of deduction and
loss (including Simulated Depletion and Simulated Loss) computed in accordance with Section 2(b)
and allocated with respect to such Partnership Interest pursuant to Section 3.
(b) For purposes of computing Net Income, Net Loss and the amount of any item of income, gain,
loss, deduction, Simulated Depletion, Simulated Gain or Simulated Loss which is to be allocated
pursuant to Section 3 and is to be reflected in the Partners Capital Accounts, the determination,
recognition and classification of any such item shall be the same as its determination, recognition
and classification for federal income tax purposes;
provided
,
however
, that:
(i) All fees and other expenses incurred by the Partnership to promote the sale of (or to
sell) a Partnership Interest that can neither be deducted nor amortized under Section 709 of the
Code, if any, shall, for purposes of Capital Account maintenance, be treated as an item of
deduction at the time such fees and other expenses are incurred and shall be allocated among the
Partners pursuant to Section 3.
(ii) Except as otherwise provided in Treasury Regulation Section 1.704-1(b)(2)(iv)(m), the
computation of all items of income, gain, loss, deduction, Simulated Depletion, Simulated Gain and
Simulated Loss shall be made without regard to any election under Section 754 of the Code which may
be made by the Partnership and, as to those items described in Section 705(a)(1)(B) or Section
705(a)(2)(B) of the Code, without regard to the fact that such items are not includable in gross
income or are neither currently deductible nor capitalized for federal income tax purposes. To the
extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Section 734(b)
or Section 743(b) of the Code is required, pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such
adjustment in the Capital Accounts shall be treated as an item of gain or loss.
(iii) Any income, gain, loss, Simulated Gain or Simulated Loss attributable to the taxable
disposition of any Partnership property shall be determined as if the adjusted basis of such
property as of such date of disposition were equal in amount to the Partnerships Carrying Value
with respect to such property as of such date.
(iv) In accordance with the requirements of Section 704(b) of the Code, any deductions for
depreciation, cost recovery, amortization or Simulated Depletion attributable to any Contributed
Property shall be determined as if the adjusted basis of such property on the date it was acquired
by the Partnership were equal to the Agreed Value of such property, and any such deductions shall
reduce the Carrying Value of such Contributed Property.
(c) A transferee of a Partnership Interest shall succeed to a pro rata portion of the Capital
Account of the transferor relating to the Partnership Interest so transferred.
(d) Subject to Section 5(b), immediately prior to the transfer of a Sponsor Common Unit, the
Capital Account maintained for the transferor with respect to its Sponsor Common Units will (A)
first, be apportioned to the Sponsor Common Units to be transferred in
Exhibit
A - 2
an amount equal to the product of (x) the number of such Sponsor Common Units to be
transferred and (y) the Uniform Per Unit Capital Amount, and (B) second, any remaining balance in
such Capital Account will be retained by the transferor and apportioned to its retained Sponsor
Common Units. Following any such apportionment, the transferors Capital Account maintained with
respect to the retained Sponsor Common Units will have a balance equal to the amount allocated
under clause (B) hereinabove, the transferees Capital Account established with respect to the
transferred Sponsor Common Units will have a balance equal to the amount allocated under clause (A)
hereinabove, and the transferred Sponsor Common Units shall cease to be Sponsor Common Units.
3.
Allocations for Capital Account Purposes
. For purposes of maintaining the Capital
Accounts and in determining the rights of the Partners among themselves, the Partnerships items of
income, gain, loss, deduction, Simulated Depletion, Simulated Gain and Simulated Loss (computed in
accordance with Section 2(b)) shall be allocated among the Partners for each Allocation Year as
provided herein below.
(a) Net Income and Net Loss. After giving effect to the special allocations set forth in
Section 3(b) and Section 3(c), Net Income and Net Loss for each taxable year and all items of
income, gain, loss and deduction taken into account in computing Net Income and Net Loss for such
Allocation Year shall be allocated to the Partners in accordance with their respective Percentage
Interests.
(b) Special Allocations. Notwithstanding any other provision of this Section 3, the following
special allocations shall be made for such taxable period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding any other provision of this Section
3, if there is a net decrease in Partnership Minimum Gain during any Partnership Allocation Year,
each Partner shall be allocated items of Partnership income, gain and Simulated Gain for such
period (and, if necessary, subsequent periods) in the manner and amounts provided in Treasury
Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor provision.
For purposes of this Section 3(b), each Partners Adjusted Capital Account balance shall be
determined, and the allocation of income, gain and Simulated Gain required hereunder shall be
effected, prior to the application of any other allocations pursuant to this Section 3(b) with
respect to such Allocation Year (other than an allocation pursuant to Sections 3(b)(vi) and
3(b)(vii)). This Section 3(b)(i) is intended to comply with the Partnership Minimum Gain
chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall be interpreted
consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain. Notwithstanding the other
provisions of this Section 3(b) (other than Section 3(b)(i)), except as provided in Treasury
Regulation Section 1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse Debt Minimum
Gain during any Partnership Allocation Year, any Partner with a share of Partner Nonrecourse Debt
Minimum Gain at the beginning of such Allocation Year shall be allocated items of Partnership
income, gain and Simulated Gain for such period (and, if necessary, subsequent periods) in the
manner and amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii), or
any successor provisions. For purposes of this Section 3(b), each Partners Adjusted Capital
Account balance shall be determined, and the
Exhibit
A - 3
allocation of income, gain and Simulated Gain required hereunder shall be effected, prior to
the application of any other allocations pursuant to this Section 3(b), other than Section 3(b)(i)
and other than an allocation pursuant to Sections 3(b)(vi) and 3(b)(vii), with respect to such
Allocation Year. This Section 3(b)(ii) is intended to comply with the chargeback of items of
income and gain requirement in Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.
(iii) Priority Allocations. If the amount of cash distributed to any Trust Unitholder with
respect to its Trust Units for any Allocation Year is greater (on a per Trust Unit basis) than the
amount of cash distributed to any other Trust Unitholder with respect to its Trust Units (on a per
Trust Unit basis), then there shall be allocated gross income and gain to each Trust Unitholder
receiving such greater cash or property distribution until the aggregate amount of such items
allocated pursuant to this Section 3(b)(iii) for the current Allocation Year to such Trust
Unitholder is equal to the product of (aa) the amount by which the distribution (on a per Trust
Unit basis) to such Trust Unitholder exceeds the distribution (on a per Trust Unit basis) to the
Trust Unitholders receiving the smallest distribution and (bb) the number of Trust Units owned by
the Trust Unitholder receiving the greater distribution. In the event and to the extent that the
allocations required by this Section 3(b)(iii), cannot be made due to an insufficiency of income or
gain available for allocation hereunder, such unfulfilled allocations shall be treated as being
required pursuant to this Section 3(b)(ii) in the next succeeding Allocation Year (and thereafter
until made). For purposes of this Section 3(b)(iii), distributions under Section 3.15(a)(i)(D)(y)
of the Trust Agreement representing the $4,957,920 million principal component of the Reimbursement
Amount shall not be treated as cash distributions to a Trust Unitholder, but distributions under
Section 3.15(a)(i)(D)(y) of the Trust Agreement representing the interest component of the
Reimbursement Amount shall be treated as cash distributions to a Trust Unitholder.
(iv) Qualified Income Offset. In the event any Partner unexpectedly receives any adjustments,
allocations or distributions described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Partnership income, gain and
Simulated Gain shall be specially allocated to such Partner in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations promulgated under Section 704(b) of
the Code, the deficit balance, if any, in its Adjusted Capital Account created by such adjustments,
allocations or distributions as quickly as possible unless such deficit balance is otherwise
eliminated pursuant to Section 3(b)(i) or 3(b)(ii).
(v) Gross Income Allocations. In the event any Partner has a deficit balance in its Capital
Account at the end of any Partnership Allocation Year in excess of the sum of (A) the amount, if
any, such Partner is required to restore pursuant to the provisions of this Exhibit and (B) the
amount such Partner is deemed obligated to restore pursuant to Treasury Regulation Sections
1.704-2(g) and 1.704-2(i)(5), such Partner shall be specially allocated items of Partnership gross
income, gain and Simulated Gain in the amount of such excess as quickly as possible;
provided
,
however
, that an allocation pursuant to this Section 3(b)(v) shall be made only if and to the
extent that such Partner would have a deficit balance in its Capital Account as adjusted after all
other allocations provided for in this Section 3 have been tentatively made as if this
Section 3(b)(v) were not in this Agreement.
Exhibit
A - 4
(vi) Nonrecourse Deductions. Nonrecourse Deductions for any Allocation Year shall be
allocated to the Partners in accordance with their respective Percentage Interests. If the Trustee
determines that the Partnerships Nonrecourse Deductions should be allocated in a different ratio
to satisfy the safe harbor requirements of the Treasury Regulations promulgated under Section
704(b) of the Code, the Trustee is authorized, upon notice to the other Partners, to revise the
prescribed ratio to the numerically closest ratio that does satisfy such requirements.
(vii) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any Allocation Year
shall be allocated 100% to the Partner that bears the Economic Risk of Loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable in
accordance with Treasury Regulation Section 1.704-2(i). If more than one Partner bears the
Economic Risk of Loss with respect to a Partner Nonrecourse Debt, such Partner Nonrecourse
Deductions attributable thereto shall be allocated between or among such Partners in accordance
with the ratios in which they share such Economic Risk of Loss.
(viii) Nonrecourse Liabilities. For purposes of Treasury Regulation Section 1.752-3(a)(3),
the Partners agree that Nonrecourse Liabilities of the Partnership in excess of the sum of (A) the
amount of Partnership Minimum Gain and (B) the total amount of Nonrecourse Built-in Gain shall be
allocated among the Partners in accordance with their respective Percentage Interests.
(ix) Code Section 754 Adjustments. To the extent an adjustment to the adjusted tax basis of
any Partnership asset pursuant to Section 734(b) or 743(b) of the Code is required, pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain
or Simulated Gain (if the adjustment increases the basis of the asset) or loss or Simulated Loss
(if the adjustment decreases such basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their Capital Accounts
are required to be adjusted pursuant to such section of the Treasury Regulations.
(x) Economic Uniformity. At the election of the Trustee with respect to any taxable period,
all or a portion of the remaining items of Partnership gross income, gain or Simulated Gain for
such taxable period shall be allocated 100% to each Partner holding Sponsor Common Units, until
each such Partner has been allocated an amount of gross income, gain or Simulated Gain that
increases the Capital Account maintained with respect to such Sponsor Common Units to an amount
that, after taking into account the other allocations of income, gain, loss, deduction, Simulated
Depletion, Simulated Gain and Simulated Loss to be made with respect to such Allocation Year, will
equal the product of (A) the number of Sponsor Common Units held by such Partner and (B) the
Uniform Per Unit Capital Amount. The purpose of this allocation is to establish uniformity between
the Capital Accounts underlying Sponsor Common Units and the Capital Accounts underlying Public
Common Units. This allocation method for establishing such economic uniformity will be available to
the Trustee only if the method for apportioning the Capital Account maintained with respect to the
Sponsor Common Units between the transferred and retained Sponsor Common Units pursuant to Section
2(d) does not otherwise provide such economic uniformity to the Sponsor Common Units.
Exhibit
A - 5
(xi) Curative Allocation.
(A) Notwithstanding any other provision of this Section 3, other than the Required
Allocations, the Required Allocations shall be taken into account in making the Agreed Allocations
so that, to the extent possible, the net amount of items of income, gain, loss, deduction,
Simulated Depletion, Simulated Gain and Simulated Loss allocated to each Partner pursuant to the
Required Allocations and the Agreed Allocations, together, shall be equal to the net amount of such
items that would have been allocated to each such Partner under the Agreed Allocations had the
Required Allocations and the related Curative Allocation not otherwise been provided in this
Section 3. Notwithstanding the preceding sentence, Required Allocations relating to (1)
Nonrecourse Deductions shall not be taken into account except to the extent that there has been a
decrease in Partnership Minimum Gain and (2) Partner Nonrecourse Deductions shall not be taken into
account except to the extent that there has been a decrease in Partner Nonrecourse Debt Minimum
Gain. Allocations pursuant to this Section 3(b)(xi)(A) shall only be made with respect to Required
Allocations to the extent the Trustee determines that such allocations will otherwise be
inconsistent with the economic agreement among the Partners. Further, allocations pursuant to this
Section 3(b)(xi)(A) shall be deferred with respect to allocations pursuant to clauses (1) and (2)
hereof to the extent the Trustee determines that such allocations are likely to be offset by
subsequent Required Allocations.
(B) The Trustee shall, with respect to each Allocation Year, (1) apply the provisions of
Section 3(b)(xi)(A) in whatever order is most likely to minimize the economic distortions that
might otherwise result from the Required Allocations, and (2) divide all allocations pursuant to
Section 3(b)(xi)(A) among the Partners in a manner that is likely to minimize such economic
distortions.
(xii) Liquidation. Notwithstanding any other provision of this Section 3, for the Allocation
Year that includes the liquidation of the Trust (and any prior Allocation Year to the extent the
Trustee determines it is appropriate), items of income, gain, loss, deduction and Simulated Gain
(other than the Required Allocations) shall be specially allocated among the Partners in the manner
determined appropriate by the Trustee so as to cause, to the maximum extent possible, the Capital
Account in respect of each Unit to equal the amount such Unit will receive in liquidating
distributions from the Trust.
(c) Simulated Basis, Simulated Depletion, Simulated Gain and Simulated Loss.
(i) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(k), Simulated Basis and
Simulated Depletion with respect to each Depletable Property shall be determined using the
simulated cost depletion method described in Treasury Regulation Section 1.704-1(b)(2)(iv)(K)(2)
and shall be allocated among the Partners in accordance with their respective Percentage Interests.
(ii) Simulated Gain shall be allocated in the same manner as an item of gain in a
corresponding amount would be allocated pursuant to Section 4(a).
Exhibit
A - 6
(iii) Simulated Loss with respect to the disposition of an Depletable Property shall be
allocated among the Partners in proportion to their allocable shares of total amount realized from
such disposition under Section 4(c)(i)).
4.
Allocations for Tax Purposes
.
(a) Except as otherwise provided in this Section 4, for federal income tax purposes, each item
of income, gain, loss and deduction shall be allocated among the Partners in the same manner as its
correlative item of book income, gain, loss or deduction is allocated pursuant to Section 3.
(b) The deduction for depletion with respect to each separate Depletable Property shall be
computed for federal income tax purposes separately by the Partners rather than by the Partnership
in accordance with Section 613A(c)(7)(D) of the Code.
(i) Except as provided in Section 4(b)(ii), for purposes of such computation
(before taking into account any adjustments resulting from an election made by the
Partnership under Section 754 of the Code), the adjusted tax basis of each
Depletable Property shall be allocated among the Partners in accordance with their
respective Percentage Interests.
(ii) The Partners recognize that with respect to Depletable Property that is
Contributed Property there may be a difference between the Carrying Value of such
property at the time of contribution and the adjusted tax basis of such property at
that time. In order to take into account the disparities between the Carrying Values
and the adjusted tax bases with respect to such properties in accordance with the
principles of Treasury Regulation Section 1.704-3(d), the adjusted tax basis of each
Depletable Property shall be allocated among the Partners in such a manner that, to
the maximum extent possible, each Partner (other than the Property Contributor)
shall be allocated an amount of the Depletable Propertys adjusted tax basis equal
to its share of the Partnerships Simulated Basis in such Depletable Property.
Each Partner shall separately keep records of his share of the adjusted tax basis in each
Depletable Property, allocated as provided above, adjust such share of the adjusted tax basis for
any cost or percentage depletion allowable with respect to such property, and use such adjusted tax
basis in the computation of its cost depletion or in the computation of his gain or loss on the
disposition of such property by the Partnership.
(c) For the purposes of the separate computation of gain or loss by each Partner on the sale
or disposition of each separate Depletable Property, the Partnerships amount realized (as such
term is defined in Section 1001(b) of the Code) from such sale or disposition shall be allocated
for federal income tax purposes among the Partners as follows:
(i) first, to the extent such amount realized constitutes a recovery of the
Simulated Basis of the property, to the Partners in the same proportion as the
adjusted tax basis of such property was allocated to the Partners pursuant to
Section 4(b);
Exhibit
A - 7
(ii) second, to any Partner that contributed the Depletable Property to the
Partnership in an amount equal (as of the time of such contribution) to the excess,
if any, of the Simulated Basis of such property allocated to Partners other than the
Property Contributor pursuant to Section 3(c)(i) over the sum of the amount of the
adjusted basis therein allocated to such other Partners pursuant to Section 4(b)(ii)
less the cumulative amount of remedial deductions, if any, allocated to such other
Partners with respect to such Depletable Property pursuant to clause (ii) of Section
4(d);
(iii) third, the remainder of such amount realized, if any, to the Partners so
that, to the maximum extent possible, the amount realized allocated to each Partner
under this Section 4(c)(iii) will equal such Partners share of the Simulated Gain
recognized by the Partnership from such sale or disposition; and
(iv) any elections or other decisions relating to such allocations shall be
made by the Trustee in any manner that reasonably reflects the purpose and intention
of the Agreement.
(d) In an attempt to eliminate Book-Tax Disparities attributable to a Contributed Property (i)
in the case of Contributed Property other than Depletable Property, (A) items of income, gain and
loss shall be allocated for federal income tax purposes among the Partners in any manner
permissible under Section 704(c) of the Code that takes into account the variation between the
Agreed Value of such property and its adjusted basis at the time of contribution; and (B) any item
of Residual Gain or Residual Loss attributable to such Contributed Property shall be allocated
among the Partners in the same manner as its correlative item of book gain or loss is allocated
pursuant to Section 3; and (ii) in the case of a Contributed Property that is a Depletable Property
in which a Public Unitholders allocable share of the Simulated Basis under Section 3(c)(i) exceeds
his allocated share of the adjusted tax basis immediately after formation of the Partnership under
Section 4(b), the Trustee shall make allocations, to the extent possible consistent with the
Treasury Regulations under Sections 613A and 704 of the Code, of tax items applying the principles
of Treasury Regulation Section 1.704-3(d) as necessary to eliminate such Book-Tax Disparity.
(e) For the proper administration of the Partnership and for the preservation of uniformity of
the Trust Units, the Trustee shall (i) make special allocations for federal income tax purposes of
income (including, without limitation, gross income) or deductions; and (ii) amend the provisions
of this Exhibit as appropriate (x) to reflect the proposal or promulgation of Treasury Regulations
under Section 704(b) or Section 704(c) of the Code or (y) otherwise to preserve or achieve
uniformity of the Trust Units. The Trustee may adopt such conventions, make such allocations and
make such amendments to this Exhibit as provided in this Section 4(e) only if such conventions,
allocations or amendments would not have a material adverse effect on the Partners or the
Partnership, and if such allocations are consistent with the principles of Section 704 of the Code.
(f) All items of income, gain, loss, deduction and credit recognized by the Partnership for
federal income tax purposes and allocated to the Partners in accordance with the provisions hereof
shall be determined without regard to any election under Section 754 of the
Exhibit
A - 8
Code that may be made by the Partnership;
provided
,
however
, that such allocations, once made,
shall be adjusted (in the manner determined by the Trustee) to take into account those adjustments
permitted or required by Sections 734 and 743 of the Code.
(g) Each item of Partnership income, gain, loss and deduction shall for federal income tax
purposes, be determined on an annual basis and allocated on a monthly basis and shall be allocated
to the Partners as of the opening of the New York Stock Exchange on the first Business Day of each
month;
provided
,
however
, such items for the period beginning on the Closing Date and ending on the
last day of the month in which the Option Closing Date or the expiration of the Over-Allotment
Option occurs shall be allocated to the Partners as of the opening of the New York Stock Exchange
on the first Business Day of the next succeeding month; and
provided
,
further
, that gain or loss on
a sale or other disposition of any assets of the Partnership or any other extraordinary item of
income or loss realized and recognized other than in the ordinary course of business, as determined
by the Trustee, shall be allocated to the Partners as of the opening of the New York Stock Exchange
on the first Business Day of the month in which such gain or loss is recognized for federal income
tax purposes. The Trustee may revise, alter or otherwise modify such methods of allocation to the
extent permitted or required by Section 706 of the Code and the regulations or rulings promulgated
thereunder.
(h) Allocations that would otherwise be made to a Trust Unitholder under the provisions of
this Section 4 shall instead be made to the beneficial owner of Trust Units held by a nominee in
any case in which the nominee has furnished the identity of such owner to the Partnership in
accordance with Section 6031(c) of the Code or any other method determined by the Trustee.
(i) The allocations pursuant to this Section 4 are solely for purposes of federal and state
income taxes and will not affect, or in any way be taken into account in computing, a Partners
Capital Account.
5.
Special Provisions Relating to the Subordinated Unitholders
.
(a) Immediately upon the conversion of Subordinated Units into Common Units pursuant to
Section 3.15(b) of the Trust Agreement, the Trust Unitholder holding a Subordinated Unit shall
possess with respect to such units all of the rights and obligations of a Trust Unitholder holding
Common Units hereunder, including the right to vote as a Common Unitholder and the right to
participate in allocations of income, gain, loss, deduction, Simulated Depletion, Simulated Gain
and Simulated Loss and distributions made with respect to Common Units;
provided, however
, that
such converted Subordinated Units shall be treated as Sponsor Common Units that remain subject to
the provisions of Sections 2(d), 3(b)(x), and 5(b).
(b) The Trust Unitholder holding a Sponsor Common Unit shall not be permitted to transfer such
Sponsor Common Unit until such time as the Trustee determines, based on advice of counsel, that
each such Sponsor Common Unit should have, as a substantive matter, like intrinsic economic and
federal income tax characteristics, in all material respects, to the intrinsic economic and federal
income tax characteristics of a Public Common Unit. In connection with the condition imposed by
this Section 5(b), the Trustee may take whatever steps are required to provide economic uniformity
to such Sponsor Common Units in preparation for a
Exhibit
A - 9
transfer thereof, including the application of Sections 2(d) and 4(b)(x);
provided, however
,
that no such steps may be taken that would have a material adverse effect on the Trust Unitholders
holding Public Common Units.
6.
Tax Matters
.
(a) Tax Returns and Information. The Trustee shall timely file or cause to be filed all
returns and reports of the Partnership that are required for federal, state and local income tax
purposes on the basis of the accrual method and a taxable year ending on December 31. In the event
the Partnership is required to use a taxable period other than a year ending on December 31, the
Trustee shall use reasonable efforts to change the taxable period of the Partnership to a year
ending on December 31. The tax information reasonably required by Record Holders for federal and
state income tax reporting purposes with respect to each Allocation Year shall be furnished to them
within 90 days of the close of the calendar year in which the Partnerships Allocation Year ends.
The classification, realization and recognition of income, gain, losses and deductions and other
items shall be on the accrual method of accounting for federal income tax purposes.
(b) Tax Elections.
(i) The Partnership shall make the election under Section 754 of the Code in accordance with
applicable regulations thereunder, subject to the reservation of the right to seek to revoke any
such election upon the Trustees determination that such revocation is in the best interests of the
Trust Unitholders. Notwithstanding any other provision herein contained, for the purposes of
computing the adjustments under Section 743(b) of the Code, the Trustee shall be authorized (but
not required) to adopt a convention whereby the price paid by a transferee of a Trust Unit will be
deemed to be the lowest quoted closing price of the Trust Units on the New York Stock Exchange
during the calendar month in which such transfer is deemed to occur pursuant to Section 4(f)
without regard to the actual price paid by such transferee.
(ii) Except as otherwise provided herein, the Trustee shall determine whether the Partnership
should make any other elections permitted by the Code.
(c) Tax Controversies. Subject to the provisions hereof, Energy Corporation of America is
designated the Tax Matters Partner (as defined in the Code) and is authorized and required to
represent the Partnership (at the Partnerships expense) in connection with all examinations of the
Partnerships affairs by tax authorities, including resulting administrative and judicial
proceedings, and to expend Partnership funds for professional services and costs associated
therewith. Each Partner agrees to cooperate with the Trustee and to do or refrain from doing any
or all things reasonably required by the Trustee to conduct such proceedings.
(d) Withholding. Notwithstanding any other provision of this Exhibit, the Trustee is
authorized to take any action that may be required to cause the Partnership to comply with any
withholding requirements established under the Code or any other federal, state or local law
including, without limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of the Code. To the
extent that the Partnership is required or elects to withhold and pay over to any taxing authority
any amount resulting from the allocation or distribution of income to any Partner
Exhibit
A - 10
(including, without limitation, by reason of Section 1446 of the Code), the Trustee may treat
the amount withheld as a distribution of cash in the amount of such withholding from such Partner.
If the payment is made to a taxing authority on behalf of a Partner whose identity cannot be
determined, the Trustee may treat the amount withheld as a distribution of cash to all current
Partners.
7.
Additional Definitions
.
Adjusted Capital Account
means the Capital Account maintained for each Partner as of
the end of each Allocation Year of the Partnership, (a) increased by any amounts that such Partner
is obligated to restore under the standards set by Treasury Regulation Section 1.704-1(b)(2)(ii)(c)
(or is deemed obligated to restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5))
and (b) decreased by (i) the amount of all losses and deductions that, as of the end of such
Allocation Year, are reasonably expected to be allocated to such Partner in subsequent years under
Sections 704(e)(2) and 706(d) of the Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and
(ii) the amount of all distributions that, as of the end of such Allocation Year, are reasonably
expected to be made to such Partner in subsequent years in accordance with the terms of this
Agreement or otherwise to the extent they exceed offsetting increases to such Partners Capital
Account that are reasonably expected to occur during (or prior to) the year in which such
distributions are reasonably expected to be made (other than increases as a result of a minimum
gain chargeback pursuant to Section 3(b)(i) or 3(b)(ii)). The foregoing definition of Adjusted
Capital Account is intended to comply with the provisions of Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
Agreed Allocation
means any allocation, other than a Required Allocation, of an item
of income, gain, loss or deduction pursuant to the provisions of Section 3, including, without
limitation, a Curative Allocation (if appropriate to the context in which the term Agreed
Allocation is used).
Agreed Value
of any Contributed Property means the fair market value of such
property or other consideration at the time of contribution as determined by the Trustee.
Allocation Year
means (i) the period commencing on the Closing Date and ending on
December 31, 2010, (ii) any subsequent period commencing on the first day of January and ending on
the last day of December, or (iii) any portion of the period described in clause (ii) for which the
Partnership is required to allocate Net Income, Net Loss, and any other items of Partnership
income, gain, loss or deduction pursuant to Section 3.
Book-Tax Disparity
means with respect to any item of Contributed Property, as of the
date of any determination, the difference between the Carrying Value of such Contributed Property
and the adjusted basis thereof for federal income tax purposes as of such date. A Partners share
of the Partnerships Book-Tax Disparities in all of its Contributed Property will be reflected by
the difference between such Partners Capital Account balance as maintained pursuant to Section 2
and the hypothetical balance of such Partners Capital Account computed as if it had been
maintained strictly in accordance with federal income tax accounting principles.
Exhibit
A - 11
Capital Account
means the capital account maintained for a Partner pursuant to
Section 2.
Capital Contribution
means any cash, cash equivalents or the Net Agreed Value of
Contributed Property that a Partner contributes to the Partnership or that is contributed or deemed
contributed to the Partnership on behalf of a Partner (including, in the case of an underwritten
offering of Trust Units, the amount of any underwriting discounts or commissions).
Carrying Value
means (a) the Agreed Value of Contributed Property, and (b) with
respect to any other Partnership property, the adjusted basis of such property for federal income
tax purposes, all as of the time of determination.
Code
means the Internal Revenue Code of 1986, as amended and in effect from time to
time. Any reference herein to a specific section or sections of the Code shall be deemed to
include a reference to any corresponding provision of any successor law.
Common Unit
has the meaning ascribed to such term in the Trust Agreement.
Contributed Property
means each property or other asset, in such form as may be
permitted by the Trust Act, but excluding cash, contributed to the Partnership.
Curative Allocation
means any allocation of an item of income, gain, deduction, loss
or credit pursuant to the provisions of Section 3(b)(xi).
Depletable Property
means each separate oil and gas property as defined in
Section 614 of the Code,
provided
,
however
, Depletable Property shall not include any interest in
an oil and gas property that is treated as a production payment within the meaning of Section 636
of the Code.
Economic Risk of Loss
has the meaning set forth in Treasury Regulation Section
1.752-2(a).
Net Agreed Value
means the Agreed Value of any Contributed Property reduced by any
liabilities either assumed by the Partnership upon such contribution or to which such property is
subject when contributed.
Net Income
means, for any Allocation Year, the excess, if any, of the Partnerships
items of income and gain for such Allocation Year over the Partnerships items of loss and
deduction for such Allocation Year. The items included in the calculation of Net Income shall be
determined in accordance with Section 2(b) and shall not include any items specially allocated
under Section 3(b) or Section 3(c).
Net Loss
means, for any Allocation Year, the excess, if any, of the Partnerships
items of loss and deduction for such Allocation Year over the Partnerships items of income and
gain for such Allocation Year. The items included in the calculation of Net Loss shall be
determined in accordance with Section 2(b) and shall not include any items specially allocated
under Section 3(b) or Section 3(c).
Exhibit
A - 12
Nonrecourse Built-in Gain
means with respect to any Contributed Properties or
Adjusted Properties that are subject to a mortgage or pledge securing a Nonrecourse Liability, the
amount of any taxable gain that would be allocated to the Partners pursuant to Sections 4(d)(i)(A)
and 4(d)(ii) if such properties were disposed of in a taxable transaction in full satisfaction of
such liabilities and for no other consideration.
Nonrecourse Deductions
means any and all items of loss, deduction or expenditure
(including, without limitation, any expenditure described in Section 705(a)(2)(B) of the Code)
that, in accordance with the principles of Treasury Regulation Section 1.704-2(b), are attributable
to a Nonrecourse Liability.
Nonrecourse Liability
has the meaning set forth in Treasury Regulation Section
1.752-2(b)(3).
Option Closing Date
means the date or dates on which any Trust Units are sold by the
Partnership to the Underwriters upon exercise of the Over-Allotment Option.
Over-Allotment Option
means the over-allotment option granted to the Underwriters by
the Partnership pursuant to the Underwriting Agreement.
Partner Nonrecourse Debt
has the meaning set forth in Treasury Regulation
Section 1.704-2(b)(4).
Partner Nonrecourse Debt Minimum Gain
has the meaning set forth in Treasury
Regulation Section 1.704-2(i)(2).
Partner Nonrecourse Deductions
means any and all items of loss, deduction or
expenditure (including, without limitation, any expenditure described in Section 705(a)(2)(B) of
the Code) that, in accordance with the principles of Treasury Regulation Section 1.704-2(i), are
attributable to a Partner Nonrecourse Debt.
Partnership Minimum Gain
means that amount determined in accordance with the
principles of Treasury Regulation Sections 1.704-2(b)(2) and 1.704-2(d).
Percentage Interest
means as of any date of determination as to any Trust Unitholder
holding Trust Units, the quotient obtained by dividing (A) the number of Trust Units held by such
Trust Unitholder by (B) the total number of all outstanding Trust Units.
Property Contributor
means any Person that transfers Contributed Property to the
Partnership in exchange for Trust Units.
Public Common Unit
means any Common Unit originally issued by the Trust solely for
cash.
Record Holder
means the Person in whose name a Trust Unit is registered on the books
of the transfer agent as of the opening of business on a particular Business Day.
Exhibit
A - 13
Required Allocations
means any allocation of an item of income, gain, loss or
deduction pursuant to Section 3(b)(i), Section 3(b)(ii), Section 3(b)(iv), Section 3(b)(v),
Section 3(b)(vi), Section 3(b)(vii), Section 3(b)(viii) or Section 3(b)(ix).
Residual Gain
or
Residual Loss
means any item of gain or loss, as the case
may be, of the Partnership recognized for federal income tax purposes resulting from a sale,
exchange or other disposition of a Contributed Property (other than Depletable Property), to the
extent such item of gain or loss is not allocated pursuant to Section 4(d)(i)(A) to eliminate
Book-Tax Disparities.
Simulated Basis
means the Carrying Value of any Depletable Property.
Simulated Depletion
means, with respect to a Depletable Property, a depletion
allowance computed solely for the purposes of maintaining Capital Accounts in accordance with
Section 2(b)(iv) and in the manner specified in Treasury Regulation
Section 1.704-1(b)(2)(iv)(k)(2). For purposes of computing Simulated Depletion with respect to any
property, the Simulated Basis of such property shall be deemed to be the Carrying Value of such
property, and in no event shall such allowance for Simulated Depletion, in the aggregate, exceed
such Simulated Basis.
Simulated Gain
means the excess, if any, of the amount realized from the sale or
other disposition of a Depletable Property over the Carrying Value thereof.
Simulated Loss
means the excess, if any, of the Carrying Value of a Depletable
Property over the amount realized from the sale or other disposition of such property.
Sponsor Common Unit
means any Common Unit held by a Person that (i) holds, or at any
time from and after the creation of the Partnership has held, one or more Subordinated Units and
(ii) has a Capital Account that differs (or prior to the end of the Subordination Period, could
differ) in amount from the (i) product of the number of Subordinated Units, if any, and Common
Units held by such Person times (ii) the Uniform Per Unit Capital Amount.
Subordinated Unit
has the meaning ascribed to such term in the Trust Agreement.
Trust Act
has the meaning ascribed to such term in the Trust Agreement.
Trust Unit
means a beneficial, undivided interest in the Partnership represented by
a Common Unit or a Subordinated Unit.
Uniform Per Unit Capital Amount
means, as of any date of determination, the Capital
Account, stated on a per Trust Unit basis, underlying any Public Common Unit.
Exhibit
A - 14
EXHIBIT B
TO
AMENDED AND RESTATED
TRUST AGREEMENT OF ECA MARCELLUS TRUST I
COMMON UNITS ISSUED TO PRIVATE INVESTORS
|
|
|
|
|
Private Investor
|
|
Number of Units
|
W. Gaston Caperton, III
|
|
|
24,933
|
|
Clark Clement
|
|
|
18,700
|
|
Mike Cochran
|
|
|
6,233
|
|
Peter H. Coors
|
|
|
62,333
|
|
Rodney Cox
|
|
|
6.233
|
|
L.B. Curtis
|
|
|
14,461
|
|
John J. Dorgan
|
|
|
12,467
|
|
Randy Farkosh
|
|
|
6,233
|
|
John S. Fischer
|
|
|
62,333
|
|
Michael S. Fletcher
|
|
|
6,233
|
|
J. Michael Forbes
|
|
|
8,677
|
|
Mark Fry
|
|
|
6.233
|
|
Thomas R. Goodwin
|
|
|
37,400
|
|
Dan Graham
|
|
|
15,040
|
|
Clink Hipke
|
|
|
8,677
|
|
Dave Jordan
|
|
|
6,233
|
|
F.H. McCullough III
|
|
|
97,240
|
|
Denny McGowan
|
|
|
6,233
|
|
John Mork*
|
|
|
766,451
|
|
Julie M. Mork*
|
|
|
766,451
|
|
Kyle M. Mork
|
|
|
72,307
|
|
Arthur C. Nielsen, Jr.
|
|
|
6,233
|
|
George OMalley
|
|
|
6,363
|
|
Jay S. Pifer
|
|
|
6,233
|
|
Niki Randolph
|
|
|
11,569
|
|
Peter Rebstock
|
|
|
6.233
|
|
Kent Schamp
|
|
|
7,665
|
|
Pete Sullivan
|
|
|
6,233
|
|
Donald C. Supcoe
|
|
|
12,467
|
|
Rod Winters
|
|
|
6,233
|
|
|
|
|
*
|
|
766,451 represents gross number of Common Units held by John & Julie M. Mork.
|
Exhibit
B - 1
SCHEDULE A
FEE SCHEDULE OF TRUSTEE
1.
The fee will be $150,000 annually until January 1, 2016.
2. The fee will be adjusted annually thereafter, up or down, by the amount of the change
in the All Urban Consumers (CPI-U) US City Average for the immediately preceding calendar year,
not to exceed +/- 3% in any one year.
Schedule
A - 1
Exhibit 10.1
PERPETUAL OVERRIDING ROYALTY INTEREST CONVEYANCE
(PDP)
COMMONWEALTH OF PENNSYLVANIA
INTRODUCTION
THIS PERPETUAL OVERRIDING ROYALTY INTEREST CONVEYANCE (this
Conveyance
) from ENERGY
CORPORATION OF AMERICA, a West Virginia corporation, with offices at 4643 South Ulster Street,
Suite 100, Denver, Colorado 80237-2867
Assignor
), to The Bank of New York Mellon Trust
Company, N.A., a national banking association organized under the laws of the State of New York,
with offices at 919 Congress Avenue, Suite 500, Austin, Texas 78701, as trustee (the
Trustee
), acting not in its individual capacity but solely as trustee of the ECA
Marcellus Trust I (the
Trust
) under that certain Amended and Restated Trust Agreement
dated as of July 7, 2010 (the
Trust Agreement
), is delivered to be effective as of 7:00
a.m., Eastern Time, April 1, 2010 (the
Effective Time
). All capitalized terms not
otherwise defined herein shall have the meanings ascribed to such terms in Article II below.
ARTICLE I
CONVEYANCE
Section 1.01 The Grant
. For and in consideration of good and valuable consideration paid by
Trustee on behalf of the Trust to Assignor, the receipt and sufficiency of which are hereby
acknowledged, Assignor has, subject to the terms of this Conveyance, BARGAINED, SOLD, GRANTED,
CONVEYED, TRANSFERRED, ASSIGNED, SET OVER, and DELIVERED, and by these presents does hereby
BARGAIN, SELL, GRANT, CONVEY, TRANSFER, ASSIGN, SET OVER, and DELIVER unto Trustee on behalf of the
Trust, as a perpetual net overriding royalty interest (the
Royalty Interest
), a variable
undivided interest in and to the Subject Interests, to the extent that the Subject Interests
pertain to Gas in, under and that may be produced and saved from the wellbores of the Wells,
sufficient to cause the Trust to receive the Trust Gas or proceeds thereof calculated and paid in
money in accordance with the further terms and conditions of this Conveyance.
Section 1.02 Habendum Clause
. TO HAVE AND TO HOLD the Royalty Interest, together with all and
singular the rights and appurtenances thereto in anywise belonging, unto Trustee on behalf of the
Trust, its successors and assigns, subject to terms and provisions of this Conveyance.
Section 1.03 Warranty
.
(a)
The Warranty
. Assignor warrants to the Trust, its successors and assigns, that the
Subject Interests are free of all Encumbrances created by, through, or under Assignor, but not
otherwise, except for the Permitted Encumbrances, and that Assignors title to the Wells entitles
Assignor to a Net Revenue Interest with respect to the Target Formation in
1
each such Well no less
than the Net Revenue Interest with respect to the Target Formation for that Well set forth in
Exhibit A
.
(b)
Sole Remedy
. In the event of a breach of the foregoing warranty for any Subject Interest,
the Trusts sole remedy shall be to receive payment on each applicable Quarterly Payment Date, out
of Assignors Net Share of Gas from other Wells in excess of that subject to the Royalty Interest,
the royalty interest created pursuant to the Term PDP Conveyance and the royalty interest created
pursuant to the Investor Conveyance (
Assignor Retained Gas
), subject to offset as
provided below and without interest (except such interest payable under this Conveyance on payments
made after the applicable due date as described in Section 5.02 below), of an amount equal to the
difference between (i) Trust Gas (or the proceeds from the sale thereof) that the Trust would have
received with respect to such Well in the applicable Computation Period if such warranty had not
been breached and (ii) Trust Gas (or the proceeds from the sale thereof) that the Trust actually
received during that Computation Period with respect to that Well, to the extent such difference is
attributable to the breach of the warranty, but not to the extent that such difference is
attributable to any other cause, and any such amounts of Assignor Retained Gas shall be treated as
Trust Gas.
(c)
Right of Offset
. If any Subject Interest owned by Assignor ever proves to be larger as of
the Effective Date than the Subject Interest reflected in the exhibits to this Conveyance and if,
as a result, the Trust receives a greater amount of Trust Gas (or the proceeds from the sale
thereof) with respect to that Subject Interest than the Trust would otherwise have received if the
Subject Interest had been the size warranted, then such increased amounts, whenever received by the
Trust, may be treated by Assignor as a credit or offset (without interest) against any amounts
payable to the Trust under Section 1.03(b).
(d)
DISCLAIMER
. EXCEPT FOR THE WARRANTIES OF TITLE GIVEN IN SECTION 1.03(a), ASSIGNOR MAKES
THIS CONVEYANCE AND ASSIGNS THE ROYALTY INTEREST WITHOUT RECOURSE, COVENANT OR WARRANTY OF TITLE OF
ANY KIND, EXPRESS, IMPLIED OR STATUTORY. ANY COVENANTS OR WARRANTIES IMPLIED BY STATUTE OR LAW BY
THE USE HEREIN OF THE WORDS
GRANT
,
CONVEY
OR OTHER SIMILAR WORDS ARE HEREBY EXPRESSLY
DISCLAIMED, WAIVED AND NEGATED. WITHOUT LIMITING THE GENERALITY OF THE TWO PRECEDING SENTENCES,
TRUSTEE ON BEHALF OF THE TRUST ACKNOWLEDGES THAT ASSIGNOR HAS NOT MADE, AND ASSIGNOR HEREBY
EXPRESSLY DISCLAIMS AND NEGATES, AND THE TRUSTEE ON BEHALF OF THE TRUST HEREBY EXPRESSLY WAIVES,
ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE RELATING
TO (i) PRODUCTION RATES, RECOMPLETION OPPORTUNITIES, DECLINE RATES OR THE QUALITY, QUANTITY OR
VOLUME OF THE RESERVES OF HYDROCARBONS, IF ANY, ATTRIBUTABLE TO THE SUBJECT INTERESTS, (ii) ANY
IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (iii) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS
FOR A PARTICULAR PURPOSE, (iv) ANY IMPLIED OR EXPRESS
WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, AND (v) ANY AND ALL IMPLIED
WARRANTIES EXISTING UNDER ANY APPLICABLE LEGAL REQUIREMENT; IT BEING THE EXPRESS INTENTION OF BOTH
THE TRUST AND ASSIGNOR THAT THE ROYALTY INTEREST IS HEREBY ASSIGNED TO THE
2
TRUSTEE ON BEHALF OF THE
TRUST ON AN AS IS AND WHERE IS BASIS WITH ALL FAULTS, AND THAT THE TRUSTEE ON BEHALF OF THE
TRUST HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS THE TRUST DEEMS APPROPRIATE. ASSIGNOR AND
THE TRUSTEE ON BEHALF OF THE TRUST AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LEGAL
REQUIREMENTS TO BE EFFECTIVE, THE DISCLAIMERS OF CERTAIN WARRANTIES CONTAINED IN THIS SECTION ARE
CONSPICUOUS DISCLAIMERS FOR THE PURPOSES OF ANY APPLICABLE LEGAL REQUIREMENT.
(e)
Substitution of Warranty
. This instrument is made with full substitution and subrogation
of the Trust in and to all covenants of warranty by Third Persons (other than Affiliates of
Assignor) heretofore given or made with respect to the Wells, the Subject Interests or any part
thereof or interest therein.
ARTICLE II
DEFINITIONS
This Article II defines certain capitalized words, terms, and phrases used in this Conveyance.
Certain other capitalized words, terms, and phrases used in this Conveyance are defined elsewhere
in this Conveyance.
Affiliate
means, for any specified Person, another Person that controls, is
controlled by, or is under common control with, the specified Person. Control, in the preceding
sentence, refers to the possession by one Person, directly or indirectly, of the right or power to
direct or cause the direction of the management and policies of another Person, whether through the
ownership of voting securities, by contract, or otherwise.
AMI Area
means that area depicted on the map set forth on
Exhibit B
as the
AMI Area.
Assignee Conveyances
means for purposes of Section 11.02(a), this Conveyance, the
Term PUD Conveyance, the Term PDP Conveyance, the Perpetual PUD Conveyance, and the Investor
Conveyance, considered collectively.
Assignor
is defined in the Introduction to this Conveyance and also includes all
permitted successors and assigns of Assignor.
Assignor Retained Gas
is defined in Section 1.03(a).
Assignors Net Share of Gas
means the share of Subject Gas from each Well that is
attributable to Assignors Net Revenue Interest in that Well.
Business Day
means any day that is not a Saturday, Sunday, a holiday determined by
the New York Stock Exchange, Inc. as affecting ex dates or any other day on which national
banking institutions in New York, New York are closed as authorized or required by law.
Chargeable Costs
is defined in Section 3.02(a).
3
Computation Period
means each calendar quarter commencing at the Effective Time,
with each calendar quarter being deemed to have begun at 7:00 a.m. Eastern Time on the first day of
such calendar quarter and to have ended at 7:00 a.m. Eastern Time on the first day of the next
calendar quarter, except for the first Computation Period, which shall be deemed to have begun at
the Effective Time and to have ended at 7:00 a.m. Eastern Time on July 1, 2010.
Conveyance
is defined in the Introduction to this Conveyance.
Development Agreement
means that certain Development Agreement between Assignor and
the Trustee dated as of even date herewith.
Development Well
has the meaning given such term in the Development Agreement.
Drilling Obligation
means Assignors obligation set forth in Section 2.01(a) of the
Development Agreement.
Drilling Obligation Completion Date
has the meaning given to such term in the
Development Agreement.
Effective Time
is defined in the Introduction to this Conveyance.
Encumbrance
means any mortgage, lien, security interest, pledge, charge,
encumbrance, limitation, preferential right to purchase, consent to assignment, irregularity,
burden, or defect.
Excess Costs
means, in any Computation Period, the excess of Chargeable Costs for
that Computation Period over the amount determined by multiplying Assignors Net Share of Gas
produced during the Computation Period by the Sales Price for that Computation Period. Excess
Costs shall bear interest at the Prime Interest Rate from the end of the Computation Period in
which such costs were incurred to the date that Assignor recovers such amounts from Trust Proceeds.
Fair Value
means, with respect to any portion of the Royalty Interest to be released
pursuant to Section 11.02 or 11.03 in connection with a sale or release of any Well or Subject
Interest, an amount of net proceeds which could reasonably be expected to be obtained from the sale
of such portion of the Royalty Interest to a party which is not an Affiliate of either the Assignor
or the Trust on an arms-length negotiated basis, taking into account relevant market conditions
and factors existing at the time of any such proposed sale or release, such net proceeds to be
determined by deducting the Trusts proportionate share of sales costs, commissions and brokerage
fees, if any (based on the ratio of (i) the fair market value of the portion of the Royalty
Interest being released to (ii) the fair market value of the Wells and Subject Interests being
transferred (including the value of the Royalty Interest being released).
Farmout Agreements
means any farmout agreement, participation agreement, exploration
agreement, development agreement or any similar agreement.
Force Majeure
is defined in Section 13.02.
4
Gas
means natural gas and all other gaseous hydrocarbons, excluding condensate,
butane, and other liquid and liquefiable components that are actually removed from the Gas stream
by separation, processing, or other means. Any oil, gas or mineral lease or other similar
instrument that covers Gas shall be considered a Gas lease hereunder, even if it also covers
other substances.
Governmental Authority
means the United States of America, any state, commonwealth,
territory, or possession thereof, and any political subdivision of any of the foregoing, including
courts, departments, commissions, boards, bureaus, agencies, and other instrumentalities.
Greene County Gathering System
means Assignors Greene County, Pennsylvania
Gathering System.
Investor Conveyance
means that certain Private Investor Overriding Royalty Interest
Conveyance by and between the Private Investors and the Trust dated effective as of the Effective
Time.
Legal Requirement
means any law, statute, ordinance, decree, requirement, order,
judgment, rule, or regulation of, including the terms of any license or permit issued by, any
Governmental Authority.
MBtu
means one thousand British thermal units and
MMBtu
means one million
British thermal units.
Mcf
means one thousand cubic feet of Gas and
MMcf
means one million cubic
feet of Gas, measured and expressed in each case at the same temperature, pressure, and other
conditions of measurement (a) provided in any contract for the purchase of Gas from the Subject
Interest or, (b) if no such contract exists, provided by applicable state law for purposes of
reporting production to Governmental Authorities.
Mortgages
means, collectively, (i) the Drilling Support Lien (as such term is
defined in the Development Agreement) and (ii) that certain Mortgage, Assignment, Security
Agreement, Fixture Filing and Financing Statement, granted by Assignor in favor of the Trust dated
as of even date herewith, which agreement grants the Trust a lien and security interest on the
Royalty Interest (as such term is defined in each of the Conveyances).
Net Revenue Interest
means the interest, stated as a decimal fraction, in Subject
Gas production from a Well that Assignor is entitled to take with respect to Assignors Subject
Interest in that Well and the associated Subject Lands, subject only to the Permitted Production
Burdens (treated in each case as a reduction in interest rather than as a cost).
Non-Affiliate
means, for any specified Person, any other Person that is not an
Affiliate of the specified Person.
Notice
is defined in Section 14.01.
5
Party
, when capitalized, refers to Assignor or Trustee.
Parties
, when
capitalized, refers to Assignor and Trustee.
Permitted Encumbrances
means:
(a) the Permitted Production Burdens;
(b) contractual obligations arising under operating agreements, Farmout Agreements,
production sales contracts, leases, assignments, and other similar agreements that may
affect the properties or their titles;
(c) pooling and unitization agreements, declarations, orders, or Legal Requirements to
secure payment of amounts not yet delinquent;
(d) liens that arise in the normal course of operations, such as liens for unpaid
taxes, statutory liens securing unpaid suppliers and contractors, and contractual liens
under operating agreements, in any case, that are not yet delinquent or, if delinquent, are
being contested in good faith in the normal course of business;
(e) conventional rights of reassignment that obligate Assignor to reassign all or part
of any Subject Interest to a Third Person if Assignor intends to release or abandon such
interest before the expiration of the primary term or other termination of such interest;
(f) easements, rights-of-way, servitudes, permits, surface leases, surface use
restrictions, and other surface uses and impediments on, over, or in respect of the Subject
Interests that are not such as to interfere materially with the operation, value, or use of
the Subject Interests;
(g) covenants, conditions, and other terms subject to which Assignor acquired the
Subject Interests, to the extent they do not cause Assignors Net Revenue Interests in any
Well related to the Target Formation to be less than the Net Revenue Interest for that Well,
as stated in
Exhibit A
;
(h) rights reserved to or vested in any Governmental Authority to control or regulate
any Subject Interests in any manner, and all applicable Legal Requirements;
(i) the terms of the instruments creating the Subject Interests and Subject Lands;
(j) any Prior Reversionary Interests that affect the Subject Interests; and
(k) the Mortgages,
provided that such aforementioned encumbrances are of the type and nature customary in the oil
and gas industry, as conducted in the Appalachian Basin, and do not, alone or in the aggregate,
materially and adversely affect the operation, value, or use of any Subject Interest, and all to
the extent, and for so long as, such Permitted Encumbrances are otherwise valid and enforceable
6
against the Subject Interests, without recognizing, expressly or by implication, any rights or
interests in any Third Person or Governmental Authority that such Third Person or Governmental
Authority does not otherwise lawfully possess.
Permitted Production Burdens
means (a) all Production Burdens that affected the
Subject Interests when they were acquired by Assignor and (b) all Production Burdens that were
created by Assignor; in each case, to the extent they do not cause Assignors Net Revenue Interest
related to the Target Formation in any Well to be less than the Net Revenue Interest for that Well
reflected in
Exhibit A
.
Perpetual PUD Conveyance
means that certain Perpetual Overriding Royalty Interest
Conveyance (PUD) by and between Assignor and the Trust dated effective as of the Effective Time.
Person
means any natural person, corporation, partnership, trust, estate, or other
entity, organization, or association.
Private Investors
means the individuals and entities set forth on Exhibit C attached
hereto.
Post Production Cost Charge
is defined in Section 3.02(c).
Prime Interest Rate
is defined in Section 5.02(b).
Prior Reversionary Interest
means any contract, agreement, Farmout Agreement, lease,
deed, conveyance or operating agreement that exists as of the Effective Time or that burdens the
Subject Interests at the time such Subject Interests are acquired, that by the terms thereof
requires a Person to convey a part of the Subject Interest to another Person or to permanently
cease production of any Well including, any operating agreements, oil and gas leases, coal leases,
and other similar agreements or instruments affecting the Subject Interests.
Production Burdens
means, with respect to any Subject Lands, Subject Interests, or
Subject Gas, all royalty interests, overriding royalty interests, production payments, net profits
interests, Prior Reversionary Interests and other similar interests that constitute a burden on,
are measured by, or are payable out of the production of Gas or the proceeds realized from the sale
or other disposition thereof.
Quarterly Payment Amount
is defined in Section 5.01(a).
Quarterly Payment Date
is defined in Section 5.01(c).
Reasonably Prudent Operator Standard
means the standard of conduct of a reasonably
prudent oil and gas operator in the AMI Area under the same or similar circumstances, acting with
respect to its own property and disregarding the existence of the Royalty Interest as a burden on
such property.
Reserved Amounts
means those amounts set aside from Trust Proceeds by Assignor in
accordance with the provisions of Section 5.04 below.
7
Royalty Interest
is defined in Section 1.01.
Sales Price
means, for any Computation Period, the sale price received by Assignor
per Mcf or per MMBtu for Trust Gas determined in accordance with the following provisions:
(a) sale refers to any sale, exchange, or other disposition of Trust Gas for value,
the value of such Gas that is exchanged or otherwise disposed of for valuable consideration
being the sales price that Assignor receives for any such Gas sold pursuant to Section 4.01
for any such Gas.
(b) amounts of money not paid to Assignor when due by any purchaser of Trust Gas (for
example, Taxes or other amounts withheld or deducted by any such purchaser) shall not be
included within the Sales Price until actually received by, or credited to the account of,
Assignor;
(c) advance payments and prepayments for future deliveries of Trust Gas shall be
included within the Sales Price, without interest, when that volume of Gas subject to the
advance payments or prepayments is actually produced;
(d) loan proceeds received by Assignor shall not be treated as a component of the
applicable Sales Price; and
(e) if a controversy or possible controversy exists, whether by reason of any statute,
order, decree, rule, regulation, contract, or otherwise, between Assignor and any purchaser
of Trust Gas or any other Person, about the correct Sales Price of any Trust Gas, about
deductions from the Sales Price, about Assignors right to receive the proceeds of any sale
of Trust Gas, or about any other matter, then monies withheld by the purchaser or deposited
by it with an escrow agent or if Assignor receives any monies and promptly deposits such
monies with a Third Person escrow agent as a result of such controversy, such monies shall
not be included within the Sales Price until received by or returned to Assignor, as
applicable.
Subject Gas
means Gas in and under, and that may be produced, saved, and sold from a
Well, insofar and only insofar as such Gas is produced from the Target Formation, subject to the
following:
(a) Subject Gas excludes Gas that is:
(i) lost in the production, gathering, or marketing of Gas;
(ii) used (A) in conformity with ordinary and prudent operations on the Subject
Lands, including drilling and production operations or (B) in connection with plant
operations (whether on or off the Subject Lands) for processing or compressing the
Subject Gas;
(iii) taken by a Third Person to recover costs, or some multiple of costs, paid
or incurred by that Third Person under any operating agreement, unit
8
agreement, or other agreement in connection with nonconsent operations
conducted (or participated in) by that Third Person;
(iv) retained by a Third Person for gathering, transportation, processing or
marketing services related to the Subject Gas in lieu of or in addition to cash
payment for such services, to the extent such agreement is permitted under this
Conveyance; and
(v) in excess of the percentage attributable to Assignors Net Share of Gas
taken by Assignor to recover costs, or some multiple of costs, paid or incurred by
Assignor under any operating agreement, unit agreement, or other agreement in
connection with nonconsent operations conducted (or participated in) by Assignor.
(b) Subject Gas includes Gas, not otherwise excluded above, that is sold or exchanged
for other Gas, or otherwise disposed of for valuable consideration.
Subject Interests
means Assignors undivided interests in the Subject Lands, whether
as lessee under Gas leases, as an owner of the Subject Gas (or the right to extract such Gas), or
otherwise, by virtue of which undivided interests Assignor has the right to conduct exploration,
drilling, development, and Gas production operations on the Subject Lands, or to cause such
operations to be conducted, or to participate in such operations by paying and bearing all or any
part of the costs, risks, and liabilities of such operations, to drill, test, complete, equip,
operate, and produce Wells to exploit the Gas. Subject Interests includes all extensions of, and
all renewal Gas leases covering, the Subject Lands (or any portion thereof) obtained by Assignor,
or any Affiliate thereof, within six (6) months after the expiration or termination of any such Gas
lease. Subject Interests do not include (a) Assignors rights to substances other than Gas; (b)
Assignors rights to Gas under contracts for the purchase, sale, transportation, storage,
processing, or other handling or disposition of Gas; (c) Assignors interests in, or rights to Gas
with respect to, pipelines, gathering systems, storage facilities, processing facilities, or other
equipment or facilities, other than the Wells; or (d) subject to Section 1.03(c), any additional,
or enlarged interests in the Wells, Subject Lands or Subject Gas, except those reflected in
Exhibit A
or any extensions and renewals covered by the preceding sentence. Subject
Interests may be owned or claimed by Assignor by virtue of grants or reservations in deeds, Gas
leases, or other instruments, or by virtue of operating agreements, pooling or unitization
agreements or orders, or other kinds of instruments, agreements, or documents, legal or equitable,
recorded or unrecorded. The Subject Interests are subject to the Permitted Encumbrances.
Subject Lands
means the lands subject to or covered by the oil and gas leases
described in
Exhibit A
, insofar and only insofar as they cover the Target Formation,
subject to the exceptions, exclusions and reservations set forth on such
Exhibit A
.
Target Formation
means what is generally referred to as the Marcellus Shale
formation and for purposes of this Conveyance is defined as that formation located from the bottom
of the Tully Formation (as seen by the ECA Kemsod #1 Well, API number 37-059-25209), at a depth of
7,881 feet, to the top of the Huntersville Chert Formation (as seen by the ECA Kemsod #1 Well, API
number 37-059-25209), at a depth of 8,204 feet.
9
Term PDP Conveyance
means that certain Term Overriding Royalty Interest Conveyance
(PDP) by and between Assignor and Eastern Marketing Corporation dated effective as of the Effective
Time.
Term PUD Conveyance
means that certain Term Overriding Royalty Interest Conveyance
(PUD) by and between Assignor and Eastern Marketing Corporation dated effective as of the Effective
Time.
Taxes
is defined in Section 3.02(b).
Third Person
means a Person other than Assignor or Trustee.
Transfer
including its syntactical variants, means any assignment, sale, transfer,
conveyance, or disposition of any property; provided, Transfer as used herein does not include the
granting of a security interest in Assignors interest in any property including the Subject
Interests or Subject Lands.
Trust
is defined in the Introduction to this Conveyance.
Trust Agreement
is defined in the Introduction to this Conveyance.
Trust Gas
is defined in Section 3.01.
Trust Proceeds
means, for any Computation Period, proceeds received by Assignor for
the account of the Trust, as the Trusts marketing and payment agent and representative, from the
sale of Trust Gas under this Conveyance less Chargeable Costs calculated in accordance with Section
3.03.
Trustee
is defined in the Introduction to this Conveyance and also includes all
successor and substitute trustees under the Trust Agreement.
Well
means the borehole of each Gas well more particularly described in
Exhibit A
.
Working Interest
means with respect to any Well, the interest, stated as a decimal
fraction, in and to such Well that is burdened with the obligation to bear and pay costs and
expenses of maintenance, development and operations on or in connection with such Well.
ARTICLE III
CALCULATION OF TRUST GAS
Section 3.01 Definition
.
Trust Gas
is that volume of Gas which the Trust is entitled to
receive in any Computation Period under this Conveyance, calculated in accordance with the
following formula:
With respect to any Well:
10
Forty and One-Half Percent (40.5%) X (Assignors Net Share of Gas produced during
that Computation Period).
For purposes of calculating Trust Gas hereunder, if, during any Computation Period, Assignor is
unable to determine the precise volume of Gas produced, sold and attributable to Assignors Net
Share of Gas, then Assignor shall, in good faith and in accordance with the Reasonably Prudent
Operator Standard, estimate the volume of such Gas produced, sold and attributable to Assignors
Net Share of Gas for such Computation Period. Assignor shall adjust Assignors Net Share of Gas
upward or downward, as the case may be, in the next or subsequent Computation Periods to reflect
the difference between the estimated volume and the actual amount of Gas produced, sold and
attributable to Assignors Net Share of Gas in the Computation Period for which such estimate was
made.
Section 3.02 Chargeable Costs
.
(a)
Definition
. Subject to Section 5.04 hereof, for each Computation Period,
Chargeable
Costs
means the sum of (i) Taxes, (ii) the Post Production Cost Charge and (iii) Excess Costs
from prior Computation Periods that (in each case) are actually paid or are deemed to have been
paid by Assignor during that Computation Period or paid or deemed to have been paid by Assignor
during a prior Computation Period and not included in any prior Computation Periods Chargeable
Costs.
(b)
Taxes
.
Taxes
means general property, ad valorem, production, severance, sales,
gathering, windfall profit, excise, and other taxes, except income taxes, assessed or levied on or
in connection with the Subject Interests, the Royalty Interest, this Conveyance, production of
Subject Gas, Assignors Net Share of Gas, the Trust Gas (or the proceeds from the sale thereof), or
facilities or equipment on the Subject Lands that are used for the production, dehydration,
treatment, processing, gathering, or transportation of Subject Gas, or against Assignor as owner of
the Subject Interests or paid by Assignor on behalf of the Trust as owner of this Royalty Interest.
(c)
Post Production Cost Charge
.
Post Production Cost Charge
means those costs
incurred by Assignor (including, internal costs and Third Person costs) to gather, transport,
compress, process, treat, dehydrate and market the Subject Gas, including any costs as may be
required to make merchantable and to deliver such Gas to market; provided, any internal costs of
Assignor and its Affiliates that are part of the Post Production Cost Charge shall not materially
exceed the costs prevailing in the area where the Subject Gas is being produced for similar
services; and provided, further, with respect to marketing costs, only Non-Affiliate marketing fees
and costs shall be included, and marketing costs of Assignor and its Affiliates with respect to any
Subject Gas will be specifically excluded from the Post Production Cost Charge; and provided,
further, until the Drilling Obligation Completion Date, any such internal costs of Assignor and its
Affiliates (excluding costs for any fuel that is used in the compression process, including
equivalent electricity charges in instances where electric compressors are used) associated with
the Greene County Gathering System shall be limited to $0.52 per MMBtu
of Trust Gas gathered. Any costs, fees or expenses that are properly charged or allocated to
the
11
Trust Gas pursuant to another provision of this Conveyance (including, as provided for in the
definition of Subject Gas) shall not be included as part of the Post Production Cost Charge.
(d)
Operating and Drilling Costs
. All costs associated with or paid or incurred in connection
with the drilling, testing, completing, developing and operating the Wells or associated with the
Subject Interests other than Taxes and Post Production Cost Charges shall be borne solely by
Assignor and shall not be included as Chargeable Costs.
Section 3.03 Trust Proceeds
.
Trust Proceeds
means the volume of Trust Gas (on an Mcf
basis or MMBtu basis, as applicable) for the applicable Computation Period multiplied by the
relevant Sales Price less the Chargeable Costs associated with such Trust Gas for the applicable
Computation Period.
ARTICLE IV
MARKETING OF TRUST GAS
Section 4.01 Rights and Duties Regarding Sale of Trust Gas
. Assignor shall market or shall cause
to be marketed Assignors Net Share of Gas (including the Trust Gas) in good faith and in
accordance with the Reasonably Prudent Operator Standard and Section 4.02(d). Assignor shall use
its reasonable efforts in connection with any sale of Assignors Net Share of Gas (including the
Trust Gas) to obtain, as soon as reasonably practicable, full payment for such Gas; provided,
however, that it shall not be considered a breach of Assignors marketing duty or standard of
conduct for Assignor to market such Gas to an Affiliate of Assignor, so long as Assignor does not
market such Gas at a volume-weighted average price lower than the volume-weighted average price
upon which Assignor pays royalties to the owners of the other royalty interests in the Subject Gas,
save and excepting Chargeable Costs provided for in Article III hereof.
Section 4.02 Trusts Agent and Representative
.
(a)
Appointment
. Trustee on behalf of the Trust appoints Assignor as the Trusts agent and
representative to market and deliver or cause to be marketed and delivered all Trust Gas and to
collect and receive all payments therefrom under any gas purchase agreement or contract without
deduction (except to the extent Chargeable Costs are deducted for any Computation Period). The
appointment of Assignor as the Trusts agent and representative for such purpose is a material item
of consideration to the Parties in connection with the execution and delivery of this Conveyance.
Trustee on behalf of the Trust may not remove Assignor from office as the Trusts agent and
representative, except for cause upon a material breach by Assignor of its duties to the Trust
under this Conveyance.
(b)
Duties and Powers
. As the Trusts agent and representative, Assignor shall receive all
payments for the sale of the Trust Gas and account to Trustee on behalf of the Trust, receive and
make all communications with the purchaser of such Gas, and otherwise act
and speak for the Trust in connection with the sale of the Trust Gas. Third Persons may rely
conclusively on the authority of Assignor to market the Trust Gas, and with respect to Third
Persons, the Trust shall be conclusively bound by the acts of Assignor in connection with the sale
of Trust Gas. It shall not be necessary for Trustee on behalf of the Trust to join Assignor in
12
the execution of any division order, transfer order, or other instrument, agreement, or document
relating to the sale of the Trust Gas. Third Persons may pay all Trust Proceeds for the sale of
such Gas directly to Assignor, without the necessity of any joinder by or consent of Trustee on
behalf of the Trust or any inquiry into the use or disposition of such proceeds by Assignor.
(c)
Prohibited Acts
. Assignor may not act for or bind the Trust on any matter, except the
marketing and delivery of the Trust Gas under this Article IV.
(d)
Standard of Conduct
. In exercising its powers and performing its duties as the Trusts
agent and representative, Assignor shall act in good faith and in accordance with the Reasonably
Prudent Operator Standard. It shall not be a violation of such standard of conduct for Assignor
(i) to sell Assignors Net Share of Gas or the Trust Gas to an Affiliate pursuant to any gas
purchase agreement or contract, or (ii) to delegate some or all of Assignors duties as the Trusts
agent and representative to its Affiliates (so long as such Affiliates perform in good faith and in
accordance with the Reasonably Prudent Operator Standard), with Assignor remaining liable to the
Trust for the performance of such Affiliates.
(e)
Termination of Authority
. Assignor may not resign as the Trusts agent and representative
without the prior written consent of the Trustee on behalf of the Trust, except that Assignor may
resign as the Trusts agent and representative without such consent with respect to any Subject
Interests assigned, sold, transferred, or conveyed by Assignor in accordance with the terms of this
Conveyance. If such sale is made subject to the Royalty Interest, Assignor must cause the
purchaser to assume the duties of the Trusts agent and representative with respect to the Subject
Interests acquired by that purchaser and to be bound by the provisions of this Article IV.
Section 4.03 Delivery of Subject Gas
. Assignor (whether or not it is serving as the Trusts agent
and representative) shall deliver or cause to be delivered Assignors Net Share of Gas (including
Trust Gas) to the purchasers thereof into the pipelines to which the Wells producing such Gas are
connected.
Section 4.04 Processing
. Assignor may process Assignors Net Share of Gas (including Trust Gas) to
remove liquid and liquefiable hydrocarbons and may commit any of the Subject Interests (including
the Royalty Interest attributable thereto) to an agreement for processing minerals (pursuant to
which, for example, the plant owner or operator receives a portion of the Subject Gas or plant
products therefrom or proceeds of the sale thereof as a fee for processing), so long as Assignor
enters into such processing arrangements in good faith and in accordance with the Reasonably
Prudent Operator Standard. The Trust shall be bound by such arrangements, shall permit Assignors
Net Share of Gas (including the Trust Gas) to be processed by Assignor or its contractor, and shall
have no right to any liquid or liquefiable hydrocarbons obtained by such processor or to the
proceeds from the sale thereof. Trustee shall not, however, be personally liable for any costs or
risks associated with such processing operations, but the Trust shall indirectly suffer the Btu
reduction and volume reductions associated with processing through corresponding reductions in the
Btu content and volumes of the Trust Gas.
13
ARTICLE V
PAYMENT
Section 5.01 Obligation to Pay
.
(a)
Quarterly Payment Amount
. On each Quarterly Payment Date, Assignor shall prepare, in good
faith, an estimate of the cash to be paid to the Trust from (A) all of the proceeds (including any
interest earned thereon and payable to the Trust pursuant to Section 5.01(b) or Section 5.01(e)) to
be paid to the Trust from the sale of Trust Gas produced during such Computation Period; plus (B)
all of the proceeds (including any interest earned thereon and payable to the Trust pursuant to
Section 5.01(b) or Section 5.01(e)) to be paid to the Trust from the sale of Trust Gas, if any,
produced during any prior Computation Periods, to the extent not previously taken into account for
purposes of determining a Quarterly Payment Amount for any prior Computation Periods, as such sum
may be (x) increased or decreased as a result of any adjustments to the estimates that were
previously made pursuant to this Section 5.01(a) for any prior Computation Periods that are
necessary to accurately report the proceeds from the sale of Trust Gas for such prior Computation
Periods, (y) increased by the amount of any damages payable to the Trustee under Section 1.03(b)
above (subject to the right of set off in Section 1.03(c) above) during the most recently completed
Computation Period prior to such Quarterly Payment Date and (z) decreased by any Reserved Amounts
as provided in Section 5.04 below (
Quarterly Payment Amount
).
(b)
The Obligation
. After each Computation Period and on or before the Quarterly Payment Date
for that Computation Period, Assignor shall tender to Trustee the Quarterly Payment Amount with
respect to the applicable Computation Period. With respect to the final Computation Period,
Assignor shall tender to the Trustee all unexpended Reserved Amounts (together with any interest
accrued thereon).
(c)
Quarterly Payment Date
.
Quarterly Payment Date
for each Computation Period
means the thirtieth (30
th
) day after the end of such Computation Period. If such day is
not a Business Day, the Quarterly Payment Date shall be the next Business Day.
(d)
No Segregated Account
. All amounts received by Assignor from the sale of Assignors Net
Share of Gas and the Trust Gas, as applicable, for any Computation Period shall be held by Assignor
in one of its general bank accounts and Assignor will not be required to maintain a segregated
account for such funds.
(e)
Disputed Proceeds
. If Assignor receives any amounts of money from the sale of Trust Gas
that is subject to controversy or, in the reasonable opinion of Assignor, possible controversy,
Assignor shall promptly deposit the money with a Third Person escrow agent in a segregated
interest-bearing account. Such amount shall not be treated as a portion of Trust
Proceeds so long as it remains with such escrow agent, but shall be treated as a portion of
the Trust Proceeds, along with the accrued interest, when received from such escrow agent and paid
over to Trustee.
Section 5.02 Interest on Past Due Payments
.
14
(a)
Obligation to Pay
. Any Trust Proceeds or other amounts of money not paid by Assignor to
Trustee when due shall bear, and Assignor will pay, interest at the Prime Interest Rate on the
overdue amount commencing on the sixth (6
th
) day after such due date until such amount
is paid.
(b)
Definition
.
Prime Interest Rate
means the lesser of (i) the rate of interest
per annum publicly announced from time to time by The Bank of New York Mellon Trust Company, N.A.
as its prime rate in effect at its principal office in New York City (each change in the Prime
Rate to be effective on the date such change is publicly announced), with the understanding that
such banks prime rate may be one of several base rates, may serve as a basis upon which
effective rates are from time to time calculated for loans making reference thereto, and may not be
the lowest of such banks base rates or (ii) the maximum rate of interest permitted under
applicable Legal Requirement.
Section 5.03 Overpayments and Refunds
.
(a)
Overpayments
. If Assignor ever pays Trustee more than the amount of money then due and
payable to the Trust under this Conveyance, Trustee shall not be obligated to return the
overpayment, but Assignor may at any time thereafter deduct from Trust Proceeds and retain for its
own account an amount equal to the overpayment.
(b)
Refunds
. If Assignor is ever legally obligated to pay any Third Person, including any gas
purchaser or Governmental Authority, any refund, interest, penalty, or other amount of money,
because any payment of Trust Proceeds received by Assignor for the account of Trustee exceeded, or
allegedly exceeded, the amount due or lawful under any applicable contract, Legal Requirement, or
other obligation, Assignor may thereafter deduct from Trust Proceeds and retain for its own account
an amount equal to such payment.
Section 5.04 Reserved Amounts
. At any time and from time to time under this Conveyance and in
accordance with the Reasonably Prudent Operator Standard, Assignor may set aside from Trust
Proceeds amounts determined in good faith to economically accrue for a Computation Period with
respect to known or anticipated costs or liabilities (the
Reserved Amounts
) which may be
incurred in future Computation Periods with respect to Taxes assessed or levied with respect to a
time period in excess of a calendar quarter. As Reserved Amounts are expended by Assignor to cover
applicable Taxes in a Computation Period, Chargeable Costs shall be reduced in such Computation
Period by an amount equal to the Reserved Amounts so expended. In the event
that Assignor overestimates the cost of any Taxes for which it has set aside Reserved Amounts, the
excess amount shall be applied against any other Chargeable Costs (which shall be reduced by an
amount equal to such excess Reserved Amounts so expended), or paid as Trust Proceeds on the
Quarterly Payment Date following the Computation Period in which it is determined that Assignor has
set aside excess Reserved Amounts.
ARTICLE VI
RECORDS AND REPORTS
Section 6.01 Books, Records, and Accounts
.
15
(a)
Obligation to Maintain
. Assignor shall maintain true and correct books, records, and
accounts of (i) all transactions required or permitted by this Conveyance and (ii) the financial
information necessary to effect such transactions, including the financial information needed to
calculate each installment of Trust Proceeds.
(b)
Right of Inspection
. Trustee or its representative, at the Trusts expense, may inspect
and copy such books, records, and accounts in the offices of Assignor during normal business hours
and upon reasonable notice.
Section 6.02 Statements
.
(a)
Quarterly Statements
. On each Quarterly Payment Date, Assignor shall deliver to Trustee a
statement showing the computation of Trust Gas and Trust Proceeds for the preceding Computation
Period.
(b)
Annual Statements
. On the first Quarterly Payment Date after the end of each calendar
year, such statement shall also show the computation of Trust Proceeds for the preceding calendar
year.
(c)
Contents of Statements
. Without limiting the generality of the foregoing provisions in
this Section 6.02, each statement delivered by Assignor to Trustee pursuant to this Section 6.02
shall state, for the relevant period, (i) the total volumes of Subject Gas produced from the
Subject Lands, (ii) the total volumes of the Assignors Net Share of Gas, (iii) the total volumes
of Trust Gas, (iv) the applicable Sales Price, (v) the amount of Trust Proceeds due and payable for
the relevant period and (vi) the amounts of money, if any, due and payable by any purchaser of the
Subject Gas or the Trust Gas, the nonpayment of which resulted in the payment to Trustee of less
than Trust Proceeds for the relevant period. Notwithstanding the preceding, Assignor shall only be
required to provide the preceding information on an aggregate basis.
Section 6.03 The Trustees Exceptions to Quarterly Statements
. If Trustee on behalf of the Trust
takes exception to any item or items included in any quarterly statement required by Section 6.02,
Trustee must notify Assignor in writing within sixty (60)
days after Trustees receipt of such quarterly statement. Such Notice must set forth in reasonable
detail the specific charges complained of and to which exception is taken or the specific credits
which should have been made and allowed. Adjustments shall be made for all complaints and
exceptions that are justified. Notwithstanding anything to the contrary herein, all matters
reflected in Assignors statements for the preceding calendar year (or portion thereof) that are
not objected to by Trustee in the manner provided by this Section 6.03 shall be deemed correct as
rendered by Assignor to Trustee.
Section 6.04 Other Information
.
(a)
Disclosure
. At Trustees request, subject to applicable restrictions on disclosure and
transfer of information, Assignor shall give Trustee and its designated representatives (on behalf
of the Trust) reasonable access in Assignors office during normal business hours to all
geological, Well, and production data in Assignors possession or Assignors Affiliates
possession, relating to operations on the Subject Interests.
16
(b)
Disclaimer of Warranties and Liability
. Assignor makes no representations or warranties
about the accuracy or completeness of any such data, reports, or studies and shall have no
liability to Trustee, the Trust or any other Person resulting from such data, studies, or reports.
(c)
No Attribution
. Trustee shall not attribute to Assignor or to the consulting engineers
any reports or studies or the contents thereof in any securities filings or reports to owners or
holders of interests in the Trust.
(d)
Confidentiality
. All information furnished to the Trustee and its designated
representatives pursuant to this Section 6.04 is confidential and for the sole benefit of Trustee
on behalf of the Trust and shall not be disclosed by Trustee or its designated representatives to
any other Person, except to the extent that such information (i) is required in any report,
statement or testimony submitted to any Governmental Authority having or claiming to have
jurisdiction over Trustee or the Trust or submitted to bank examiners or similar organizations or
their successors, (ii) is required in response to any summons or subpoena or in connection with any
litigation, (iii) is believed to be required in order to comply with any applicable Legal
Requirement to the Trustee or the Trust, (iv) was publicly available or otherwise known to the
recipient at the time of disclosure or (v) subsequently becomes publicly available other than
through any act or omission of the recipient; provided, however, with respect to the disclosures
with respect to items (i), (ii) and (iii) above, Trustee will notify Assignor prior to any such
disclosure in order to provide Assignor an opportunity to seek to limit any such required
disclosure.
ARTICLE VII
NO LIABILITY OF THE TRUSTEE OR THE TRUST
Neither the Trustee nor the Trust shall be personally liable or responsible under this
Conveyance for any cost, risk, liability, or obligation associated in any way with the ownership or
operation of the Subject Lands, the Subject Interests, the Wells, or the Subject Gas. The
foregoing sentence does not restrict the right of Assignor to deduct Chargeable Costs or
Reserved Amounts in calculating the volumes of the Trust Gas or Trust Proceeds.
ARTICLE VIII
OPERATIONS
Section 8.01 Standards of Conduct
. Except as otherwise specifically provided in this Conveyance,
Assignor shall (a) operate and maintain the Subject Interests and (b) make elections under each
applicable lease, operating agreement, unit agreement, contract for development, and other similar
instrument or agreement (including elections concerning abandonment of any Well or release of any
Subject Interest) in good faith and in accordance with the Reasonably Prudent Operator Standard.
Section 8.02 Abandonment of Properties
. Nothing in this Conveyance shall obligate Assignor to
continue to operate any Well or to operate or maintain in force or attempt to maintain in force any
Subject Interest when such Well or Subject Interest ceases to produce, or Assignor determines, in
accordance with Section 8.01 above, that such Well or Subject Interest is
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not capable of producing
Gas in paying quantities. The expiration of a Subject Interest in accordance with the terms and
conditions applicable thereto shall not be considered to be a voluntary surrender or abandonment
thereof.
Section 8.03 Insurance
. Assignor may, but is not required by this Conveyance to, carry insurance
on any Subject Interest or Well, or covering any risk with respect thereto. Assignor shall never
be liable to the Trustee or the Trust on account of any injury or loss to the Subject Interests or
any Well, whether insurable or uninsurable, not covered by insurance. If Assignor elects to carry
insurance, the premiums shall not be included in Chargeable Costs, and Assignor shall retain all
proceeds of such insurance.
ARTICLE IX
POOLING AND UNITIZATION
Section 9.01 Pooling of Subject Interests
. Certain Subject Interests have been, or may have been,
heretofore pooled and unitized for the production of Gas. Such Subject Interests are and shall be
subject to the terms and provisions of the applicable pooling and unitization agreements, and the
Royalty Interest in each pooled or unitized Subject Interest shall apply to and affect only the Gas
produced from such units that accrues to such Subject Interest under and by virtue of the
applicable pooling and unitization agreements.
Section 9.02 Pooling and Unitization
.
(a)
Right to Pool
. Assignor has the exclusive executive right and power (as between Assignor
and the Trustee) to pool or unitize any Subject Interest and to alter, change, amend, or terminate
any pooling or unitization agreements heretofore or hereafter entered into, as to all or any part
of the Subject Lands, as to any one or more of the formations or horizons, and as to any Gas, upon
such terms and provisions as Assignor shall in its sole discretion deem appropriate.
(b)
Effect of Pooling
. If and whenever through the exercise of such right and power, or
pursuant to any Legal Requirement now existing or hereafter enacted or promulgated, any Subject
Interest is pooled or unitized in any manner, the Royalty Interest, insofar as it affects such
Subject Interest, shall also be pooled and unitized, and such Royalty Interest in such Subject
Interest shall apply to and affect only the Gas production that accrues to such Subject Interest
under and by virtue of the applicable pooling and unitization agreement or order. It shall not be
necessary for the Trustee to agree to, consent to, ratify, confirm or adopt any exercise of pooling
or unitization of any Subject Interest by Assignor.
ARTICLE X
GOVERNMENT REGULATION
Section 10.01 Legal Requirements
. All obligations of Assignor under this Conveyance are, and shall
be, subject to all applicable Legal Requirements and the instruments, documents, and agreements
creating the Subject Interests.
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Section 10.02 Filings
. Assignor shall use its reasonable discretion in making filings for itself
and on behalf of the Trust with any Governmental Authority having jurisdiction with respect to
matters affecting the Subject Interests, the Subject Lands, or the Subject Gas.
ARTICLE XI
ASSIGNMENT AND SALE OF SUBJECT INTERESTS
Section 11.01 Assignment by Assignor Subject to Royalty Interest
.
(a)
Right to Sell
. Subject to Section 11.05, Assignor may from time to time Transfer,
mortgage, or pledge its interest in the Wells, the Subject Interests, or any part thereof or
undivided interest therein, subject to the Royalty Interest and this Conveyance. Assignor shall
cause the assignee, purchaser, transferee, grantee, mortgagee, or pledgee of any such transaction
to take the affected Subject Interests subject to the Royalty Interest and this Conveyance and,
from and after the actual date of any such Transfer, to assume Assignors obligations under this
Conveyance with respect to such Subject Interests.
(b)
Effect of Sale
. From and after the actual date of any such Transfer by Assignor, Assignor
shall be relieved of all obligations, requirements, and responsibilities arising
under this Conveyance with respect to the Subject Interests Transferred, except for those that
accrued prior to such date.
(c)
Allocation of Consideration
. Trustee is not entitled to receive any share of the sales
proceeds received by Assignor in any transaction permitted by this Section 11.01.
(d)
Separate Interest
. Effective on the effective date of any Transfer of any Subject
Interest subject to this Section 11.01, Trust Gas and Trust Proceeds shall thereafter be computed
separately with respect to such Subject Interests, and the assignee, buyer, transferee, or grantee
of such Subject Interests shall thereafter serve as the Trusts agent and representative under
Article IV with respect to such interests and shall pay all corresponding Trust Proceeds directly
to Trustee.
Section 11.02 Sale and Release of Properties
.
(a)
Transfer
. Subject to Section 11.05, Assignor may from time to time, Transfer the Wells,
the Subject Interests, or any part thereof or undivided interest therein, free of the Royalty
Interest and this Conveyance provided that the aggregate Fair Value of all Royalty Interests
released with respect to the Assignee Conveyances during any twelve (12) month period shall not
exceed $5,000,000.
(b)
Payments
. In connection with any Transfer pursuant to this Section 11.02, Assignor shall
remit to the Trust an amount equal to the Fair Value of the Royalty Interest being released.
Assignor shall make such payment to the Trust on the Quarterly Payment Date for the Computation
Period in which Assignor receives the payment with respect to any such Transfer of the Subject
Interest.
(c)
Release
. In connection with any Transfer provided for in Section 11.02(a), Trustee on
behalf of the Trust shall, on request, execute, acknowledge, and deliver to
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Assignor a recordable
instrument (reasonably acceptable to Assignor) that releases the Royalty Interest with respect to
the Well and the related Subject Interests and Subject Lands being Transferred.
(d)
Effect of Sale
. From and after the actual date of any such Transfer by Assignor, Assignor
and any assignee, purchaser, transferee or grantee of such Subject Interest shall be relieved of
all obligations, requirements, and responsibilities arising under the Royalty Interest or this
Conveyance with respect to the Well or Subject Interests Transferred, except for those that accrued
prior to such date.
Section 11.03 Release of Other Properties
.
(a)
Prior Reversionary Interests
. In the event that any Person notifies Assignor that,
pursuant to a Prior Reversionary Interest, Assignor is required to convey any of the Subject
Interests to such Person or cease production from any Well, Assignor may provide
such conveyance with respect to such Subject Interest or permanently cease Production from any
such Well.
(b)
Payments
. In the event that Assignor receives compensation pursuant to any Prior
Reversionary Interest in connection with any conveyance or permanent cessation of production from
any Well, Assignor shall remit to the Trust an amount equal to the product of (x) such amount
actually received by Assignor with respect to such reconveyance or permanent cessation of
production and (y) a fraction the numerator of which is (A) the Fair Value of the Royalty Interest
released and the denominator of which is (B) the Fair Value of the Subject Interest that is being
released. Assignor shall make such payment to the Trust on the Quarterly Payment Date for the
Computation Period in which Assignor receives such payment.
(c)
Release for Prior Reversionary Interests
. In connection with any conveyance or permanent
cessation of production provided for in Section 11.03(a) above, Trustee on behalf of the Trust
shall, on request, execute, acknowledge, and deliver to Assignor a recordable instrument
(reasonably acceptable to Assignor) that releases the Royalty Interest and this Conveyance with
respect to any such Well or Subject Interests.
(d)
Effect of Prior Reversionary Interests
. From and after the actual date of any conveyance
or permanent cessation of production provided for in Section 11.03(a), Assignor and any assignee,
purchaser, transferee or grantee of such Subject Interest shall be relieved of all obligations,
requirements, and responsibilities arising under the Royalty Interest or this Conveyance with
respect to the Subject Interests Transferred, except for those that accrued prior to such date.
Section 11.04 Change in Ownership
.
(a)
Obligation to Give Notice
. No change of ownership or of the right to receive payment of
the Royalty Interest, or of any part thereof, however accomplished, shall bind Assignor until
notice thereof is furnished to Assignor by the Person claiming the benefit thereof, and then only
with respect to payments made after such Notice is furnished.
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(b)
Notice of Sale
. Notice of sale, transfer, conveyance, or assignment shall consist of a
certified copy of the recorded instrument accomplishing the same.
(c)
Notice of Other Changes of Ownership
. Notice of change of ownership or of the right to
receive payment accomplished in any other manner (
e.g.
, by dissolution of the Trust) shall consist
of certified copies of recorded documents and complete proceedings legally binding and conclusive
of the rights of all Persons.
(d)
Effect of Lack of Notice
. Until such Notice accompanied by such documentation is
furnished to Assignor in the manner provided above, Assignor may, at Assignors election, either
(i) continue to pay or tender all sums payable on the Royalty Interest in the same manner provided
in this Conveyance, precisely as if no such change in interest or ownership or right to receive
payment had occurred or (ii) suspend payment of Trust Proceeds without interest until such
documentation is furnished.
(e)
Effect of Nonconforming Notices
. The kinds of Notice provided by this Section 11.03(d)
shall be exclusive, and no other kind, whether actual or constructive, shall bind Assignor.
Section 11.05 Transfer of Subject Lands
. Assignor will not Transfer any Well or any of the Subject
Interests comprising a part of the Subject Lands pursuant to Sections 11.01 and 11.02 prior to the
Drilling Obligation Completion Date.
Section 11.06 One Payee
. Assignor shall never be obligated to
pay Trust Proceeds to more than one Person. If more than one Person is ever entitled to receive
payment of any part of the Trust Proceeds, Assignor may suspend payments of all Trust Proceeds
until the concurrent owners or claimants of the Royalty Interest or the right to receive payment of
Trust Proceeds appoint one Person in writing to receive all payments of Trust Proceeds on their
behalf. Assignor may thereafter conclusively rely upon the authority of that Person to receive
payments of Trust Proceeds and shall be under no further duty to inquire into the authority or
performance of such Person.
Section 11.07 Rights of Mortgagee
. If Trustee executes a mortgage or deed of trust covering all or
part of the Royalty Interest, the mortgagees or trustees therein named or the holders of any
obligation secured thereby shall be entitled, to the extent that such mortgage or deed of trust so
provides, to exercise the rights, remedies, powers, and privileges conferred upon Trustee by this
Conveyance and to give or withhold all consents required to be obtained from Trustee. This Section
11.07 shall not be deemed or construed to impose upon Assignor any obligation or liability
undertaken by the Trustee under such mortgage or deed of trust or under the obligation secured
thereby.
ARTICLE XII
AMI AREA
Section 12.01 No Drainage
. Subsequent to the Drilling Obligation Completion Date, neither Assignor
nor any of its Affiliates shall drill any Gas well that will have a perforated segment that will be
within five hundred feet (500) of any perforated interval of any Well which produces oil or gas
from the Target Formation.
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ARTICLE XIII
FORCE MAJEURE
Section 13.01 Nonperformance
. Assignor shall not be responsible to Trustee for any loss or damage
to Trustee resulting from any delay in performing or failure to perform any obligation under this
Conveyance (other than
Assignors obligation to make payments of Trust Proceeds to Trustee) to the extent such failure or
delay is caused by Force Majeure.
Section 13.02 Force Majeure
.
Force Majeure
means any of the following, to the extent
they are not caused solely by the breach by Assignor of its duty to perform certain obligations
under this Conveyance in accordance with the Reasonably Prudent Operator Standard:
(a) act of God, fire, lightning, landslide, earthquake, storm, hurricane, hurricane warning,
flood, high water, washout, tidal wave, or explosion;
(b) strike, lockout, or other similar industrial disturbance, act of the public enemy, war,
military operation, blockade, insurrection, riot, epidemic, arrest or restraint of Governmental
Authority or people, or national emergency;
(c) the inability of the Assignor to acquire, or the delay on the part of any Third Person
(other than an Affiliate of the Assignor) in acquiring, materials, supplies, machinery, equipment,
servitudes, right-of-way grants, easements, permits, or licenses, or approvals or authorizations by
regulatory bodies needed to enable such Party to perform hereunder;
(d) any breakage of or accident to machinery, equipment, or lines of pipe, the repair,
maintenance, improvement, replacement, alteration to a plant or line of pipe or related facility,
the testing of machinery, equipment or line of pipe, or the freezing of a line of pipe;
(e) any Legal Requirement or the affected Partys compliance therewith; or
(f) any other cause, whether similar or dissimilar to the causes enumerated in (a) through (e)
above, not reasonably within the control of Assignor.
Section 13.03 Force Majeure Notice
. Assignor will give Trustee a Notice of each Force Majeure as
soon as reasonably practicable after the occurrence of the Force Majeure.
Section 13.04 Remedy
. Assignor will use its reasonable efforts to remedy each Force Majeure and
resume full performance under this Conveyance as soon as reasonably practicable, except that the
settlement of strikes, lockouts, or other labor disputes shall be entirely within the discretion of
Assignor.
ARTICLE XIV
NOTICE
Section 14.01 Definition
.
Notice
means any notice, advice, invoice, demand, or other communication required or
permitted by this Conveyance.
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Section 14.02 Written Notice
. Except as otherwise provided by this Conveyance, each Notice shall
be in writing.
Section 14.03 Methods of Giving Notice
. Notice may be given by any reasonable means, including
telecopier, hand delivery, overnight courier, and United States mail.
Section 14.04 Charges
. All Notices shall be properly addressed to the recipient, with all postage
and other charges being paid by the Party giving Notice.
Section 14.05 Effective Date
. Notice shall be effective when actually received by the Party being
notified.
Section 14.06 Addresses
. The addresses of the Parties for purposes of Notice are the addresses in
the Introduction to this Conveyance.
Section 14.07 Change of Address
. Either Party may change its address to another address within the
continental United States by giving ten (10) days Notice to the other Party.
ARTICLE XV
OTHER PROVISIONS
Section 15.01 Successors and Assigns
. Subject to the limitation and restrictions on the assignment
or delegation by the Parties of their rights and interests under this Conveyance, this Conveyance
binds and inures to the benefit of Assignor, Trustee, the Trust and their respective successors,
assigns, and legal representatives.
Section 15.02 Governing Law
.
WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PRINCIPLES
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION, THIS CONVEYANCE SHALL BE
CONSTRUED UNDER AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA (EXCLUDING CHOICE OF
LAW AND CONFLICT OF LAW RULES).
Section 15.03 Construction of Conveyance
. In construing this Conveyance, the following principles shall be followed:
(a) no consideration shall be given to the captions of the articles, sections, subsections, or
clauses, which are inserted for convenience in locating the provisions of this Conveyance and not
as an aid in its construction;
(b) no consideration shall be given to the fact or presumption that one Party had a greater or
lesser hand in drafting this Conveyance;
(c) the word includes and its syntactical variants mean includes, but is not limited to
and corresponding syntactical variant expressions;
(d) a defined term has its defined meaning throughout this Conveyance, regardless of whether
it appears before or after the place in this Conveyance where it is defined;
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(e) the plural shall be deemed to include the singular, and vice versa, unless the content
otherwise requires; and
(f) each exhibit, attachment, and schedule to this Conveyance is a part of this Conveyance,
but if there is any conflict or inconsistency between the main body of this Conveyance and any
exhibit, attachment, or schedule, the provisions of the main body of this Conveyance shall prevail.
Section 15.04 No Waiver
. Failure of either Party to require performance of any provision of this
Conveyance shall not affect either Partys right to require full performance thereof at any time
thereafter, and the waiver by either Party of a breach of any provision hereof shall not constitute
a waiver of a similar breach in the future or of any other breach or nullify the effectiveness of
such provision.
Section 15.05 Relationship of Parties
. This Conveyance does not create a partnership, mining
partnership, joint venture, or relationship of trust or agency (except with respect to Assignors
agency relationship with respect to those matters set forth in Articles IV and V above) between the
Parties.
Section 15.06 Proportionate Reduction
. In the event of failure or deficiency in title to any Well
or Subject Interest, the portion of the Subject Gas production attributable thereto shall be
reduced in the same proportion that such Well or Subject Interest is reduced by such failure or
deficiency. Such proportionate reduction of the Royalty Interest shall not limit Trustees rights
with respect to such reduction under Section 1.03(a).
Section 15.07 Further Assurances
. Each Party shall execute, acknowledge, and deliver to the other
Party all additional instruments and other documents reasonably required to describe more
specifically any interests subject
hereto, to vest more fully in Trustee the Royalty Interest conveyed (or intended to be conveyed) by
this Conveyance, or to evidence or effect any transaction contemplated by this Conveyance.
Assignor shall also execute and deliver all additional instruments and other documents reasonably
required to transfer interests in state, federal, or Indian lease interests in compliance with
applicable Legal Requirements or agreements.
Section 15.08 The 7:00 A.M. Convention
. Except as otherwise provided in this Conveyance, each
calendar day, month, quarter, and year shall be deemed to begin at 7:00 a.m. Eastern Time on the
stated day or on the first day of the stated month, quarter, or year, and to end at 7:00 a.m.
Eastern Time on the next day or on first day of the next month, quarter, or year, respectively.
Section 15.09 Counterpart Execution
. This Conveyance may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but
all of such counterparts shall constitute for all purposes one Conveyance. As between the Parties,
any signature hereto delivered by a Party by facsimile transmission or email pdf. shall be deemed
an original hereto.
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Section 15.10 Present and Absolute Conveyance
. It is the express intention of Assignor and Trustee
that the Royalty Interest is, and shall be construed for all purposes as, a present, fully-vested
and absolute conveyance.
Section 15.11 Limitation of Liability
. It is expressly understood and agreed by the parties hereto
that (a) this Agreement is executed and delivered by the Trustee not individually or personally,
but solely as Trustee in the exercise of the powers and authority conferred and vested in it and
(b) under no circumstances shall the Trustee be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Trust under this Agreement.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, each Party has caused this Conveyance to be executed in its name and
behalf and delivered on the date or dates stated in the acknowledgment certificates appended to
this Conveyance, to be effective as of the Effective Time.
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ENERGY CORPORATION
OF AMERICA
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By:
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/s/ Donald C. Supcoe
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Name: Donald C. Supcoe
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Title: Senior Vice President
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S-1
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ECA MARCELLUS TRUST I
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By: The Bank of New
York Mellon Trust Company, N.A.
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By:
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/s/ Michael J. Ulrich
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Name: Michael J. Ulrich
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Title: Authorized Signatory
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Prepared by:
Vinson & Elkins LLP
1001 Fannin Street
Suite 2500
Houston, TX 77002-6760
Attention: Thomas Herbert
Signature Page to Perpetual Royalty Interest Conveyance
S-2
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THE
STATE OF COLORADO
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§
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COUNTY
OF DENVER
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On
this, the 7
th
day of July, 2010, before me Julie Ann Kitano, a Notary public,
personally appeared Donald C. Supcoe, who acknowledged himself to be the Senior Vice President of
Energy Corporation of America, a West Virginia corporation, and that he as such Senior Vice
President, being authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as Senior Vice President.
In witness whereof, I hereunto set my hand and official seal.
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/s/ Julie Ann Kitano
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[SEAL]
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My
Commission Expires: 4-26-2014
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THE
STATE OF COLORADO
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§
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§
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COUNTY
OF DENVER
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§
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On
this, the 7
th
day of July, 2010, before me Julie Ann Kitano, a Notary public,
personally appeared Michael J. Ulrich, who acknowledged himself to be the authorized signatory of
The Bank of New York Mellon Trust Company, N.A., a national banking association and Trustee of ECA
Marcellus Trust I and that he as such authorized signatory, being authorized to do so, executed the
foregoing instrument for the purposes therein contained by signing the name of the national banking
association by himself as authorized signatory.
In witness whereof, I hereunto set my hand and official seal.
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/s/ Julie Ann Kitano
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[SEAL]
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My
Commission Expires: 4-26-2014
CERTIFICATE OF RESIDENCE
The Bank of New York Mellon Trust Company, N.A., as grantee and Trustee hereunder, hereby
certifies that its precise address is:
919 Congress Avenue
Suite 500
Austin, Texas 78701
ECA MARCELLUS TRUST I
By: The Bank of New York Mellon Trust Company, N.A.
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By:
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/s/ Michael J. Ulrich
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Name: Michael J. Ulrich
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Title: Authorized Signatory
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Exhibit A
(Attached hereto.)
Exhibit A
Exhibit B
(Attached hereto.)
Exhibit B
Exhibit C
Private Investors
W. GASTON CAPERTON, III
CLARK CLEMENT and PAULETTE CLEMENT
MICHAEL J. COCHRAN, JR.
PETER H. COORS
RODNEY D. COX and JENNIFER M. COX
CURTIS FAMILY REVOCABLE TRUST
DORGAN LIVING TRUST
RANDALL C. FARKOSH and SHERRY J. FARKOSH
JOHN S. FISCHER and FAYE E. FISCHER
MICHAEL S. FLETCHER and BOBBETTE FLETCHER
J. MICHAEL FORBES
MARK A. FRY and TAMMY L. FRY
THOMAS R. GOODWIN
DANIEL EARL GRAHAM LIVING TRUST and SALLY QUEREAU GRAHAM LIVING TRUST
CLINT L. HIPKE
DAVID E. JORDAN and CAROL JORDAN
FRANCIS H. McCULLOUGH, III and KATHY L. McCULLOUGH
KATHERINE F. McCULLOUGH TRUST
KRISTIN McCULLOUGH TRUST
LESLEY K. McCULLOUGH TRUST
MEREDITH B. McCULLOUGH TRUST
DENNIS L. McGOWAN and N. GAYLE McGOWAN
ALISON MORK TRUST
JOHN MORK and JULIE MORK
KYLE MORK TRUST
ARTHUR C. NIELSEN, JR. TRUST DATED JULY 14, 2003
GEORGE OMALLEY
JAY S. PIFER
NIKI D. RANDOLPH
PETER L. REBSTOCK
R. KENT SCHAMP
PETER A. SULLIVAN and WENDY H. SULLIVAN
DONALD C. SUPCOE and PATTY L. SUPCOE
RODNEY A. WINTERS and TAMMY M. WINTERS
Exhibit C
Exhibit 10.2
PERPETUAL OVERRIDING ROYALTY INTEREST CONVEYANCE
(PUD)
COMMONWEALTH OF PENNSYLVANIA
INTRODUCTION
THIS PERPETUAL OVERRIDING ROYALTY INTEREST CONVEYANCE (this
Conveyance
) from ENERGY
CORPORATION OF AMERICA, a West Virginia corporation, with offices at 4643 South Ulster Street,
Suite 100, Denver, Colorado 80237-2867
Assignor
), to The Bank of New York Mellon Trust
Company, N.A., a national banking association organized under the laws of the State of New York,
with offices at 919 Congress Avenue, Suite 500, Austin, Texas 78701, as trustee (the
Trustee
), acting not in its individual capacity but solely as trustee of the ECA
Marcellus Trust I (the
Trust
) under that certain Amended and Restated Trust Agreement
dated as of July 7, 2010 (the
Trust Agreement
), is delivered to be effective as of 7:00
a.m., Eastern Time, April 1, 2010 (the
Effective Time
). All capitalized terms not
otherwise defined herein shall have the meanings ascribed to such terms in Article II below.
ARTICLE I
CONVEYANCE
Section 1.01 The Grant
. For and in consideration of good and valuable consideration paid by
Trustee on behalf of the Trust to Assignor, the receipt and sufficiency of which are hereby
acknowledged, Assignor has, subject to the terms of this Conveyance, BARGAINED, SOLD, GRANTED,
CONVEYED, TRANSFERRED, ASSIGNED, SET OVER, and DELIVERED, and by these presents does hereby
BARGAIN, SELL, GRANT, CONVEY, TRANSFER, ASSIGN, SET OVER, and DELIVER unto Trustee on behalf of the
Trust, as a perpetual net overriding royalty interest (the
Royalty Interest
), a variable
undivided interest in and to the Subject Interests, to the extent that the Subject Interests
pertain to Gas in, under and that may be produced and saved from the wellbores of the Development
Wells, sufficient to cause the Trust to receive the Trust Gas or proceeds thereof calculated and
paid in money in accordance with the further terms and conditions of this Conveyance.
Section 1.02 Habendum Clause
. TO HAVE AND TO HOLD the Royalty Interest, together with all and
singular the rights and appurtenances thereto in anywise belonging, unto Trustee on behalf of the
Trust, its successors and assigns, subject to terms and provisions of this Conveyance.
Section 1.03 Warranty
.
(a)
The Warranty
. Assignor warrants to the Trust, its successors and assigns, that the
Subject Interests are free of all Encumbrances created by, through, or under Assignor, but not
otherwise, except for the Permitted Encumbrances.
1
(b)
Remedies
.
(i) Subject to Section 1.03(b)(ii), in the event of a breach of the foregoing warranty
for any Subject Interest, the Trusts sole remedy shall be to receive payment on each
applicable Quarterly Payment Date, out of Assignors Net Share of Gas from other Development
Wells in excess of that subject to the Royalty Interest and the royalty interest created
pursuant to the Term PUD Conveyance (
Assignor Retained Gas
), without interest
(except such interest payable under this Conveyance on payments made after the applicable
due date as described in Section 5.02 below), of an amount equal to the difference between
(x) Trust Gas (or the proceeds from the sale thereof) that the Trust would have received
with respect to such Development Well in the applicable Computation Period if such warranty
had not been breached and (y) Trust Gas (or the proceeds from the sale thereof) that the
Trust actually received during that Computation Period with respect to that Development
Well, to the extent such difference is attributable to the breach of the warranty, but not
to the extent that such difference is attributable to any other cause, and any such amounts
of Assignor Retained Gas shall be treated as Trust Gas.
(ii) In the event a breach of the foregoing warranty for any Subject Interest is due to
production burdens in excess of twelve and one half percent (12.5%) with respect to a
Development Well, Assignor shall pay to Trustee on each applicable Quarterly Payment Date an
amount equal to that which Trustee would have received with respect to such Development Well
in the applicable Computation Period if such warranty had not been breached out of Assignor
Retained Gas, and such excess production burdens will be fully allocated against Assignors
retained interest in such Development Well.
(c)
DISCLAIMER
. EXCEPT FOR THE WARRANTIES OF TITLE GIVEN IN SECTION 1.03(a), ASSIGNOR MAKES
THIS CONVEYANCE AND ASSIGNS THE ROYALTY INTEREST WITHOUT RECOURSE, COVENANT OR WARRANTY OF TITLE OF
ANY KIND, EXPRESS, IMPLIED OR STATUTORY. ANY COVENANTS OR WARRANTIES IMPLIED BY STATUTE OR LAW BY
THE USE HEREIN OF THE WORDS
GRANT
,
CONVEY
OR OTHER SIMILAR WORDS ARE HEREBY EXPRESSLY
DISCLAIMED, WAIVED AND NEGATED. WITHOUT LIMITING THE GENERALITY OF THE TWO PRECEDING SENTENCES,
TRUSTEE ON BEHALF OF THE TRUST ACKNOWLEDGES THAT ASSIGNOR HAS NOT MADE, AND ASSIGNOR HEREBY
EXPRESSLY DISCLAIMS AND NEGATES, AND THE TRUSTEE ON BEHALF OF THE TRUST HEREBY EXPRESSLY WAIVES,
ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE RELATING
TO (i) PRODUCTION RATES, RECOMPLETION OPPORTUNITIES, DECLINE RATES OR THE QUALITY, QUANTITY OR
VOLUME OF THE RESERVES OF HYDROCARBONS, IF ANY, ATTRIBUTABLE TO THE SUBJECT INTERESTS, (ii) ANY
IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (iii) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS
FOR A PARTICULAR PURPOSE, (iv) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES
OF MATERIALS, AND (v) ANY AND ALL IMPLIED WARRANTIES EXISTING UNDER ANY APPLICABLE LEGAL
REQUIREMENT; IT BEING THE EXPRESS INTENTION OF BOTH THE TRUST AND ASSIGNOR THAT THE ROYALTY
INTEREST IS HEREBY ASSIGNED TO THE
2
TRUSTEE ON BEHALF OF THE TRUST ON AN AS IS AND WHERE IS BASIS WITH ALL FAULTS, AND THAT
THE TRUSTEE ON BEHALF OF THE TRUST HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS THE TRUST
DEEMS APPROPRIATE. ASSIGNOR AND THE TRUSTEE ON BEHALF OF THE TRUST AGREE THAT, TO THE EXTENT
REQUIRED BY APPLICABLE LEGAL REQUIREMENTS TO BE EFFECTIVE, THE DISCLAIMERS OF CERTAIN WARRANTIES
CONTAINED IN THIS SECTION ARE CONSPICUOUS DISCLAIMERS FOR THE PURPOSES OF ANY APPLICABLE LEGAL
REQUIREMENT.
(d)
Substitution of Warranty
. This instrument is made with full substitution and subrogation
of the Trust in and to all covenants of warranty by Third Persons (other than Affiliates of
Assignor) heretofore given or made with respect to the Development Wells, the Subject Interests or
any part thereof or interest therein.
Section 1.04 Release of Excess Acreage
. After the Drilling Obligation Completion Date, Trustee on
behalf of the Trust shall, on request, execute, acknowledge, and deliver to Assignor a recordable
instrument (reasonably acceptable to Assignor) that conveys the Royalty Interest to Assignor and
releases such Royalty Interest and this Conveyance with respect to all Subject Lands except such
portion of any Subject Lands that covers and pertains to all Subject Gas in, under and that may be
produced from any wellbore of any Development Well.
ARTICLE II
DEFINITIONS
This Article II defines certain capitalized words, terms, and phrases used in this Conveyance.
Certain other capitalized words, terms, and phrases used in this Conveyance are defined elsewhere
in this Conveyance.
Additional Lease
is defined in Section 12.01.
Affiliate
means, for any specified Person, another Person that controls, is
controlled by, or is under common control with, the specified Person. Control, in the preceding
sentence, refers to the possession by one Person, directly or indirectly, of the right or power to
direct or cause the direction of the management and policies of another Person, whether through the
ownership of voting securities, by contract, or otherwise.
AMI Area
means that area depicted on the map set forth on
Exhibit B
as the
AMI Area.
Assignee Conveyances
means for purposes of Section 11.02(a), this Conveyance, the
Term PUD Conveyance, the Term PDP Conveyance, the Perpetual PDP Conveyance, and the Investor
Conveyance, considered collectively.
Assignor
is defined in the Introduction to this Conveyance and also includes all
permitted successors and assigns of Assignor.
Assignor Retained Gas
is defined in Section 1.03(b)(i).
3
Assignors Net Share of Gas
means the share of Subject Gas from each Development
Well that is attributable to Assignors Net Revenue Interest in that Development Well.
Business Day
means any day that is not a Saturday, Sunday, a holiday determined by
the New York Stock Exchange, Inc. as affecting ex dates or any other day on which national
banking institutions in New York, New York are closed as authorized or required by law.
Chargeable Costs
is defined in Section 3.02(a).
Computation Period
means each calendar quarter commencing at the Effective Time,
with each calendar quarter being deemed to have begun at 7:00 a.m. Eastern Time on the first day of
such calendar quarter and to have ended at 7:00 a.m. Eastern Time on the first day of the next
calendar quarter, except for the first Computation Period, which shall be deemed to have begun at
the Effective Time and to have ended at 7:00 a.m. Eastern Time on July 1, 2010.
Conveyance
is defined in the Introduction to this Conveyance.
Development Agreement
means that certain Development Agreement between Assignor and
the Trustee dated as of even date herewith.
Development Well
has the meaning given such term in the Development Agreement.
Drilling Obligation
means Assignors obligation set forth in Section 2.01(a) of the
Development Agreement.
Drilling Obligation Completion Date
has the meaning given to such term in the
Development Agreement.
Effective Time
is defined in the Introduction to this Conveyance.
Encumbrance
means any mortgage, lien, security interest, pledge, charge,
encumbrance, limitation, preferential right to purchase, consent to assignment, irregularity,
burden, or defect.
Excess Costs
means, in any Computation Period, the excess of Chargeable Costs for
that Computation Period over the amount determined by multiplying Assignors Net Share of Gas
produced during the Computation Period by the Sales Price for that Computation Period. Excess
Costs shall bear interest at the Prime Interest Rate from the end of the Computation Period in
which such costs were incurred to the date that Assignor recovers such amounts from Trust Proceeds.
Exchange Acreage
has the meaning set forth in Section 12.02.
Excluded Assets
means those oil and gas wells and all oil and gas formations, except
for the Target Formation, in the lands subject to or covered by the oil and gas leases described on
Exhibit C.
4
Fair Value
means, with respect to any portion of the Royalty Interest to be released
pursuant to Section 11.02 or 11.03 in connection with a sale or release of any Development Well or
Subject Interest, an amount of net proceeds which could reasonably be expected to be obtained from
the sale of such portion of the Royalty Interest to a party which is not an Affiliate of either the
Assignor or the Trust on an arms-length negotiated basis, taking into account relevant market
conditions and factors existing at the time of any such proposed sale or release, such net proceeds
to be determined by deducting the Trusts proportionate share of sales costs, commissions and
brokerage fees, if any (based on the ratio of (i) the fair market value of the portion of the
Royalty Interest being released to (ii) the fair market value of the Development Wells and Subject
Interests being transferred (including the value of the Royalty Interest being released).
Farmout Agreements
means any farmout agreement, participation agreement, exploration
agreement, development agreement or any similar agreement.
Force Majeure
is defined in Section 13.02.
Gas
means natural gas and all other gaseous hydrocarbons, excluding condensate,
butane, and other liquid and liquefiable components that are actually removed from the Gas stream
by separation, processing, or other means. Any oil, gas or mineral lease or other similar
instrument that covers Gas shall be considered a Gas lease hereunder, even if it also covers
other substances.
Governmental Authority
means the United States of America, any state, commonwealth,
territory, or possession thereof, and any political subdivision of any of the foregoing, including
courts, departments, commissions, boards, bureaus, agencies, and other instrumentalities.
Greene County Gathering System
means Assignors Greene County, Pennsylvania
Gathering System.
Investor Conveyance
means that certain Private Investor Overriding Royalty Interest
Conveyance by and between the Private Investors and the Trust dated effective as of the Effective
Time.
Legal Requirement
means any law, statute, ordinance, decree, requirement, order,
judgment, rule, or regulation of, including the terms of any license or permit issued by, any
Governmental Authority.
MBtu
means one thousand British thermal units, and
MMBtu
means one million
British thermal units.
Mcf
means one thousand cubic feet of Gas, and
MMcf
means one million cubic
feet of Gas, measured and expressed in each case at the same temperature, pressure, and other
conditions of measurement (a) provided in any contract for the purchase of Gas from the Subject
Interest or, (b) if no such contract exists, provided by applicable state law for purposes of
reporting production to Governmental Authorities.
5
Mortgages
means, collectively, (i) the Drilling Support Lien (as such term is
defined in the Development Agreement) and (ii) that certain Mortgage, Assignment, Security
Agreement, Fixture Filing and Financing Statement, granted by Assignor in favor of the Trust dated
as of even date herewith, which agreement grants the Trust a lien and security interest on the
Royalty Interest (as such term is defined in each of the Conveyances).
Net Revenue Interest
means the interest, stated as a decimal fraction, in Subject
Gas production from a Development Well that Assignor is entitled to take with respect to Assignors
Subject Interest in that Development Well and the associated Subject Lands, subject only to the
Permitted Production Burdens (treated in each case as a reduction in interest rather than as a
cost).
Non-Affiliate
means, for any specified Person, any other Person that is not an
Affiliate of the specified Person.
Notice
is defined in Section 14.01.
Party
, when capitalized, refers to Assignor or Trustee.
Parties
, when
capitalized, refers to Assignor and Trustee.
Permitted Encumbrances
means:
(a) the Permitted Production Burdens;
(b) contractual obligations arising under operating agreements, Farmout Agreements,
production sales contracts, leases, assignments, and other similar agreements that may
affect the properties or their titles;
(c) pooling and unitization agreements, declarations, orders, or Legal Requirements to
secure payment of amounts not yet delinquent;
(d) liens that arise in the normal course of operations, such as liens for unpaid
taxes, statutory liens securing unpaid suppliers and contractors, and contractual liens
under operating agreements, in any case, that are not yet delinquent or, if delinquent, are
being contested in good faith in the normal course of business;
(e) conventional rights of reassignment that obligate Assignor to reassign all or part
of any Subject Interest to a Third Person if Assignor intends to release or abandon such
interest before the expiration of the primary term or other termination of such interest;
(f) easements, rights-of-way, servitudes, permits, surface leases, surface use
restrictions, and other surface uses and impediments on, over, or in respect of the Subject
Interests that are not such as to interfere materially with the operation, value, or use of
the Subject Interests;
(g) rights reserved to or vested in any Governmental Authority to control or regulate
any Subject Interests in any manner, and all applicable Legal Requirements;
6
(h) the terms of the instruments creating the Subject Interests and Subject Lands;
(i) any Prior Reversionary Interests that affect the Subject Interests; and
(j) the Mortgages,
provided that such aforementioned encumbrances are of the type and nature customary in the oil and
gas industry, as conducted in the Appalachian Basin, and do not, alone or in the aggregate,
materially and adversely affect the operation, value, or use of any Subject Interest, and all to
the extent, and for so long as, such Permitted Encumbrances are otherwise valid and enforceable
against the Subject Interests, without recognizing, expressly or by implication, any rights or
interests in any Third Person or Governmental Authority that such Third Person or Governmental
Authority does not otherwise lawfully possess.
Permitted Production Burdens
means (a) all Production Burdens that affected the
Subject Interests when they were acquired by Assignor and (b) all Production Burdens that were
created by Assignor; in each case, provided that the total Permitted Production Burdens for any
Development Well shall not exceed twelve and one half percent (12.5%) (proportionately reduced to
Assignors Working Interest in such Development Well).
Perpetual PDP Conveyance
means that certain Perpetual Overriding Royalty Interest
Conveyance (PDP) by and between Assignor and the Trust dated effective as of the Effective Time.
Person
means any natural person, corporation, partnership, trust, estate, or other
entity, organization, or association.
Private Investors
means the individuals and entities listed on Exhibit D attached
hereto.
Post Production Cost Charge
is defined in Section 3.02(c).
Prime Interest Rate
is defined in Section 5.02(b).
Prior Reversionary Interest
means any contract, agreement, Farmout Agreement, lease,
deed, conveyance or operating agreement that exists as of the Effective Time, that by the terms
thereof requires a Person to convey a part of the Subject Interest to another Person or to
permanently cease production of any Development Well including, any operating agreements, oil and
gas leases, coal leases, and other similar agreements or instruments affecting the Subject
Interests.
Production Burdens
means, with respect to any Subject Lands, Subject Interests, or
Subject Gas, all royalty interests, overriding royalty interests, production payments, net profits
interests, Prior Reversionary Interests and other similar interests that constitute a burden on,
are measured by, or are payable out of the production of Gas or the proceeds realized from the sale
or other disposition thereof.
Quarterly Payment Amount
is defined in Section 5.01(a).
7
Quarterly Payment Date
is defined in Section 5.01(c).
Reasonably Prudent Operator Standard
means the standard of conduct of a reasonably
prudent oil and gas operator in the AMI Area under the same or similar circumstances, acting with
respect to its own property and disregarding the existence of the Royalty Interest as a burden on
such property.
Reserved Amounts
means those amounts set aside from Trust Proceeds by Assignor in
accordance with the provisions of Section 5.04 below.
Royalty Interest
is defined in Section 1.01.
Sales Price
means, for any Computation Period, the sale price received by Assignor
per Mcf or per MMBtu for Trust Gas determined in accordance with the following provisions:
(a) sale refers to any sale, exchange, or other disposition of Trust Gas for value,
the value of such Gas that is exchanged or otherwise disposed of for valuable consideration
being the sales price that Assignor receives for any such Gas sold pursuant to Section 4.01
for any such Gas.
(b) amounts of money not paid to Assignor when due by any purchaser of Trust Gas (for
example, Taxes or other amounts withheld or deducted by any such purchaser) shall not be
included within the Sales Price until actually received by, or credited to the account of,
Assignor;
(c) advance payments and prepayments for future deliveries of Trust Gas shall be
included within the Sales Price, without interest, when that volume of Gas subject to the
advance payments or prepayments is actually produced;
(d) loan proceeds received by Assignor shall not be treated as a component of the
applicable Sales Price; and
(e) if a controversy or possible controversy exists, whether by reason of any statute,
order, decree, rule, regulation, contract, or otherwise, between Assignor and any purchaser
of Trust Gas or any other Person, about the correct Sales Price of any Trust Gas, about
deductions from the Sales Price, about Assignors right to receive the proceeds of any sale
of Trust Gas, or about any other matter, then monies withheld by the purchaser or deposited
by it with an escrow agent or if Assignor receives any monies and promptly deposits such
monies with a Third Person escrow agent as a result of such controversy, such monies shall
not be included within the Sales Price until received by or returned to Assignor, as
applicable.
Subject Gas
means Gas in and under, and that may be produced, saved, and sold from a
Development Well, insofar and only insofar as such Gas is produced from the Target Formation,
subject to the following:
(a) Subject Gas excludes Gas that is:
8
(i) lost in the production, gathering, or marketing of Gas;
(ii) used (A) in conformity with ordinary and prudent operations on the Subject
Lands, including drilling and production operations with respect to such Development
Well or (B) in connection with plant operations (whether on or off the Subject
Lands) for processing or compressing the Subject Gas;
(iii) taken by a Third Person to recover costs, or some multiple of costs, paid
or incurred by that Third Person under any operating agreement, unit agreement, or
other agreement in connection with nonconsent operations conducted (or participated
in) by that Third Person;
(iv) retained by a Third Person for gathering, transportation, processing or
marketing services related to the Subject Gas in lieu of cash payment for such
services, to the extent such agreement is permitted under this Conveyance; and
(v) in excess of the percentage attributable to Assignors Net Share of Gas
taken by Assignor to recover costs, or some multiple of costs, paid or incurred by
Assignor under any operating agreement, unit agreement, or other agreement in
connection with nonconsent operations conducted (or participated in) by Assignor.
(b) Subject Gas includes Gas, not otherwise excluded above, that is sold or exchanged
for other Gas, or otherwise disposed of for valuable consideration.
Subject Interests
means Assignors undivided interests in the Subject Lands, whether
as lessee under Gas leases, as an owner of the Subject Gas (or the right to extract such Gas), or
otherwise, by virtue of which undivided interests Assignor has the right to conduct exploration,
drilling, development, and Gas production operations on the Subject Lands, or to cause such
operations to be conducted, or to participate in such operations by paying and bearing all or any
part of the costs, risks, and liabilities of such operations, to drill, test, complete, equip,
operate, and produce Development Wells to exploit the Gas. Subject Interests includes all
extensions of, and all renewal Gas leases covering, the Subject Lands (or any portion thereof)
obtained by Assignor, or any Affiliate thereof, within six (6) months after the expiration or
termination of any such Gas lease. Subject Interests do not include (a) Assignors rights to
substances other than Gas; (b) Assignors rights to Gas under contracts for the purchase, sale,
transportation, storage, processing, or other handling or disposition of Gas; (c) Assignors
interests in, or rights to Gas with respect to, pipelines, gathering systems, storage facilities,
processing facilities, or other equipment or facilities, other than the Development Wells; or (d)
any additional, or enlarged interests in the Development Wells, Subject Lands or Subject Gas,
except those reflected in
Exhibit A
, subject to Section 12.01, extensions and renewals
covered by the preceding sentence. Subject Interests may be owned or claimed by Assignor by
virtue of grants or reservations in deeds, Gas leases, or other instruments, or by virtue of
operating agreements, pooling or unitization agreements or orders, or other kinds of instruments,
agreements, or documents, legal or equitable, recorded or unrecorded. The Subject Interests are
subject to the Permitted Encumbrances.
9
Subject Lands
means the lands subject to or covered by the oil and gas leases
described in Exhibit A, insofar and only insofar as they cover the Target Formation, less and
except the Excluded Assets, and subject to the exceptions, exclusions and reservations set forth on
such Exhibit A, as such Exhibit may be modified pursuant to Section 12.01.
Target Formation
means what is generally referred to as the Marcellus Shale
formation and for purposes of this Conveyance is defined as that formation located from the bottom
of the Tully Formation (as seen by the ECA Kemsod #1 Well, API number 37-059-25209), at a depth of
7,881 feet, to the top of the Huntersville Chert Formation (as seen by the ECA Kemsod #1 Well, API
number 37-059-25209), at a depth of 8,204 feet.
Term PDP Conveyance
means that certain Term Overriding Royalty Interest Conveyance
(PDP) by and between Assignor and Eastern Marketing Corporation dated effective as of the Effective
Time.
Term PUD Conveyance
means that certain Term Overriding Royalty Interest Conveyance
(PUD) by and between Assignor and Eastern Marketing Corporation dated effective as of the Effective
Time.
Taxes
is defined in Section 3.02(b).
Third Person
means a Person other than Assignor or Trustee.
Transfer
including its syntactical variants, means any assignment, sale, transfer,
conveyance, or disposition of any property; provided, Transfer as used herein does not include the
granting of a security interest in Assignors interest in any property including the Subject
Interests or Subject Lands.
Trust
is defined in the Introduction to this Conveyance.
Trust Agreement
is defined in the Introduction to this Conveyance.
Trust Gas
is defined in Section 3.01.
Trust Proceeds
means, for any Computation Period, proceeds received by Assignor for
the account of the Trust, as the Trusts marketing and payment agent and representative, from the
sale of Trust Gas under this Conveyance less Chargeable Costs calculated in accordance with Section
3.03.
Trustee
is defined in the Introduction to this Conveyance and also includes all
successor and substitute trustees under the Trust Agreement.
Working Interest
means with respect to any Development Well, the interest, stated as
a decimal fraction, in and to such Development Well that is burdened with the obligation to bear
and pay costs and expenses of maintenance, development and operations on or in connection with such
Development Well.
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ARTICLE III
CALCULATION OF TRUST GAS
Section 3.01 Definition
.
Trust Gas
is that volume of Gas which the Trust is entitled to
receive in any Computation Period under this Conveyance, calculated in accordance with the
following formula:
With respect to any Development Well:
Twenty-Five Percent (25%) X (Assignors Net Share of Gas produced during that
Computation Period).
For purposes of calculating Trust Gas hereunder, if, during any Computation Period, Assignor is
unable to determine the precise volume of Gas produced, sold and attributable to Assignors Net
Share of Gas, then Assignor shall, in good faith and in accordance with the Reasonably Prudent
Operator Standard, estimate the volume of such Gas produced, sold and attributable to Assignors
Net Share of Gas for such Computation Period. Assignor shall adjust Assignors Net Share of Gas
upward or downward, as the case may be, in the next or subsequent Computation Periods to reflect
the difference between the estimated volume and the actual amount of Gas produced, sold and
attributable to Assignors Net Share of Gas in the Computation Period for which such estimate was
made.
Section 3.02 Chargeable Costs
.
(a)
Definition
. Subject to Section 5.04 hereof, for each Computation Period,
Chargeable
Costs
means the sum of (i) Taxes, (ii) the Post Production Cost Charge and (iii) Excess Costs
from prior Computation Periods that (in each case) are actually paid or are deemed to have been
paid by Assignor during that Computation Period or paid or deemed to have been paid by Assignor
during a prior Computation Period and not included in any prior Computation Periods Chargeable
Costs. All costs associated with or paid or incurred in connection with the initial drilling,
testing, completing, and equipping for production of the Development Wells shall be borne solely by
Assignor and shall not be included as Chargeable Costs.
(b)
Taxes
.
Taxes
means general property, ad valorem, production, severance, sales,
gathering, windfall profit, excise, and other taxes, except income taxes, assessed or levied on or
in connection with the Subject Interests, the Royalty Interest, this Conveyance, production of
Subject Gas, Assignors Net Share of Gas, the Trust Gas (or the proceeds from the sale thereof), or
facilities or equipment on the Subject Lands that are used for the production, dehydration,
treatment, processing, gathering, or transportation of Subject Gas, or against Assignor as owner of
the Subject Interests or paid by Assignor on behalf of behalf of the Trust as owner of this Royalty
Interest.
(c)
Post Production Cost Charge
.
Post Production Cost Charge
means those costs
incurred by Assignor (including, internal costs and Third Person costs) to gather, transport,
compress, process, treat, dehydrate and market the Subject Gas, including any costs as may be
required to make merchantable and to deliver such Gas to market; provided, any internal costs of
Assignor and its Affiliates that are part of the Post Production Cost Charge shall not materially
exceed the costs prevailing in the area where the Subject Gas is being produced for
11
similar services; and provided, further, with respect to marketing costs, only Non-Affiliate
marketing fees and costs shall be included, and marketing costs of Assignor and its Affiliates with
respect to any Subject Gas will be specifically excluded from the Post Production Cost Charge; and
provided, further, until the Drilling Obligation Completion Date, any such internal costs of
Assignor and its Affiliates (excluding costs for any fuel that is used in the compression process,
including equivalent electricity charges in instances where electric compressors are used)
associated with the Greene County Gathering System shall be limited to $0.52 per MMBtu of Trust Gas
gathered. Any costs, fees or expenses that are properly charged or allocated to the Trust Gas
pursuant to another provision of this Conveyance (including, as provided for in the definition of
Subject Gas) shall not be included as part of the Post Production Cost Charge.
(d)
Operating and Drilling Costs
. All costs associated with or paid or incurred in connection
with the drilling, testing, completing, developing and operating the Development Wells or
associated with the Subject Interests other than Taxes and Post Production Cost Charges shall be
borne solely by Assignor and shall not be included as Chargeable Costs.
Section 3.03 Trust Proceeds
.
Trust Proceeds
means the volume of Trust Gas (on an Mcf
basis or MMBtu basis, as applicable) for the applicable Computation Period multiplied by the
relevant Sales Price less the Chargeable Costs associated with such Trust Gas for the applicable
Computation Period.
ARTICLE IV
MARKETING OF TRUST GAS
Section 4.01 Rights and Duties Regarding Sale of Trust Gas
. Assignor shall market or shall cause
to be marketed Assignors Net Share of Gas (including the Trust Gas) in good faith and in
accordance with the Reasonably Prudent Operator Standard and Section 4.02(d). Assignor shall use
its reasonable efforts in connection with any sale of Assignors Net Share of Gas (including the
Trust Gas) to obtain, as soon as reasonably practicable, full payment for such Gas; provided,
however, that it shall not be considered a breach of Assignors marketing duty or standard of
conduct for Assignor to market such Gas to an Affiliate of Assignor, so long as Assignor does not
market such Gas at a volume-weighted average price lower than the volume-weighted average price
upon which Assignor pays royalties to the owners of the other royalty interests in the Subject Gas,
save and excepting Chargeable Costs provided for in Article III hereof.
Section 4.02 Trusts Agent and Representative
.
(a)
Appointment
. Trustee on behalf of the Trust appoints Assignor as the Trusts agent and
representative to market and deliver or cause to be marketed and delivered all Trust Gas and to
collect and receive all payments therefrom under any gas purchase agreement or contract without
deduction (except to the extent Chargeable Costs are deducted for any Computation Period). The
appointment of Assignor as the Trusts agent and representative for such purpose is a material item
of consideration to the Parties in connection with the execution and delivery of this Conveyance.
Trustee on behalf of the Trust may not remove Assignor from
12
office as the Trusts agent and representative, except for cause upon a material breach by
Assignor of its duties to the Trust under this Conveyance.
(b)
Duties and Powers
. As the Trusts agent and representative, Assignor shall receive all
payments for the sale of the Trust Gas and account to Trustee on behalf of the Trust, receive and
make all communications with the purchaser of such Gas, and otherwise act and speak for the Trust
in connection with the sale of the Trust Gas. Third Persons may rely conclusively on the authority
of Assignor to market the Trust Gas, and with respect to Third Persons, the Trust shall be
conclusively bound by the acts of Assignor in connection with the sale of Trust Gas. It shall not
be necessary for Trustee on behalf of the Trust to join Assignor in the execution of any division
order, transfer order, or other instrument, agreement, or document relating to the sale of the
Trust Gas. Third Persons may pay all Trust Proceeds for the sale of such Gas directly to Assignor,
without the necessity of any joinder by or consent of Trustee on behalf of the Trust or any inquiry
into the use or disposition of such proceeds by Assignor.
(c)
Prohibited Acts
. Assignor may not act for or bind the Trust on any matter, except the
marketing and delivery of the Trust Gas under this Article IV.
(d)
Standard of Conduct
. In exercising its powers and performing its duties as the Trusts
agent and representative, Assignor shall act in good faith and in accordance with the Reasonably
Prudent Operator Standard. It shall not be a violation of such standard of conduct for Assignor
(i) to sell Assignors Net Share of Gas or the Trust Gas to an Affiliate pursuant to any gas
purchase agreement or contract, or (ii) to delegate some or all of Assignors duties as the Trusts
agent and representative to its Affiliates (so long as such Affiliates perform in good faith and in
accordance with the Reasonably Prudent Operator Standard), with Assignor remaining liable to the
Trust for the performance of such Affiliates.
(e)
Termination of Authority
. Assignor may not resign as the Trusts agent and representative
without the prior written consent of the Trustee on behalf of the Trust, except that Assignor may
resign as the Trusts agent and representative without such consent with respect to any Subject
Interests assigned, sold, transferred, or conveyed by Assignor in accordance with the terms of this
Conveyance. If such sale is made subject to the Royalty Interest, Assignor must cause the
purchaser to assume the duties of the Trusts agent and representative with respect to the Subject
Interests acquired by that purchaser and to be bound by the provisions of this Article IV.
Section 4.03 Delivery of Subject Gas
. Assignor (whether or not it is serving as the Trusts agent
and representative) shall deliver or cause to be delivered Assignors Net Share of Gas (including
Trust Gas) to the purchasers thereof into the pipelines to which the Development Wells producing
such Gas are connected.
Section 4.04 Processing
. Assignor may process Assignors Net Share of Gas (including Trust Gas) to
remove liquid and liquefiable hydrocarbons and may commit any of the Subject Interests (including
the Royalty Interest attributable thereto) to an agreement for processing minerals (pursuant to
which, for example, the plant owner or operator receives a portion of the Subject Gas or plant
products therefrom or proceeds of the sale thereof as a fee for processing), so long as Assignor
enters into such processing arrangements in good faith and in
13
accordance with the Reasonably Prudent Operator Standard. The Trust shall be bound by such
arrangements, shall permit Assignors Net Share of Gas (including the Trust Gas) to be processed by
Assignor or its contractor, and shall have no right to any liquid or liquefiable hydrocarbons
obtained by such processor or to the proceeds from the sale thereof. Trustee shall not, however,
be personally liable for any costs or risks associated with such processing operations, but the
Trust shall indirectly suffer the Btu reduction and volume reductions associated with processing
through corresponding reductions in the Btu content and volumes of the Trust Gas.
ARTICLE V
PAYMENT
Section 5.01 Obligation to Pay
.
(a)
Quarterly Payment Amount
. On each Quarterly Payment Date, Assignor shall prepare, in good
faith, an estimate of the cash to be paid to the Trust from (A) all of the proceeds (including any
interest earned thereon and payable to the Trust pursuant to Section 5.01(b) or Section 5.01(e)) to
be paid to the Trust from the sale of Trust Gas produced during such Computation Period; plus (B)
all of the proceeds (including any interest earned thereon and payable to the Trust pursuant to
Section 5.01(b) or Section 5.01(e)) to be paid to the Trust from the sale of Trust Gas, if any,
produced during any prior Computation Periods, to the extent not previously taken into account for
purposes of determining a Quarterly Payment Amount for any prior Computation Periods, as such sum
may be (x) increased or decreased as a result of any adjustments to the estimates that were
previously made pursuant to this Section 5.01(a) for any prior Computation Periods that are
necessary to accurately report the proceeds from the sale of Trust Gas for such prior Computation
Periods(y) increased by the amount of any damages payable to the Trustee under Section 1.03(b)
during the most recently completed Computation Period prior to such Quarterly Payment Date and (z)
decreased by any Reserved Amounts as provided in Section 5.04 below (
Quarterly Payment
Amount
).
(b)
The Obligation
. After each Computation Period and on or before the Quarterly Payment Date
for that Computation Period, Assignor shall tender to Trustee the Quarterly Payment Amount with
respect to the applicable Computation Period. With respect to the final Computation Period,
Assignor shall tender to the Trustee all unexpended Reserved Amounts (together with any interest
accrued thereon).
(c)
Quarterly Payment Date
.
Quarterly Payment Date
for each Computation Period
means the thirtieth (30
th
) day after the end of such Computation Period. If such day is
not a Business Day, the Quarterly Payment Date shall be the next Business Day.
(d)
No Segregated Account
. All amounts received by Assignor from the sale of Assignors Net
Share of Gas and the Trust Gas, as applicable, for any Computation Period shall be held by Assignor
in one of its general bank accounts and Assignor will not be required to maintain a segregated
account for such funds.
(e)
Disputed Proceeds
. If Assignor receives any amounts of money from the sale of Trust Gas
that is subject to controversy or, in the reasonable opinion of Assignor, possible
14
controversy, Assignor shall promptly deposit the money with a Third Person escrow agent in a
segregated interest-bearing account. Such amount shall not be treated as a portion of Trust
Proceeds so long as it remains with such escrow agent, but shall be treated as a portion of the
Trust Proceeds, along with the accrued interest, when received from such escrow agent and paid over
to Trustee.
Section 5.02 Interest on Past Due Payments
.
(a)
Obligation to Pay
. Any Trust Proceeds or other amounts of money not paid by Assignor to
Trustee when due shall bear, and Assignor will pay, interest at the Prime Interest Rate on the
overdue amount commencing on the sixth (6
th
) day after such due date until such amount
is paid.
(b)
Definition
.
Prime Interest Rate
means the lesser of (i) the rate of interest
per annum publicly announced from time to time by The Bank of New York Mellon Trust Company, N.A.
as its prime rate in effect at its principal office in New York City (each change in the Prime
Rate to be effective on the date such change is publicly announced), with the understanding that
such banks prime rate may be one of several base rates, may serve as a basis upon which
effective rates are from time to time calculated for loans making reference thereto, and may not be
the lowest of such banks base rates or (ii) the maximum rate of interest permitted under
applicable Legal Requirement.
Section 5.03 Overpayments and Refunds
.
(a)
Overpayments
. If Assignor ever pays Trustee more than the amount of money then due and
payable to the Trust under this Conveyance, Trustee shall not be obligated to return the
overpayment, but Assignor may at any time thereafter deduct from Trust Proceeds and retain for its
own account an amount equal to the overpayment.
(b)
Refunds
. If Assignor is ever legally obligated to pay any Third Person, including any gas
purchaser or Governmental Authority, any refund, interest, penalty, or other amount of money,
because any payment of Trust Proceeds received by Assignor for the account of Trustee exceeded, or
allegedly exceeded, the amount due or lawful under any applicable contract, Legal Requirement, or
other obligation, Assignor may thereafter deduct from Trust Proceeds and retain for its own account
an amount equal to such payment.
Section 5.04 Reserved Amounts
. At any time and from time to time under this Conveyance and in
accordance with the Reasonably Prudent Operator Standard, Assignor may set aside from Trust
Proceeds amounts determined in good faith to economically accrue to a Computation Period with
respect to known or anticipated costs or liabilities (the
Reserved Amounts
) which may be
incurred in future Computation Periods with respect to Taxes assessed or levied with respect to a
time period in excess of a calendar quarter. As Reserved Amounts are expended by Assignor to cover
applicable Taxes in a Computation Period, Chargeable Costs shall be reduced in such Computation
Period by an amount equal to the Reserved Amounts so expended. In the event that Assignor
overestimates the cost of any Taxes for which it has set aside Reserved Amounts, the excess amount
shall be applied against any other Chargeable Costs (which shall be reduced by an amount equal to
such excess Reserved Amounts so expended), or
15
paid as Trust Proceeds on the Quarterly Payment Date following the Computation Period in which it
is determined that Assignor has set aside excess Reserved Amounts.
ARTICLE VI
RECORDS AND REPORTS
Section 6.01 Books, Records, and Accounts
.
(a)
Obligation to Maintain
. Assignor shall maintain true and correct books, records, and
accounts of (i) all transactions required or permitted by this Conveyance and (ii) the financial
information necessary to effect such transactions, including the financial information needed to
calculate each installment of Trust Proceeds.
(b)
Right of Inspection
. Trustee or its representative, at the Trusts expense, may inspect
and copy such books, records, and accounts in the offices of Assignor during normal business hours
and upon reasonable notice.
Section 6.02 Statements
.
(a)
Quarterly Statements
. On each Quarterly Payment Date, Assignor shall deliver to Trustee a
statement showing the computation of Trust Gas and Trust Proceeds for the preceding Computation
Period.
(b)
Annual Statements
. On the first Quarterly Payment Date after the end of each calendar
year, such statement shall also show the computation of Trust Proceeds for the preceding calendar
year.
(c)
Contents of Statements
. Without limiting the generality of the foregoing provisions in
this Section 6.02, each statement delivered by Assignor to Trustee pursuant to this Section 6.02
shall state, for the relevant period, (i) the total volumes of Subject Gas produced from the
Subject Lands, (ii) the total volumes of the Assignors Net Share of Gas, (iii) the total volumes
of Trust Gas, (iv) the applicable Sales Price, (v) the amount of Trust Proceeds due and payable for
the relevant period and (vi) the amounts of money, if any, due and payable by any purchaser of the
Subject Gas or the Trust Gas, the nonpayment of which resulted in the payment to Trustee of less
than Trust Proceeds for the relevant period. Notwithstanding the preceding, Assignor shall only be
required to provide the preceding information on an aggregate basis.
Section 6.03 The Trustees Exceptions to Quarterly Statements
. If Trustee on behalf of the Trust
takes exception to any item or items included in any quarterly statement required by Section 6.02,
Trustee must notify Assignor in writing within sixty (60) days after Trustees receipt of such
quarterly statement. Such Notice must set forth in reasonable detail the specific charges
complained of and to which exception is taken or the specific credits which should have been made
and allowed. Adjustments shall be made for all complaints and exceptions that are justified.
Notwithstanding anything to the contrary herein, all matters reflected in Assignors statements for
the preceding calendar year (or portion thereof) that are not objected to by Trustee in the manner
provided by this Section 6.03 shall be deemed correct as rendered by Assignor to Trustee.
16
Section 6.04 Other Information
.
(a)
Disclosure
. At Trustees request, subject to applicable restrictions on disclosure and
transfer of information, Assignor shall give Trustee and its designated representatives (on behalf
of the Trust) reasonable access in Assignors office during normal business hours to all
geological, Development Well, and production data in Assignors possession or Assignors
Affiliates possession, relating to operations on the Subject Interests.
(b)
Disclaimer of Warranties and Liability
. Assignor makes no representations or warranties
about the accuracy or completeness of any such data, reports, or studies and shall have no
liability to Trustee, the Trust or any other Person resulting from such data, studies, or reports.
(c)
No Attribution
. Trustee shall not attribute to Assignor or to the consulting engineers
any reports or studies or the contents thereof in any securities filings or reports to owners or
holders of interests in the Trust.
(d)
Confidentiality
. All information furnished to the Trustee and its designated
representatives pursuant to this Section 6.04 is confidential and for the sole benefit of Trustee
on behalf of the Trust and shall not be disclosed by Trustee or its designated representatives to
any other Person, except to the extent that such information (i) is required in any report,
statement or testimony submitted to any Governmental Authority having or claiming to have
jurisdiction over Trustee or the Trust or submitted to bank examiners or similar organizations or
their successors, (ii) is required in response to any summons or subpoena or in connection with any
litigation, (iii) is believed to be required in order to comply with any applicable Legal
Requirement to the Trustee or the Trust, (iv) was publicly available or otherwise known to the
recipient at the time of disclosure or (v) subsequently becomes publicly available other than
through any act or omission of the recipient; provided, however, with respect to the disclosures
with respect to items (i), (ii) and (iii) above, Trustee will notify Assignor prior to any such
disclosure in order to provide Assignor an opportunity to seek to limit any such required
disclosure.
ARTICLE VII
NO LIABILITY OF THE TRUSTEE OR THE TRUST
Neither the Trustee nor the Trust shall be personally liable or responsible under this
Conveyance for any cost, risk, liability, or obligation associated in any way with the ownership or
operation of the Subject Lands, the Subject Interests, the Development Wells, or the Subject Gas.
The foregoing sentence does not restrict the right of Assignor to deduct Chargeable Costs or
Reserved Amounts in calculating the volumes of the Trust Gas or Trust Proceeds.
ARTICLE VIII
OPERATIONS
Section 8.01 Standards of Conduct
. Except as otherwise specifically provided in this Conveyance,
Assignor shall (a) operate and maintain the Subject Interests and (b) make elections under each
applicable lease, operating agreement, unit agreement, contract for development, and other similar
instrument or agreement (including elections concerning
17
abandonment of any Development Well or release of any Subject Interest) in good faith and in
accordance with the Reasonably Prudent Operator Standard.
Section 8.02 Abandonment of Properties
. Nothing in this Conveyance shall obligate Assignor to
continue to operate any Development Well or to operate or maintain in force or attempt to maintain
in force any Subject Interest when such Development Well or Subject Interest ceases to produce, or
Assignor determines, in accordance with Section 8.01 above, that such Development Well or Subject
Interest is not capable of producing Gas in paying quantities. The expiration of a Subject
Interest in accordance with the terms and conditions applicable thereto shall not be considered to
be a voluntary surrender or abandonment thereof.
Section 8.03 Insurance
. Assignor may, but is not required by this Conveyance to, carry insurance
on any Subject Interest or Development Well, or covering any risk with respect thereto. Assignor
shall never be liable to the Trustee or the Trust on account of any injury or loss to the Subject
Interests or any Development Well, whether insurable or uninsurable, not covered by insurance. If
Assignor elects to carry insurance, the premiums shall not be included in Chargeable Costs, and
Assignor shall retain all proceeds of such insurance.
ARTICLE IX
POOLING AND UNITIZATION
Section 9.01 Pooling of Subject Interests
. Certain Subject Interests have been, or may have been,
heretofore pooled and unitized for the production of Gas. Such Subject Interests are and shall be
subject to the terms and provisions of the applicable pooling and unitization agreements, and the
Royalty Interest in each pooled or unitized Subject Interest shall apply to and affect only the Gas
produced from such units that accrues to such Subject Interest under and by virtue of the
applicable pooling and unitization agreements.
Section 9.02 Pooling and Unitization
.
(a)
Right to Pool
. Assignor has the exclusive executive right and power (as between Assignor
and the Trustee) to pool or unitize any Subject Interest and to alter, change, amend, or terminate
any pooling or unitization agreements heretofore or hereafter entered into, as to all or any part
of the Subject Lands, as to any one or more of the formations or horizons, and as to any Gas, upon
such terms and provisions as Assignor shall in its sole discretion deem appropriate.
(b)
Effect of Pooling
. If and whenever through the exercise of such right and power, or
pursuant to any Legal Requirement now existing or hereafter enacted or promulgated, any Subject
Interest is pooled or unitized in any manner, the Royalty Interest, insofar as it affects such
Subject Interest, shall also be pooled and unitized, and such Royalty Interest in such Subject
Interest shall apply to and affect only the Gas production that accrues to such Subject Interest
under and by virtue of the applicable pooling and unitization agreement or order. It shall not be
necessary for the Trustee to agree to, consent to, ratify, confirm or adopt any exercise of pooling
or unitization of any Subject Interest by Assignor.
18
ARTICLE X
GOVERNMENT REGULATION
Section 10.01 Legal Requirements
. All obligations of Assignor under this Conveyance are, and shall
be, subject to all applicable Legal Requirements and the instruments, documents, and agreements
creating the Subject Interests.
Section 10.02 Filings
. Assignor shall use its reasonable discretion in making filings for itself
and on behalf of the Trust with any Governmental Authority having jurisdiction with respect to
matters affecting the Subject Interests, the Subject Lands, or the Subject Gas.
ARTICLE XI
ASSIGNMENT AND SALE OF SUBJECT INTERESTS
Section 11.01 Assignment by Assignor Subject to Royalty Interest
.
(a)
Right to Sell
. Subject to Section 11.05, Assignor may from time to time Transfer,
mortgage, or pledge its interest in the Development Wells, the Subject Interests, or any part
thereof or undivided interest therein, subject to the Royalty Interest and this Conveyance.
Assignor shall cause the assignee, purchaser, transferee, grantee, mortgagee, or pledgee of any
such transaction to take the affected Subject Interests subject to the Royalty Interest and this
Conveyance and, from and after the actual date of any such Transfer, to assume Assignors
obligations under this Conveyance with respect to such Subject Interests.
(b)
Effect of Sale
. From and after the actual date of any such Transfer by Assignor, Assignor
shall be relieved of all obligations, requirements, and responsibilities arising under this
Conveyance with respect to the Subject Interests Transferred, except for those that accrued prior
to such date.
(c)
Allocation of Consideration
. Trustee is not entitled to receive any share of the sales
proceeds received by Assignor in any transaction permitted by this Section 11.01.
(d)
Separate Interest
. Effective on the effective date of any Transfer of any Subject
Interest subject to this Section 11.01, Trust Gas and Trust Proceeds shall thereafter be computed
separately with respect to such Subject Interests, and the assignee, buyer, transferee, or grantee
of such Subject Interests shall thereafter serve as the Trusts agent and representative under
Article IV with respect to such interests and shall pay all corresponding Trust Proceeds directly
to Trustee.
Section 11.02 Sale and Release of Properties
.
(a)
Transfer
. Subject to Section 11.05, Assignor may from time to time, Transfer the
Development Wells, the Subject Interests, or any part thereof or undivided interest therein, free
of the Royalty Interest and this Conveyance provided that the aggregate Fair Value of all Royalty
Interests released with respect to the Assignee Conveyances during any twelve (12) month period
shall not exceed $5,000,000 or as provided for in Section 12.02.
19
(b)
Payments
. In connection with any Transfer pursuant to this Section 11.02, Assignor shall
remit to the Trust an amount equal to the Fair Value of the Royalty Interest being released.
Assignor shall make such payment to the Trust on the Quarterly Payment Date for the Computation
Period in which Assignor receives the payment with respect to any such Transfer of the Subject
Interest.
(c)
Release
. In connection with any Transfer provided for in Section 11.02(a), Trustee on
behalf of the Trust shall, on request, execute, acknowledge, and deliver to Assignor a recordable
instrument (reasonably acceptable to Assignor) that releases the Royalty Interest with respect to
the Development Well and the related Subject Interests and Subject Lands being Transferred.
(d)
Effect of Sale
. From and after the actual date of any such Transfer by Assignor, Assignor
and any assignee, purchaser, transferee or grantee of such Subject Interest shall be relieved of
all obligations, requirements, and responsibilities arising under the Royalty Interest or this
Conveyance with respect to the Development Well or Subject Interests Transferred, except for those
that accrued prior to such date.
Section 11.03 Release of Other Properties
.
(a)
Prior Reversionary Interests
. In the event that any Person notifies Assignor that,
pursuant to a Prior Reversionary Interest, Assignor is required to convey any of the Subject
Interests to such Person or cease production from any Development Well, Assignor may provide such
conveyance with respect to such Subject Interest or permanently cease Production from any such
Development Well.
(b)
Payments
. In the event that Assignor receives compensation pursuant to any Prior
Reversionary Interest in connection with any conveyance or permanent cessation of production from
any Development Well, Assignor shall remit to the Trust an amount equal to the product of (x) such
amount actually received by Assignor with respect to such reconveyance or permanent cessation of
production and (y) a fraction the numerator of which is (A) the Fair Value of the Royalty Interest
released and the denominator of which is (B) the Fair Value of the Subject Interest that is being
released. Assignor shall make such payment to the Trust on the Quarterly Payment Date for the
Computation Period in which Assignor receives such payment.
(c)
Release for Prior Reversionary Interests
. In connection with any conveyance or permanent
cessation of production provided for in Section 11.03(a) above, Trustee on behalf of the Trust
shall, on request, execute, acknowledge, and deliver to Assignor a recordable instrument
(reasonably acceptable to Assignor) that releases the Royalty Interest and this Conveyance with
respect to any such Development Well or Subject Interests.
(d)
Effect of Prior Reversionary Interests
. From and after the actual date of any conveyance
or permanent cessation of production provided for in Section 11.03(a), Assignor and any assignee,
purchaser, transferee or grantee of such Subject Interest shall be relieved of all obligations,
requirements, and responsibilities arising under the Royalty Interest or this Conveyance with
respect to the Subject Interests Transferred, except for those that accrued prior to such date.
20
Section 11.04 Farmouts
.
(a)
Farmout
. Assignor may from time to time enter into Farmout Agreements with Third Persons
with respect to the Subject Interests. In the event that Assignor enters into any Farmout
Agreement with a Third Person, the Royalty Interest and this Conveyance shall only burden
Assignors retained interest in the Subject Interest after giving effect to any interest in the
Subject Interest that a counterparty to the Farmout Agreement may earn under such Farmout
Agreement. Only the Assignors retained interest in the Subject Interest will count towards the
Assignors obligation to drill Development Wells under the Development Agreement.
(b)
Release
. In connection with Assignor entering into any Farmout Agreement, Trustee on
behalf of the Trust shall, upon request of Assignor, execute, acknowledge, and deliver to Assignor
a recordable instrument (reasonably acceptable to Assignor) that releases the Royalty Interest and
this Conveyance with respect to the Subject Interests being transferred pursuant to such Farmout
Agreement; provided, the Royalty Interest shall still burden the Subject Interest retained by
Assignor.
Section 11.05 Transfer of Subject Lands
. Except as provided for in Section 12.02, Assignor will
not Transfer any Development Well or any of the Subject Interests comprising a part of the Subject
Lands pursuant to Sections 11.01 and 11.02 prior to the Drilling Obligation Completion Date.
Section 11.06 Change in Ownership
.
(a)
Obligation to Give Notice
. No change of ownership or of the right to receive payment of
the Royalty Interest, or of any part thereof, however accomplished, shall bind Assignor until
notice thereof is furnished to Assignor by the Person claiming the benefit thereof, and then only
with respect to payments made after such Notice is furnished.
(b)
Notice of Sale
. Notice of sale, transfer, conveyance, or assignment shall consist of a
certified copy of the recorded instrument accomplishing the same.
(c)
Notice of Other Changes of Ownership
. Notice of change of ownership or of the right to
receive payment accomplished in any other manner (
e.g.
, by dissolution of the Trust) shall consist
of certified copies of recorded documents and complete proceedings legally binding and conclusive
of the rights of all Persons.
(d)
Effect of Lack of Notice
. Until such Notice accompanied by such documentation is
furnished to Assignor in the manner provided above, Assignor may, at Assignors election, either
(i) continue to pay or tender all sums payable on the Royalty Interest in the same manner provided
in this Conveyance, precisely as if no such change in interest or ownership or right to receive
payment had occurred or (ii) suspend payment of Trust Proceeds without interest until such
documentation is furnished.
(e)
Effect of Nonconforming Notices
. The kinds of Notice provided by this Section 11.03(d)
shall be exclusive, and no other kind, whether actual or constructive, shall bind Assignor.
21
Section 11.07 One Payee
. Assignor shall never be obligated to pay Trust Proceeds to more than one
Person. If more than one Person is ever entitled to receive payment of any part of the Trust
Proceeds, Assignor may suspend payments of all Trust Proceeds until the concurrent owners or
claimants of the Royalty Interest or the right to receive payment of Trust Proceeds appoint one
Person in writing to receive all payments of Trust Proceeds on their behalf. Assignor may
thereafter conclusively rely upon the authority of that Person to receive payments of Trust
Proceeds and shall be under no further duty to inquire into the authority or performance of such
Person.
Section 11.08 Rights of Mortgagee
. If Trustee executes a mortgage or deed of trust covering all or
part of the Royalty Interest, the mortgagees or trustees therein named or the holders of any
obligation secured thereby shall be entitled, to the extent that such mortgage or deed of trust so
provides, to exercise the rights, remedies, powers, and privileges conferred upon Trustee by this
Conveyance and to give or withhold all consents required to be obtained from Trustee. This Section
11.08 shall not be deemed or construed to impose upon Assignor any obligation or liability
undertaken by the Trustee under such mortgage or deed of trust or under the obligation secured
thereby.
ARTICLE XII
AMI AREA
Section 12.01 Additional Leases
. In the event that Assignor acquires any additional leases
(
Additional Lease
) other than the Subject Interests in the AMI Area prior the Drilling
Obligation Completion Date, (i) Assignor shall be subject to all of the limitations hereunder and
under the Development Agreement with respect to such Additional Leases(s), and (ii), subject to
Section 12.03, at Assignors option, Assignor and Trustee shall execute, acknowledge, and deliver
an instrument that amends this Conveyance so that such Additional Lease will be subject to the
Royalty Interest and be part of the Subject Interests and Subject Lands hereunder; provided that in
no event shall Assignor extend any well into such Additional Lease(s) unless and until this
Conveyance is amended to include such Additional Leases(s) as part of the Subject Interests.
Section 12.02 Exchange of Subject Lands
. Subject to Section 12.03, Assignor may, at its option at
any time prior to the Drilling Obligation Completion Date, cause Trustee to execute, acknowledge,
and deliver to Assignor a recordable instrument (reasonably acceptable to Assignor) that releases
from the Royalty Interest and this Conveyance portions of the Subject Interests in connection with
Assignors exchange of such Subject Interests for other properties within the AMI, which such other
properties will be made subject to the Royalty Interests in this Conveyance (such other properties
being hereafter referred to as
Exchange Acreage
).
Section 12.03 Limitations
. In no event, however, may any Additional Lease be made subject to the
Royalty Interest and this Conveyance pursuant to Section 12.01, or any exchange be effected
pursuant to Section 12.02 unless Assignor certifies to the Trust that (a) no Development Well will
be spud on the Additional Lease or the Exchange Acreage, (b) the aggregate acreage attributable to
all Additional Leases and all Exchange Acreage will not exceed 5% of the Subject Lands as such
exist as of the date of this Conveyance, (c) if the Additional Lease and Exchange Acreage were
treated as Subject Lands, the portion of the Subject Lands
22
that covers and pertains to Subject Gas in, under and that may be produced from all horizontal
wells to be drilled by Assignor pursuant to the Drilling Obligation that extend into Additional
Leases and Exchange Acreage and that may be retained by the Trust pursuant to Section 1.04 hereof
following the Drilling Obligation Completion Date will not constitute more than 5% of the Subject
Lands that cover and pertain to Subject Gas in, under and that may be produced from all Development
Wells (including horizontal wells that extend into Additional Leases and Exchange Acreage) and that
may be retained by the Trust pursuant to Section 1.04 hereof following the Drilling Obligation
Completion Date, (d) in the case of an Additional Lease, the reserve profile of such Additional
Lease is consistent with reserve profiles of other portions of the Subject Interests that would,
but for the acquisition of the Additional Lease, be tapped from a Development Well having the
entire length of all of its perforated laterals located within the Subject Interests and (e) in the
case of an exchange pursuant to Section 12.02, the reasonably projected quantity of proved
undeveloped reserves attributable to the Exchange Acreage does not significantly differ from the
reasonably projected quantity of proved undeveloped reserves attributable to the portion of the
Subject Interests to be given in exchange therefor.
Section 12.04 No Drainage
. Subsequent to the Drilling Obligation Completion Date, neither Assignor
nor any of its Affiliates shall drill any Gas well that will have a perforated segment that will be
within five hundred feet (500) of any perforated interval of any Development Well which produces
oil or gas from the Target Formation.
ARTICLE XIII
FORCE MAJEURE
Section 13.01 Nonperformance
. Assignor shall not be responsible to Trustee for any loss or damage
to Trustee resulting from any delay in performing or failure to perform any obligation under this
Conveyance (other than Assignors obligation to make payments of Trust Proceeds to Trustee) to the
extent such failure or delay is caused by Force Majeure.
Section 13.02 Force Majeure
.
Force Majeure
means any of the following, to the extent
they are not caused solely by the breach by Assignor of its duty to perform certain obligations
under this Conveyance in accordance with the Reasonably Prudent Operator Standard:
(a) act of God, fire, lightning, landslide, earthquake, storm, hurricane, hurricane warning,
flood, high water, washout, tidal wave, or explosion;
(b) strike, lockout, or other similar industrial disturbance, act of the public enemy, war,
military operation, blockade, insurrection, riot, epidemic, arrest or restraint of Governmental
Authority or people, or national emergency;
(c) the inability of the Assignor to acquire, or the delay on the part of any Third Person
(other than an Affiliate of the Assignor) in acquiring, materials, supplies, machinery, equipment,
servitudes, right-of-way grants, easements, permits, or licenses, or approvals or authorizations by
regulatory bodies needed to enable such Party to perform hereunder;
23
(d) any breakage of or accident to machinery, equipment, or lines of pipe, the repair,
maintenance, improvement, replacement, alteration to a plant or line of pipe or related facility,
the testing of machinery, equipment or line of pipe, or the freezing of a line of pipe;
(e) any Legal Requirement or the affected Partys compliance therewith; or
(f) any other cause, whether similar or dissimilar to the causes enumerated in (a) through (e)
above, not reasonably within the control of Assignor.
Section 13.03 Force Majeure Notice
. Assignor will give Trustee a Notice of each Force Majeure as
soon as reasonably practicable after the occurrence of the Force Majeure.
Section 13.04 Remedy
. Assignor will use its reasonable efforts to remedy each Force Majeure and
resume full performance under this Conveyance as soon as reasonably practicable, except that the
settlement of strikes, lockouts, or other labor disputes shall be entirely within the discretion of
Assignor.
ARTICLE XIV
NOTICE
Section 14.01 Definition
.
Notice
means any notice, advice, invoice, demand, or other
communication required or permitted by this Conveyance.
Section 14.02 Written Notice
. Except as otherwise provided by this Conveyance, each Notice shall
be in writing.
Section 14.03 Methods of Giving Notice
. Notice may be given by any reasonable means, including
telecopier, hand delivery, overnight courier, and United States mail.
Section 14.04 Charges
. All Notices shall be properly addressed to the recipient, with all postage
and other charges being paid by the Party giving Notice.
Section 14.05 Effective Date
. Notice shall be effective when actually received by the Party being
notified.
Section 14.06 Addresses
. The addresses of the Parties for purposes of Notice are the addresses in
the Introduction to this Conveyance.
Section 14.07 Change of Address
. Either Party may change its address to another address within the
continental United States by giving ten (10) days Notice to the other Party.
ARTICLE XV
OTHER PROVISIONS
Section 15.01 Successors and Assigns
. Subject to the limitation and restrictions on the assignment
or delegation by the Parties of their rights and interests under this Conveyance, this Conveyance
binds and inures to the benefit of Assignor, Trustee, the Trust and their respective successors,
assigns, and legal representatives.
24
Section 15.02 Governing Law
.
WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PRINCIPLES
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION, THIS CONVEYANCE SHALL BE
CONSTRUED UNDER AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA (EXCLUDING CHOICE OF
LAW AND CONFLICT OF LAW RULES).
Section 15.03 Construction of Conveyance
. In construing this Conveyance, the following principles
shall be followed:
(a) no consideration shall be given to the captions of the articles, sections, subsections, or
clauses, which are inserted for convenience in locating the provisions of this Conveyance and not
as an aid in its construction;
(b) no consideration shall be given to the fact or presumption that one Party had a greater or
lesser hand in drafting this Conveyance;
(c) the word includes and its syntactical variants mean includes, but is not limited to
and corresponding syntactical variant expressions;
(d) a defined term has its defined meaning throughout this Conveyance, regardless of whether
it appears before or after the place in this Conveyance where it is defined;
(e) the plural shall be deemed to include the singular, and vice versa, unless the content
otherwise requires; and
(f) each exhibit, attachment, and schedule to this Conveyance is a part of this Conveyance,
but if there is any conflict or inconsistency between the main body of this Conveyance and any
exhibit, attachment, or schedule, the provisions of the main body of this Conveyance shall prevail.
Section 15.04 No Waiver
. Failure of either Party to require performance of any provision of this
Conveyance shall not affect either Partys right to require full performance thereof at any time
thereafter, and the waiver by either Party of a breach of any provision hereof shall not constitute
a waiver of a similar breach in the future or of any other breach or nullify the effectiveness of
such provision.
Section 15.05 Relationship of Parties
. This Conveyance does not create a partnership, mining
partnership, joint venture, or relationship of trust or agency (except with respect to Assignors
agency relationship with respect to those matters set forth in Articles IV and V above) between the
Parties.
Section 15.06 Proportionate Reduction
. In the event of failure or deficiency in title to any
Development Well or Subject Interest (other than burdens in excess of twelve and one half percent
(12.5%)), the portion of the Subject Gas production attributable thereto shall be reduced in the
same proportion that such Development Well or Subject Interest is reduced by such failure or
deficiency. Such proportionate reduction of the Royalty Interest shall not limit Trustees rights
with respect to such reduction under Section 1.03(a).
25
Section 15.07 Further Assurances
. Each Party shall execute, acknowledge, and deliver to the other
Party all additional instruments and other documents reasonably required to describe more
specifically any interests subject hereto, to vest more fully in Trustee the Royalty Interest
conveyed (or intended to be conveyed) by this Conveyance, or to evidence or effect any transaction
contemplated by this Conveyance. Assignor shall also execute and deliver all additional
instruments and other documents reasonably required to transfer interests in state, federal, or
Indian lease interests in compliance with applicable Legal Requirements or agreements.
Section 15.08 The 7:00 A.M. Convention
. Except as otherwise provided in this Conveyance, each
calendar day, month, quarter, and year shall be deemed to begin at 7:00 a.m. Eastern Time on the
stated day or on the first day of the stated month, quarter, or year, and to end at 7:00 a.m.
Eastern Time on the next day or on first day of the next month, quarter, or year, respectively.
Section 15.09 Counterpart Execution
. This Conveyance may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but
all of such counterparts shall constitute for all purposes one Conveyance. As between the Parties,
any signature hereto delivered by a Party by facsimile transmission or email pdf. shall be deemed
an original hereto.
Section 15.10 Present and Absolute Conveyance
. It is the express intention of Assignor and Trustee
that the Royalty Interest is, and shall be construed for all purposes as, a present, fully-vested
and absolute conveyance.
Section 15.11 Limitation of Liability
. It is expressly understood and agreed by the parties hereto
that (a) this Agreement is executed and delivered by the Trustee not individually or personally,
but solely as Trustee in the exercise of the powers and authority conferred and vested in it and
(b) under no circumstances shall the Trustee be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Trust under this Agreement.
[Remainder of page intentionally left blank.]
26
IN WITNESS WHEREOF, each Party has caused this Conveyance to be executed in its name and
behalf and delivered on the date or dates stated in the acknowledgment certificates appended to
this Conveyance, to be effective as of the Effective Time.
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ENERGY CORPORATION OF
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AMERICA
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By:
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/s/ Donald C. Supcoe
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Name: Donald C. Supcoe
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Title: Senior Vice President
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Signature Page to Perpetual Royalty Interest Conveyance
S-1
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ECA MARCELLUS TRUST I
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By: The Bank of New York Mellon Trust
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Company, N.A.
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By:
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/s/ Michael J. Ulrich
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Name: Michael J. Ulrich
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Title: Authorized Signatory
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Prepared by:
Vinson & Elkins LLP
1001 Fannin Street
Suite 2500
Houston, TX 77002-6760
Attention: Thomas Herbert
Signature Page to Perpetual Royalty Interest Conveyance
S-2
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THE
STATE OF COLORADO
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§
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§
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COUNTY
OF DENVER
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§
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On this, the
7
th
day of July, 2010, before me Julie Ann Kitano, a
Notary public,
personally appeared Donald C. Supcoe, who acknowledged himself to be the Senior Vice President of
Energy Corporation of America, a West Virginia corporation, and that he as such Senior Vice
President, being authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as Senior Vice President.
In witness whereof, I hereunto set my hand and official seal.
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/s/ Julie Ann Kitano
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[SEAL]
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My
Commission Expires: 4-26-2014
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THE
STATE OF COLORADO
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§
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§
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COUNTY
OF DENVER
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§
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On this, the
7
th
day of July, 2010, before me Julie Ann Kitano, a
Notary public,
personally appeared Michael J. Ulrich, who acknowledged himself to be the authorized signatory of
The Bank of New York Mellon Trust Company, N.A., a national banking association and Trustee of ECA
Marcellus Trust I and that he as such authorized signatory, being authorized to do so, executed the
foregoing instrument for the purposes therein contained by signing the name of the national banking
association by himself as authorized signatory.
In witness whereof, I hereunto set my hand and official seal.
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/s/ Julie Ann Kitano
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[SEAL]
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My
Commission Expires: 4-26-2014
CERTIFICATE OF RESIDENCE
The Bank of New York Mellon Trust Company, N.A., as grantee and Trustee hereunder, hereby
certifies that its precise address is:
919 Congress Avenue
Suite 500
Austin, Texas 78701
ECA MARCELLUS TRUST I
By: The Bank of New York Mellon Trust Company, N.A.
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By:
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/s/ Michael J. Ulrich
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Name: Michael J. Ulrich
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Title: Authorized Signatory
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Exhibit A
(Attached hereto.)
Exhibit A
Exhibit B
(Attached hereto.)
Exhibit B
Exhibit C
(Attached hereto.)
Exhibit C
Exhibit D
Private Investors
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W. GASTON CAPERTON, III
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CLARK CLEMENT and PAULETTE CLEMENT
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MICHAEL J. COCHRAN, JR.
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PETER H. COORS
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RODNEY D. COX and JENNIFER M. COX
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CURTIS FAMILY REVOCABLE TRUST
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DORGAN LIVING TRUST
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RANDALL C. FARKOSH and SHERRY J. FARKOSH
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JOHN S. FISCHER and FAYE E. FISCHER
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MICHAEL S. FLETCHER and BOBBETTE FLETCHER
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J. MICHAEL FORBES
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MARK A. FRY and TAMMY L. FRY
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THOMAS R. GOODWIN
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DANIEL EARL GRAHAM LIVING TRUST and SALLY QUEREAU GRAHAM LIVING TRUST
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CLINT L. HIPKE
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DAVID E. JORDAN and CAROL JORDAN
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FRANCIS H. McCULLOUGH, III and KATHY L. McCULLOUGH
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KATHERINE F. McCULLOUGH TRUST
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KRISTIN McCULLOUGH TRUST
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LESLEY K. McCULLOUGH TRUST
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MEREDITH B. McCULLOUGH TRUST
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DENNIS L. McGOWAN and N. GAYLE McGOWAN
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ALISON MORK TRUST
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JOHN MORK and JULIE MORK
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KYLE MORK TRUST
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ARTHUR C. NIELSEN, JR. TRUST DATED JULY 14, 2003
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GEORGE OMALLEY
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JAY S. PIFER
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NIKI D. RANDOLPH
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PETER L. REBSTOCK
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R. KENT SCHAMP
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PETER A. SULLIVAN and WENDY H. SULLIVAN
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DONALD C. SUPCOE and PATTY L. SUPCOE
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RODNEY A. WINTERS and TAMMY M. WINTERS
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Exhibit D
Exhibit 10.3
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COMMONWEALTH OF
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§
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PENNSYLVANIA
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§
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§
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KNOW ALL MEN BY THESE PRESENTS THAT:
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COUNTY OF GREENE
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§
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§
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ASSIGNMENT OF ROYALTY INTEREST
THIS ASSIGNMENT OF ROYALTY INTEREST (this
Assignment
) from each person executing this
Assignment on the signature pages hereto under the heading Assignor (collectively,
Assignor
), to The Bank of New York Mellon Trust Company, N.A., a national banking
association organized under the laws of the State of New York, with offices at 919 Congress Avenue,
Suite 500, Austin, Texas 78701, as trustee (the
Assignee
), acting not in its individual
capacity but solely as trustee of the ECA Marcellus Trust I (the
Trust
) under that
certain Amended and Restated Trust Agreement dated as of July 7, 2010, (the
Trust
Agreement
) is delivered to be effective as of 7:00 a.m., Eastern Time, April 1, 2010 (the
Effective Time
). Assignor and Assignee are sometimes referred to herein individually as a
Party
and collectively as
Parties
.
Recitals
Assignor is the owner of a certain Royalty Interest (as defined in the Conveyance) reserved by
Assignor and further described in that certain recorded instrument entitled Assignment and
Conveyance (the
Conveyance
), which Conveyance is described in Exhibit A hereto. All
persons are referred to the Conveyance for the terms thereof and for specific descriptions of the
Royalty Interest.
NOW THEREFORE
, for the sum of $100.00 paid and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.
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Conveyance
. Effective as of the Effective Time, Assignor, for good and valuable
consideration in hand paid by Assignee, hereby GRANTS, BARGAINS, SELLS, ASSIGNS, TRANSFERS,
CONVEYS, SETS OVER AND DELIVERS, without recourse or warranty (except the special warranty
provided below) or representation of any kind, all of its right, title, and interest in and to
the Royalty Interest (
Transferred Interests
) and any and all of the other rights
arising from or under the Conveyance with respect to the Transferred Interests (collectively,
the
Assigned Rights
).
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Assignor hereby binds itself, its successors and assigns to warrant and forever defend the
title to the Transferred Interests herein granted, conveyed, assigned, and transferred unto
Assignee, its successors and assigns, against the lawful claims and demands of every person
whomsoever claiming or to claim the same or any part thereof, by, through or under Assignor,
but not otherwise.
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2.
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Assumption
. Assignee hereby assumes the express obligations of the Assignee under
Annex I to the Conveyance with respect to the Assigned Interests to the extent such
obligations arise under the terms of the Conveyance.
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3.
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Counterparts
. This Assignment may be executed in any number of counterparts, and
each such counterpart hereof shall be deemed to be an original instrument, but all of such
counterparts shall constitute for all purposes one Assignment. As between the Parties, any
signature hereto delivered by a Party by facsimile transmission or email pdf shall be deemed
an original hereto.
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4.
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Governing Law
.
WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PRINCIPLES
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION, THIS ASSIGNMENT SHALL BE
CONSTRUED UNDER AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA (EXCLUDING CHOICE
OF LAW AND CONFLICT OF LAW RULES).
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5.
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Limitation of Liability
. It is expressly understood and agreed by the parties hereto
that (i) this Assignment is executed and delivered by the Assignee not individually or
personally, but solely as trustee to the Trust in the exercise of the powers and authority
conferred and vested in it and (ii) under no circumstances shall the Assignee be liable for
the breach or failure of any obligation, representation, warranty or covenant made or
undertaken by the Trust under this Assignment.
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-2-
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its name and
behalf and delivered on the date or dates stated in the acknowledgment certificates appended to
this Assignment, to be effective as of the Effective Time.
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ASSIGNOR
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By:
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/s/
W. Gaston Caperton, III
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Name: eW. Gaston Caperton, III
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Signature Page to Assignment of Royalty Interest
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THE STATE OF IL
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§
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§
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COUNTY OF COOK
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§
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On this, the 22 day of June, 2010, before me Mary Dean Pearson, a
Notary public, personally appeared W. Gaston Caperton, III, who executed the foregoing
instrument for the purposes therein contained by signing his/her name to such document.
In witness whereof, I hereunto set my hand and official^seal.
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[SEAL]
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/s/
Mary Dean Pearson
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My Commission Expires:
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Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its
name and behalf and delivered on the date or dates stated in the acknowledgment
certificates appended to this Assignment, to be effective as of the Effective Time.
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ASSIGNOR
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By:
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/s/
Clark Clement
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Name:
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Clark Clement
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By:
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/s/
Paulette Clement
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Name:
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Paulette Clement
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Signature Page to Assignment of Royalty Interest
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THE STATE OF Texas
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§
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§
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COUNTY OF Fort Bend
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§
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On
this, the 22
nd
day June, 2010, before me Jackie L. Hopkins, a Notary public, personally
appeared Clark Clement, who executed the foregoing instrument for the purposes therein contained by signing his name to such
document.
In
witness whereof, I hereunto set my hand and official seal.
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[SEAL]
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/s/
Jackie L. Hopkins
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My Commission Expires: 7-1-12
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THE STATE OF Texas
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§
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§
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COUNTY OF Fort Bend
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§
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On
this, the 22
nd
day of June, 2010, before me Jackie L. Hopkins, a Notary public,
personally appeared Paulette Clement, who executed the foregoing instrument for the purposes
therein contained by signing her name to such document.
In witness whereof I hereunto set my hand and official seal.
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[SEAL]
|
/s/
Jackie L. Hopkins
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My Commission Expires: 7-1-12
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Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its
name and behalf and delivered on the date or dates stated in the acknowledgment
certificates appended to this Assignment, to be effective as of the Effective Time.
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ASSIGNOR
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By:
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/s/ Michael J. Cochran, Jr.
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Name:
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Michael J. Cochran, Jr.
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Signature Page to Assignment of Royalty Interest
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THE STATE OF WEST VIRGINIA
|
|
§
|
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§
|
COUNTY OF KANAWHA
|
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§
|
On
this, the 24
th
day of June, 2010, before me Antoinette Rutledge, a Notary
Public, personally appeared Michael J. Cochran, Jr., who executed the foregoing instrument
for the purposes therein contained by signing his name to such document.
In witness whereof, I hereunto set my hand and official seal.
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[SEAL]
|
/s/ Antoinette Rutledge
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My Commission Expires: March 11, 2012
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Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its
name and behalf and delivered on the date or dates stated in the acknowledgment
certificates appended to this Assignment, to be effective as of the Effective Time.
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ASSIGNOR
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By:
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/s/ Peter H. Coors
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Name:
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Peter H. Coors
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Signature Page to Assignment of Royalty Interest
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THE STATE OF IL
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§
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§
|
COUNTY OF COOK
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§
|
On this, the 22 day of June
,
2010, before me Mary Dean Pearson, a Notary public,
personally appeared Peter H. Coors, who executed the foregoing instrument for the purposes therein
contained by signing his name to such document.
In
witness whereof, I hereunto set my hand and official seal.
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[SEAL]
|
/s/ Mary Dean Pearson
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My Commission Expires:
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its
name and behalf and delivered on the date or dates stated in the acknowledgment
certificates appended to this Assignment, to be effective as of the Effective Time.
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ASSIGNOR
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By:
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/s/ Rodney D. Cox
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Name:
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Rodney D. Cox
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By:
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/s/ Jennifer M. Cox
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Name:
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Jennifer M. Cox
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Signature Page to Assignment of Royalty Interest
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THE STATE OF WEST VIRGINIA
|
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§
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§
|
COUNTY OF KANAWHA
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§
|
On this, the 21
ST
day of June, 2010, before me Antoinette
Rutledge, a Notary public, personally appeared Rodney D. Cox, who executed the foregoing
instrument for the purposes therein contained by signing his name to such document.
In witness whereof, I hereunto set my hand and official seal.
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[SEAL]
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/s/ Antoinette Rutledge
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My Commission Expires: March 11, 2012
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THE STATE OF WEST VIRGINIA
|
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§
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§
|
COUNTY OF KANAWHA
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§
|
On this, the 21
st
day of June, 2010, before me Antoinette Rutledge, a
Notary public, personally appeared Jennifer M. Cox, who executed the foregoing instrument
for the purposes therein contained by signing her name to such document.
In witness whereof, I hereunto set my hand and official seal.
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[SEAL]
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/s/ Antoinette Rutledge
|
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My Commission Expires: March 11, 2012
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Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its
name and behalf and delivered on the date or dates stated in the acknowledgment
certificates appended to this Assignment, to be effective as of the Effective Time.
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ASSIGNOR
Curtis Family Revocable Trust
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By:
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/s/ L.B. Curtis
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Name:
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L.B. Curtis
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Title:
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Co-Trustee
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By:
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/s/ Rose A. Curtis
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Name:
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Rose A. Curtis
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Title:
|
Co-Trustee
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Signature Page to Assignment of Royalty Interest
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THE STATE OF WEST VIRGINIA
|
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§
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§
|
COUNTY OF KANAWHA
|
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§
|
On
this, the 22
nd
day of June, 2010, before me Antoinette Rutledge, a Notary
Public, personally appeared L.B. Curtis, not in his/her individual capacity but as the
trustee of the Curtis Family Revocable Trust, who executed the foregoing instrument for the
purposes therein contained by signing his/her name to such document on behalf of the Trust.
In witness whereof, I hereunto set my hand and official seal.
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[SEAL]
|
/s/ Antoinette Rutledge
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My Commission Expires: March 11, 2012
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THE STATE OF WEST VIRGINIA
|
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§
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§
|
COUNTY OF KANAWHA
|
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§
|
On
this, the 22
nd
day of June, 2010, before me Antoinette Rutledge, a Notary
Public, personally appeared Rose A. Curtis, not in her individual capacity but as the
trustee of the Curtis Family Revocable Trust, who executed the foregoing instrument for the
purposes therein contained by signing her name to such document on behalf of the Trust.
In witness whereof, I hereunto set my hand and official seal.
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[SEAL]
|
/s/ Antoinette Rutledge
|
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My Commission Expires: March 11, 2012
|
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Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its name
and behalf and delivered on the date or dates stated in the acknowledgment certificates
appended to this Assignment, to be effective as of the Effective Time.
|
|
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|
|
ASSIGNOR
Dorgan Living Trust
|
|
|
By:
|
/s/ J.J. Dorgan
|
|
|
|
Name:
|
J.J. Dorgan
|
|
|
|
Title:
|
Trustee
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|
Signature Page to Assignment of Royalty Interest
|
|
|
THE STATE OF IL
|
|
§
|
|
|
§
|
COUNTY OF COOK
|
|
§
|
On this, the 22 day of June, 2010, before me Mary Dean Pearson, a Notary public, personally
appeared J.J . Dorgan, not in his/her individual capacity but as the trustee of the Dorgan Living
Trust, who executed the foregoing instrument for the purposes therein contained by signing his/her
name to such document on behalf of the Trust.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
|
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|
[SEAL]
|
|
/s/ Mary Dean Pearson
|
My Commission Expires:
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its
name and behalf and delivered on the date or dates stated in the acknowledgment
certificates appended to this Assignment, to be effective as of the Effective Time.
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|
ASSIGNOR
|
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|
By:
|
/s/ Randall C. Farkosh
|
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|
Name:
|
Randall C. Farkosh
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By:
|
/s/ Sherry J. Farkosh
|
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|
Name:
|
Sherry J. Farkosh
|
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|
Signature Page to Assignment of Royalty Interest
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
|
|
|
§
|
COUNTY OF KANAWHA
|
|
§
|
On this, the 21
ST
day of June, 2010, before me Antoinette Rutledge, a Notary Public,
personally appeared Randall C. Farkosh, who executed the foregoing instrument for the purposes
therein contained by signing his name to such document.
In witness whereof, I hereunto set my hand and official seal.
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|
[SEAL]
|
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
|
My Commission Expires: March 11, 2012
|
|
|
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
|
|
|
§
|
COUNTY OF KANAWHA
|
|
§
|
On this, the 21
ST
day of June, 2010, before me Antoinette
Rutledge, a Notary Public, personally appeared Sherry J. Farkosh, who executed the
foregoing instrument for the purposes therein contained by signing her name to such
document.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
|
|
|
[SEAL]
|
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
|
My Commission Expires: March 11, 2012
|
|
|
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its
name and behalf and delivered on the date or dates stated in the acknowledgment
certificates appended to this Assignment, to be effective as of the Effective Time.
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|
ASSIGNOR
|
|
|
By:
|
/s/ John Fischer
|
|
|
|
Name:
|
John Fischer
|
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|
By:
|
/s/ Faye E. Fischer
|
|
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|
Name:
|
Faye E. Fischer
|
|
|
|
|
|
|
Signature Page to Assignment of Royalty Interest
|
|
|
THE STATE OF IL
|
|
§
|
|
|
§
|
COUNTY OF COOK
|
|
§
|
On this, the 22 day of June, 2010, before me Mary Dean Pearson, a Notary
public, personally appeared John Fischer, who executed the foregoing instrument for the
purposes therein contained by signing his name to such document.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
|
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|
[SEAL]
|
|
/s/ Mary Dean Pearson
|
My Commission Expires:
|
|
|
THE STATE OF IL
|
|
§
|
|
|
§
|
COUNTY OF COOK
|
|
§
|
On this, the
22
day of June
,
2010, before me Mary Dean Pearson, a Notary
public, personally appeared Faye E. Fischer, who executed the foregoing instrument for the
purposes therein contained by signing her name to such document.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
|
|
|
[SEAL]
|
|
/s/ Mary Dean Pearson
|
My Commission Expires:
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its
name and behalf and delivered on the date or dates stated in the acknowledgment
certificates appended to this Assignment, to be effective as of the Effective Time.
|
|
|
|
|
|
ASSIGNOR
|
|
|
By:
|
/s/ Michael S. Fletcher
|
|
|
|
Name:
|
Michael S. Fletcher
|
|
|
|
|
|
By:
|
/s/ Bobbette Fletcher
|
|
|
|
Name:
|
Bobbette Fletcher
|
|
|
|
|
|
|
Signature Page to Assignment of Royalty Interest
|
|
|
THE STATE OF COLORADO
|
|
§
|
|
|
§
|
COUNTY OF DENVER
|
|
§
|
On this, the 23
rd
day of, June, 2010, before me Julie Ann Kitano, a Notary
public, personally appeared Michael S. Fletcher, who executed the foregoing instrument for
the purposes therein contained by signing his name to such document.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
|
|
|
[SEAL]
|
|
/s/ Julie Ann Kitano
|
My Commission Expires
|
|
|
THE STATE OF COLORADO
|
|
§
|
|
|
§
|
COUNTY OF DENVER
|
|
§
|
On this, the 23
rd
day of June
,
2010, before me Julie Ann Kitano, a Notary
public, personally appeared Bobbette Fletcher, who executed the foregoing instrument for
the purposes therein contained by signing her name to such document.
In witness whereof,
I hereunto set my hand and official seal.
|
|
|
|
|
|
[SEAL]
|
|
/s/ Julie Ann Kitano
|
My Commission Expires:
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its
name and behalf and delivered on the date or dates stated in the acknowledgment
certificates appended to this Assignment, to be effective as of the Effective Time.
|
|
|
|
|
|
ASSIGNOR
|
|
|
By:
|
/s/ J Michael Forbes
|
|
|
|
Name:
|
J Michael Forbes
|
|
|
|
|
|
|
Signature Page to Assignment of Royalty Interest
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
|
|
|
§
|
COUNTY OF KANAWHA
|
|
§
|
On this, the 23
rd
day of June, 2010, before me Antoinette Rutledge, a Notary
Public, personally appeared J. Michael Forbes, who executed the foregoing instrument for
the purposes therein contained by signing his name to such document.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
|
|
|
|
|
[SEAL]
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
My Commission Expires: March 11, 2012
|
|
|
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its
name and behalf and delivered on the date or dates stated in the acknowledgment
certificates appended to this Assignment, to be effective as of the Effective Time.
|
|
|
|
|
|
ASSIGNOR
|
|
|
By:
|
/s/ Mark A. Fry
|
|
|
|
Name:
|
Mark A. Fry
|
|
|
|
|
|
By:
|
/s/ Tammy L. Fry
|
|
|
|
Name:
|
Tammy L. Fry
|
|
|
|
|
|
Signature Page to Assignment of Royalty Interest
|
|
|
THE STATE OF PENNSYLVANIA
|
|
§
|
|
|
§
|
COUNTY OF INDIANA
|
|
§
|
On this, the 22
day of June, 2010, before me Seth Burdette, a Notary
Public, personally appeared Mark A. Fry, who executed the foregoing instrument for
the purposes therein contained by signing his name to such document.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
|
|
|
My Commission Expires: 5/7/12
|
|
|
|
|
|
THE STATE OF PENNSYLVANIA
|
|
§
|
|
|
§
|
COUNTY OF INDIANA
|
|
§
|
On this, the 22
day of June, 2010, before me Seth Burdette, a Notary
Public, personally appeared Tammy L. Fry, who executed the foregoing instrument for
the purposes therein contained by signing his name to such document.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
|
|
|
My Commission Expires: 5/7/12
|
|
|
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its
name and behalf and delivered on the date or dates stated in the acknowledgment
certificates appended to this Assignment, to be effective as of the Effective Time.
|
|
|
|
|
|
ASSIGNOR
|
|
|
By:
|
/s/ Thomas R. Goodwin
|
|
|
|
Name:
|
Thomas R. Goodwin
|
|
Signature Page to Assignment of Royalty Interest
|
|
|
THE STATE OF IL
|
|
§
|
|
|
§
|
COUNTY OF COOK
|
|
§
|
On this, the 22
day of June, 2010, before me Mary Dean Pearson, a Notary
Public, personally appeared Thomas R. Goodwin, who executed the foregoing instrument for
the purposes therein contained by signing his name to such document.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
|
|
|
|
|
[SEAL]
|
/s/ Mary Dean Pearson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
My Commission Expires:
|
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its
name and behalf and delivered on the date or dates stated in the acknowledgment
certificates appended to this Assignment, to be effective as of the Effective Time.
|
|
|
|
|
|
ASSIGNOR
Daniel Earl Graham Living Trust
|
|
|
By:
|
/s/ Daniel Earl Graham
|
|
|
|
Name:
|
Daniel Earl Graham
|
|
|
|
Title:
|
Trustee
|
|
|
|
Sally Quereau Graham Living Trust
|
|
|
By:
|
/s/ Sally Quereau Graham
|
|
|
|
Name:
|
Sally Quereau Graham
|
|
|
|
Title:
|
Trustee
|
|
Signature Page to Assignment of Royalty Interest
|
|
|
THE STATE OF COLORADO
|
|
§
|
|
|
§
|
COUNTY
OF DENVER
|
|
§
|
On
this, the
22
nd
day
of June, 2010, before me Julie Ann Kitaro,
a Notary public, personally appeared Daniel Earl Graham, not in his individual capacity but as the trustee of the Daniel Earl Graham Living Trust, who executed the foregoing instrument for the purposes therein contained by signing his name to such document on behalf of the Trust.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
|
|
|
|
|
[SEAL]
|
/s/ Julie Ann Kitaro
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
My Commission Expires:
|
|
|
|
|
|
THE STATE OF COLORADO
|
|
§
|
|
|
§
|
COUNTY
OF DENVER
|
|
§
|
On
this, the 22
nd
day of
June, 2010, before me Julie Ann Kitaro, a Notary public, personally appeared Sally Quereau Graham, not in her individual capacity but as the trustee of the Sally Quereau Graham Living Trust, who executed the foregoing instrument for the purposes therein contained by signing her name to such document on behalf of the Trust.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
|
|
|
|
|
[SEAL]
|
/s/ Julie Ann Kitaro
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
My Commission Expires:
|
|
|
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its
name and behalf and delivered on the date or dates stated in the acknowledgment
certificates appended to this Assignment, to be effective as of the Effective Time.
|
|
|
|
|
|
ASSIGNOR
|
|
|
By:
|
/s/
Clint L. Hipke
|
|
|
|
Name:
|
Clint L. Hipke
|
|
|
|
|
|
|
Signature Page to Assignment of Royalty Interest
|
|
|
THE STATE OF Nebraska
|
|
§
|
|
|
§
|
COUNTY
OF Boyd
|
|
§
|
On this, the 22
nd
day of June, 2010, before me Tasha Coburn, a
Notary public, personally appeared Clint L. Hipke, who executed the foregoing instrument
for the purposes therein contained by signing his name to such document.
In
witness whereof, I hereunto set my hand and official seal.
[SEAL]
|
|
|
|
|
|
|
|
|
/s/ Tasha Coburn
|
|
|
|
|
|
|
|
|
My Commission Expires: April 20, 2014
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its name and
behalf and delivered on the date or dates stated in the acknowledgment certificates appended to
this Assignment, to be effective as of the Effective Time.
|
|
|
|
|
|
|
|
|
ASSIGNOR
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ David E. Jordan
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
David E. Jordan
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Carol Jordan
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
Carol Jordan
|
|
|
Signature Page to Assignment of Royalty Interest
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
|
|
|
§
|
COUNTY OF KANAWHA
|
|
§
|
On this, the 21
ST
day of June, 2010, before me Antoinette Rutledge, a Notary public,
personally appeared David E. Jordan, who executed the foregoing instrument for the purposes therein
contained by signing his name to such document.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
[SEAL]
|
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
|
My Commission Expires: March 11, 2012
|
|
|
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
|
|
|
§
|
COUNTY OF KANAWHA
|
|
§
|
On this, the 21
ST
day of June, 2010, before me Antoinette Rutledge, a Notary public,
personally appeared Carol Jordan, who executed the foregoing instrument for the purposes therein
contained by signing her name to such document.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
[SEAL]
|
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
|
My Commission Expires: March 11, 2012
|
|
|
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its name and
behalf and delivered on the date or dates stated in the acknowledgment certificates appended to
this Assignment, to be effective as of the Effective Time.
|
|
|
|
|
|
|
ASSIGNOR
|
|
|
|
|
|
|
|
By:
|
|
/s/ Francis H. McCullough, III
|
|
|
|
|
|
|
|
Name:
|
|
Francis H. McCullough, III
|
|
|
|
|
|
|
|
By:
|
|
/s/ Kathy L. McCullough
|
|
|
|
|
|
|
|
Name:
|
|
Kathy L. McCullough
|
Signature Page to Assignment of Royalty Interest
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
|
|
|
§
|
COUNTY OF KANAWHA
|
|
§
|
On this, the 22
nd
day of June, 2010, before me Antoinette Rutledge, a Notary Public,
personally appeared Francis H. McCullough, III, who executed the foregoing instrument for the
purposes therein contained by signing his name to such document.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
[SEAL]
|
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
|
My Commission Expires: March 11, 2012
|
|
|
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
|
|
|
§
|
COUNTY OF KANAWHA
|
|
§
|
On this, the 22
nd
day of June, 2010, before me Antoinette Rutledge, a Notary Public,
personally appeared Kathy L. McCullough, who executed the foregoing instrument for the purposes
therein contained by signing her name to such document.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
[SEAL]
|
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
|
My Commission Expires: March 11, 2012
|
|
|
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its name and behalf and
delivered on the date or dates stated in the acknowledgment certificates appended to this
Assignment, to be effective as of the Effective Time.
|
|
|
|
|
|
|
ASSIGNOR
|
|
|
|
|
|
|
|
Katherine F. McCullough Trust
|
|
|
|
|
|
|
|
By:
|
|
/s/ Kathy L. McCullough
|
|
|
|
|
|
|
|
Name:
|
|
Kathy L. McCullough
|
|
|
Title:
|
|
Trustee
|
Signature Page to Assignment of Royalty Interest
|
|
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
§
|
|
|
COUNTY OF KANAWHA
|
|
§
|
|
|
On this, the 22
nd
day of June, 2010, before me Antoinette Rutledge, a Notary Public,
personally appeared Kathy L. McCullough, not in her individual capacity but as the trustee of the
Katherine F. McCullough Trust, who executed the foregoing instrument for the purposes therein
contained by signing her name to such document on behalf of the Trust.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
[SEAL]
|
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
|
My
Commission Expires: March 11, 2012
|
|
|
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its
name and behalf and delivered on the date or dates stated in the acknowledgment certificates
appended to this Assignment, to be effective as of the Effective Time.
|
|
|
|
|
|
|
|
|
ASSIGNOR
|
|
|
|
|
|
|
|
|
|
|
|
Kristin McCullough Trust
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Francis H. McCullough, III
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
Francis H. McCullough, III
|
|
|
|
|
Title:
|
|
Trustee
|
|
|
Signature Page to Assignment of Royalty Interest
|
|
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
|
|
|
|
|
§
|
|
|
COUNTY OF KANAWHA
|
|
§
|
|
|
On this, the 22
nd
day of June, 2010, before me Antoinette Rutledge, a Notary Public,
personally appeared Francis H. McCullough, III, not in his individual capacity but as the trustee
of the Kristin McCullough Trust, who executed the foregoing instrument for the purposes therein
contained by signing his name to such document on behalf of the Trust.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
[SEAL]
|
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
|
My Commission Expires: March 11, 2012
|
|
|
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its
name and behalf and delivered on the date or dates stated in the acknowledgment certificates
appended to this Assignment, to be effective as of the Effective Time.
|
|
|
|
|
|
|
|
|
ASSIGNOR
|
|
|
|
|
|
|
|
|
|
|
|
Lesley K. McCullough Trust
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Francis H. McCullough, III
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
Francis H. McCullough, III
|
|
|
|
|
Title:
|
|
Trustee
|
|
|
Signature Page to Assignment of Royalty Interest
|
|
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
§
|
|
|
COUNTY OF KANAWHA
|
|
§
|
|
|
On this, the 22
nd
day of June, 2010, before me Antoinette Rutledge, a Notary Public,
personally appeared Francis H. McCullough, III, not in his individual capacity but as the trustee
of the Lesley K. McCullough Trust, who executed the foregoing instrument for the purposes
therein contained by signing his name to such document on behalf of the Trust.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
[SEAL]
|
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
|
My Commission Expires: March 11, 2012
|
|
|
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its
name and behalf and delivered on the date or dates stated in the acknowledgment certificates
appended to this Assignment, to be effective as of the Effective Time.
|
|
|
|
|
|
|
|
|
ASSIGNOR
|
|
|
|
|
|
|
|
|
|
|
|
Meredith B. McCullough Trust
|
|
|
|
|
|
|
|
|
|
|
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By:
|
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/s/ Francis H. McCullough, III
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Name:
|
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Francis H. McCullough, III
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Title:
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Trustee
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Signature Page to Assignment of Royalty Interest
|
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THE STATE OF WEST VIRGINIA
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§
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§
|
COUNTY OF KANAWHA
|
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§
|
On this, the 22
nd
day of June, 2010, before me Antoinette Rutledge, a Notary Public,
personally appeared Francis H. McCullough, III, not in his individual capacity but as the trustee
of the Meredith B. McCullough Trust, who executed the foregoing instrument for the purposes therein
contained by signing his name to such document on behalf of the Trust.
In witness whereof, I hereunto set my hand and official seal.
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[SEAL]
|
|
/s/ Antoinette Rutledge
|
|
My Commission Expires: March 11, 2012
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its
name and behalf and delivered on the date or dates stated in the acknowledgment certificates
appended to this Assignment, to be effective as of the Effective Time.
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ASSIGNOR
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By:
|
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/s/ Dennis L. McGowan
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Name:
|
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Dennis L. McGowan
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By:
|
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/s/ N. Gayle McGowan
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Name:
|
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N. Gayle McGowan
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Signature Page to Assignment of Royalty Interest
|
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|
THE STATE OF COLORADO
|
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§
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|
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§
|
COUNTY OF DENVER
|
|
§
|
On
this, the
22
nd
day of June, 2010, before me Julie Ann Kitano a Notary
public, personally appeared Dennis L. McGowan, who executed the foregoing instrument for the
purposes therein contained by signing his name to such document.
In witness whereof, I hereunto set my hand and official seal.
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[SEAL]
|
|
/s/ Julie Ann Kitano
|
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My Commission Expires:
|
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|
THE STATE OF COLORADO
|
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§
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§
|
COUNTY OF DENVER
|
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§
|
On this, the 22
nd
day of June, 2010, before me Julie Ann Kitano, a Notary
public, personally appeared N. Gayle McGowan, who executed the foregoing instrument for the
purposes therein contained by signing her name to such document.
In witness whereof, I hereunto set my hand and official seal.
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[SEAL]
|
|
/s/ Julie Ann Kitano
|
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|
|
My Commission Expires:
|
|
|
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its name
and behalf and delivered on the date or dates stated in the acknowledgment certificates appended to
this Assignment, to be effective as of the Effective Time.
|
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ASSIGNOR
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Alison Mork Trust
|
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By:
|
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/s/ J. Michael Forbes
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Name:
|
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J. Michael Forbes
|
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Title:
|
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Trustee
|
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|
Signature Page to Assignment of Royalty Interest
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
|
|
|
§
|
COUNTY OF KANAWHA
|
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§
|
On this, the 23
rd
day of June, 2010, before me Antoinette Rutledge, a Notary Public,
personally appeared J. Michael Forbes, not in his individual capacity but as the trustee of the
Alison Mork Trust, who executed the foregoing instrument for the purposes therein contained by
signing his name to such document on behalf of the Trust.
In witness whereof, I hereunto set my hand and official seal.
|
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|
[SEAL]
|
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
|
My Commission Expires: March 11, 2012
|
|
|
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its name and
behalf and delivered on the date or dates stated in the acknowledgment certificates appended to
this Assignment, to be effective as of the Effective Time.
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ASSIGNOR
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By:
|
/s/ John Mork
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Name:
|
John Mork
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By:
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/s/ Julie Mork
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Name:
|
Julie Mork
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|
Signature Page to Assignment of Royalty Interest
|
|
|
THE STATE OF IL
|
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§
|
|
|
§
|
COUNTY OF COOK
|
|
§
|
On this, the 22 day of June
,
2010, before me Mary Dean Pearson, a Notary public, personally appeared John
Mork, who executed the foregoing instrument for the purposes therein contained by signing his name
to such document.
In witness whereof, I hereunto set my hand and official seal.
|
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|
[SEAL]
|
|
|
|
/s/ Mary Dean Pearson
|
My Commission Expires:
|
|
|
THE STATE OF IL
|
|
§
|
|
|
§
|
COUNTY OF COOK
|
|
§
|
On this, the 22 day of June, 2010, before me Mary Dean Pearson, a Notary public, personally appeared Julie
Mork, who executed the foregoing instrument for the purposes therein contained by signing her name
to such document.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
|
|
[SEAL]
|
|
|
|
/s/ Mary Dean Pearson
|
My Commission Expires:
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its name and
behalf and delivered on the date or dates stated in the acknowledgment certificates appended to
this Assignment, to be effective as of the Effective Time.
|
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ASSIGNOR
|
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|
Kyle Mork Trust
|
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By:
|
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/s/ J. Michael Forbes
|
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|
|
Name:
|
|
J. Michael Forbes
|
|
|
|
|
Title:
|
|
Trustee
|
|
|
Signature Page to Assignment of Royalty Interest
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
|
|
|
§
|
COUNTY OF KANAWHA
|
|
§
|
On this, the 23
rd
day of June, 2010, before me Antoinette Rutledge, a Notary Public,
personally appeared J. Michael Forbes, not in his individual capacity but as the trustee of the
Kyle Mork Trust, who executed the foregoing instrument for the purposes therein contained by
signing his name to such document on behalf of the Trust.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
|
[SEAL]
|
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
My Commission Expires: March 11, 2012
|
|
|
|
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its name and
behalf and delivered on the date or dates stated in the acknowledgment certificates appended to
this Assignment, to be effective as of the Effective Time.
|
|
|
|
|
|
|
|
|
ASSIGNOR
|
|
|
|
|
|
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|
|
Arthur C. Nielsen, Jr. Trust Dated July 14, 2003
|
|
|
|
|
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|
|
By:
|
|
/s/ Arthur C. Nielsen, Jr.
|
|
|
|
|
Name:
|
|
Arthur C. Nielsen, Jr.
|
|
|
|
|
Title:
|
|
Trustee
|
|
|
Signature Page to Assignment of Royalty Interest
|
|
|
THE STATE OF IL
|
|
§
|
|
|
§
|
COUNTY OF COOK
|
|
§
|
On this, the 22 day of June, 2010, before me Mary Dean Pearson, a Notary public,
personally appeared Arthur C. Nielsen, Jr., not in his/her individual capacity but as the trustee of
the Arthur C. Nielsen, Jr. Trust dated July 14, 2003, who executed the foregoing instrument for
the purposes therein contained by signing his/her name to such document on behalf of the Trust.
In witness whereof, I hereunto set my hand and official seal.
My Commission Expires:
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its
name and behalf and delivered on the date or dates stated in the acknowledgment certificates
appended to this Assignment, to be effective as of the Effective Time.
|
|
|
|
|
|
ASSIGNOR
|
|
|
|
|
|
By:
|
/s/
George OMalley
|
|
|
|
Name: George OMalley
|
|
Signature
Page to Assignment of Royalty Interest
|
|
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
|
|
|
|
|
§
|
|
|
COUNTY OF KANAWHA
|
|
§
|
|
|
On this, the 21
ST
day of June, 2010, before me Antoinette Rutledge, a Notary public,
personally appeared George OMalley, who executed the foregoing instrument for the purposes therein
contained by signing his name to such document.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
|
|
[SEAL]
|
|
|
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
|
|
|
|
|
My Commission Expires: March 11, 2012
|
|
|
|
|
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its name and
behalf and delivered on the date or dates stated in the acknowledgment certificates appended to
this Assignment, to be effective as of the Effective Time.
|
|
|
|
|
|
|
ASSIGNOR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Jay S. Pifer
|
|
|
|
|
|
|
|
Name:
|
|
Jay S. Pifer
|
|
|
|
|
|
Signature Page to Assignment of Royalty Interest
|
|
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
|
|
|
|
|
§
|
|
|
COUNTY OF KANAWHA
|
|
§
|
|
|
On this, the 22
nd
day of June, 2010, before me Antoinette Rutledge, a Notary Public,
personally appeared Jay S. Pifer, who executed the foregoing instrument for the purposes therein
contained by signing his name to such document.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
|
|
[SEAL]
|
|
|
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
|
|
|
|
|
My Commission Expires: March 11, 2012
|
|
|
|
|
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its name and
behalf and delivered on the date or dates stated in the acknowledgment certificates appended to
this Assignment, to be effective as of the Effective Time.
|
|
|
|
|
|
|
ASSIGNOR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Niki D. Randolph
|
|
|
|
|
|
|
|
Name:
|
|
Niki D. Randolph
|
|
|
|
|
|
Signature Page to Assignment of Royalty Interest
|
|
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
|
|
|
|
|
§
|
|
|
COUNTY OF KANAWHA
|
|
§
|
|
|
On this, the 21
ST
day of June, 2010, before me Antoinette Rutledge, a Notary public,
personally appeared Niki D. Randolph, who executed the foregoing instrument for the purposes
therein contained by signing his/her name to such document.
In witness whereof I hereunto set my hand and official seal.
|
|
|
|
|
[SEAL]
|
|
|
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
|
|
|
|
|
My Commission Expires: March 11, 2012
|
|
|
|
|
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its name and
behalf and delivered on the date or dates stated in the acknowledgment certificates appended to
this Assignment, to be effective as of the Effective Time.
|
|
|
|
|
|
|
ASSIGNOR
|
|
|
|
|
|
|
|
By:
|
|
/s/ Peter L. Rebstock
|
|
|
|
|
|
|
|
Name:
|
|
Peter L. Rebstock
|
|
|
|
|
|
Signature Page to Assignment of Royalty Interest
|
|
|
THE STATE OF COLORADO
|
|
§
|
|
|
§
|
COUNTY OF DENVER
|
|
§
|
On this, the 22
nd
day of June, 2010, before me Julie Ann Kitano, a Notary public,
personally appeared Peter L. Rebstock, who executed the foregoing instrument for the purposes
therein contained by signing his name to such document.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
[SEAL]
|
|
/s/ Julie Ann Kitano
|
|
|
|
My Commission Expires:
|
|
|
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its name and
behalf and delivered on the date or dates stated in the acknowledgment certificates appended to
this Assignment, to be effective as of the Effective Time.
|
|
|
|
|
|
|
ASSIGNOR
|
|
|
|
|
|
|
|
By:
|
|
/s/ R. Kent Schamp
|
|
|
|
|
|
|
|
Name:
|
|
R. Kent Schamp
|
|
|
|
|
|
Signature Page to Assignment of Royalty Interest
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
|
|
|
§
|
COUNTY OF KANAWHA
|
|
§
|
On
this, the 21
st
day of June, 2010, before me Antoinette Rutledge, a Notary
public, personally appeared R. Kent Schamp, who executed the foregoing instrument for
the purposes therein contained by signing his name to such document.
|
|
In witness whereof, I hereunto set my hand and official seal.
|
|
|
|
[SEAL]
|
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
|
My Commission Expires: March 11, 2012
|
|
|
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its name and
behalf and delivered on the date or dates stated in the acknowledgment certificates appended to
this Assignment, to be effective as of the Effective Time.
|
|
|
|
|
|
|
ASSIGNOR
|
|
|
|
|
|
|
|
By:
|
|
/s/ Peter A. Sullivan
|
|
|
|
|
|
|
|
Name:
|
|
Peter A. Sullivan
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Wendy H. Sullivan
|
|
|
|
|
|
|
|
Name:
|
|
Wendy H. Sullivan
|
|
|
|
|
|
Signature Page to Assignment of Royalty Interest
|
|
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
|
|
|
|
|
§
|
|
|
COUNTY OF KANAWHA
|
|
§
|
|
|
On this, the 21st day of June, 2010, before me Antoinette Rutledge, a Notary public,
personally appeared Peter A. Sullivan, who executed the foregoing instrument for the purposes
therein contained by signing his name to such document.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
|
|
|
[SEAL]
|
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
|
|
|
|
My Commission Expires: March 11, 2012
|
|
|
|
|
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
|
|
|
|
|
§
|
|
|
COUNTY OF KANAWHA
|
|
§
|
|
|
On this, the 21st day of June, 2010, before me Antoinette Rutledge, a Notary public,
personally appeared Wendy H. Sullivan, who executed the foregoing instrument for the purposes
therein contained by signing her name to such document.
In
witness whereof, I hereunto set my hand and official seal.
|
|
|
|
|
|
[SEAL]
|
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
|
|
|
|
My Commission Expires: March 11, 2012
|
|
|
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its name and
behalf and delivered on the date or dates stated in the acknowledgment certificates appended to
this Assignment, to be effective as of the Effective Time.
|
|
|
|
|
|
|
ASSIGNOR
|
|
|
|
|
|
|
|
By:
|
|
/s/ Donald C. Supcoe
|
|
|
|
|
|
|
|
Name:
|
|
Donald C. Supcoe
|
|
|
|
|
|
|
|
By:
|
|
/s/ Patty L. Supcoe
|
|
|
|
|
|
|
|
Name:
|
|
Patty L. Supcoe
|
Signature Page to Assignment of Royalty Interest
|
|
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
|
|
|
|
|
§
|
|
|
COUNTY OF KANAWHA
|
|
§
|
|
|
On this, the 21st day of June, 2010, before me Antoinette Rutledge, a Notary public,
personally appeared Donald C. Supcoe, who executed the foregoing instrument for the purposes
therein contained by signing his name to such document.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
|
|
|
[SEAL]
|
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
|
|
|
|
My Commission Expires: March 11, 2012
|
|
|
|
|
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
|
|
|
|
|
§
|
|
|
COUNTY OF KANAWHA
|
|
§
|
|
|
On
this, the 21st day of June, 2010, before me Antoinette Rutledge, a Notary
public, personally appeared Patty L. Supcoe, who executed the foregoing instrument for the purposes
therein contained by signing her name to such document.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
|
|
|
[SEAL]
|
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
|
|
|
|
My Commission Expires: March 11, 2012
|
|
|
Signature Page to Assignment of Royalty Interest
IN WITNESS WHEREOF, each Party has caused this Assignment to be executed in its name and
behalf and delivered on the date or dates stated in the acknowledgment certificates appended to
this Assignment, to be effective as of the Effective Time.
|
|
|
|
|
|
|
ASSIGNOR
|
|
|
|
|
|
|
|
By:
|
|
/s/ Rodney A. Winters
|
|
|
|
|
|
|
|
|
|
Rodney A. Winters
|
|
|
|
|
|
|
|
By:
|
|
/s/ Tammy M. Winters
|
|
|
|
|
|
|
|
Name:
|
|
Tammy M. Winters
|
Signature Page to Assignment of Royalty Interest
|
|
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
|
|
|
|
|
§
|
|
|
COUNTY OF KANAWHA
|
|
§
|
|
|
On this the 21st day of June, 2010, before me Antoinette Rutledge, a Notary public, personally
appeared Rodney A. Winters, who executed the foregoing instrument for the purposes therein
contained by signing his name to such document.
In
witness whereof, I hereunto set my hand and official seal.
|
|
|
|
|
|
[SEAL]
|
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
|
|
|
|
My Commission Expires: March 11, 2012
|
|
|
|
|
|
|
|
THE STATE OF WEST VIRGINIA
|
|
§
|
|
|
|
|
§
|
|
|
COUNTY OF KANAWHA
|
|
§
|
|
|
On this the 21st day of June, 2010, before me Antoinette Rutledge, a Notary public, personally
appeared Tammy M. Winters, who executed the foregoing instrument for the purposes therein contained
by signing her name to such document.
In witness whereof, I hereunto set my hand and official seal.
|
|
|
|
|
|
[SEAL]
|
|
/s/ Antoinette Rutledge
|
|
|
|
|
|
|
|
|
|
My Commission Expires: March 11, 2012
|
|
|
Signature Page to Assignment of Royalty Interest
|
|
|
|
|
|
|
|
|
ECA MARCELLUS TRUST I
|
|
|
|
|
|
|
|
|
|
|
|
By: The Bank of New York Mellon Trust
Company, N.A.
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Michael J. Ulrich
|
|
|
|
|
|
|
|
|
|
|
|
Name: Michael J. Ulrich
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Title: Authorized Signatory
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Prepared by:
Vinson & Elkins LLP
1001 Fannin Street
Suite 2500
Houston, TX 77002-6760
Attention: Thomas Herbert
Signature Page to Assignment of Royalty Interest
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THE STATE OF COLORADO
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§
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§
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COUNTY OF DENVER
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§
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On this, the
7
th
day of
July, 2010, before me Julie Ann Kitano, a
Notary public,
personally appeared Michael J. Ulrich, who acknowledged himself to be the authorized signatory of
The Bank of New York Mellon Trust Company, N.A., a national banking association and Trustee of ECA
Marcellus Trust I and that he as such authorized signatory, being authorized to do so, executed the
foregoing instrument for the purposes therein contained by signing the name of the national banking
association by himself as authorized signatory.
In witness whereof, I hereunto set my hand and official seal.
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[SEAL]
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/s/ Julie Ann Kitano
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My Commission Expires: 4-26-2014
CERTIFICATE OF RESIDENCE
The Bank of New York Mellon Trust Company, N.A., as grantee and Assignee hereunder, hereby
certifies that its precise address is:
919 Congress Avenue
Suite 500
Austin, Texas 78701
ECA MARCELLUS TRUST I
By: The Bank of New York Mellon Trust Company, N.A.
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By:
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/s/ Michael J. Ulrich
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Name: Michael J. Ulrich
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Title: Authorized Signatory
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EXHIBIT A
1.
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Assignment and Conveyance between parties signatory thereto as an Assignor, and
Energy Corporation of America, as Assignee.
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County
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File No.
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Date Recorded
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Greene County, PA
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Exhibit A to Assignment of Royalty Interest
Exhibit 10.5
TERM OVERRIDING ROYALTY INTEREST CONVEYANCE (PDP)
COMMONWEALTH OF PENNSYLVANIA
INTRODUCTION
THIS TERM OVERRIDING ROYALTY INTEREST CONVEYANCE (this
Conveyance
) from ENERGY
CORPORATION OF AMERICA, a West Virginia corporation, with offices at 4643 South Ulster Street,
Suite 100, Denver, Colorado 80237-2867 (
Assignor
), to Eastern Marketing Corporation, a
West Virginia corporation with offices at 4643 South Ulster Street, Suite 100, Denver, Colorado
80237-2867 (
Assignee
), is delivered to be effective as of 7:00 a.m., Eastern Time, April
1, 2010 (the
Effective Time
). All capitalized terms not otherwise defined herein shall
have the meanings ascribed to such terms in Article II below.
ARTICLE I
CONVEYANCE
Section 1.01 The Grant
. For and in consideration of good and valuable consideration paid by
Assignee to Assignor, the receipt and sufficiency of which are hereby acknowledged, Assignor has,
subject to the terms of this Conveyance, BARGAINED, SOLD, GRANTED, CONVEYED, TRANSFERRED, ASSIGNED,
SET OVER, and DELIVERED, and by these presents does hereby BARGAIN, SELL, GRANT, CONVEY, TRANSFER,
ASSIGN, SET OVER, and DELIVER unto Assignee, for the Term, as a term net overriding royalty
interest (the
Royalty Interest
), a variable undivided interest in and to the Subject
Interests, to the extent that the Subject Interests pertain to Gas in, under and that may be
produced and saved from the wellbores of the Wells, sufficient to cause Assignee to receive
Assignee Gas or proceeds thereof calculated and paid in money in accordance with the further terms
and conditions of this Conveyance.
Section 1.02 Term
. The term of the Royalty Interest (the
Term
) shall begin at the
Effective Time and end at March 31, 2030 (the
Termination Date
). At the end of the Term,
all of Assignees interest in and to the Royalty Interest shall automatically terminate and
immediately revert to and revest in Assignor.
Section 1.03 Habendum Clause
. TO HAVE AND TO HOLD the Royalty Interest, together with all and
singular the rights and appurtenances thereto in anywise belonging, unto Assignee, its successors
and assigns, for the Term, subject to terms and provisions of this Conveyance.
Section 1.04 Warranty
.
(a)
The Warranty
. Assignor warrants to Assignee, its successors and assigns, that the Subject
Interests are free of all Encumbrances created by, through, or under Assignor, but not otherwise,
except for the Permitted Encumbrances, and that Assignors title to the Wells entitles Assignor to
a Net Revenue Interest with respect to the Target Formation in
1
each such Well no less than the Net
Revenue Interest with respect to the Target Formation for that Well set forth in
Exhibit A
.
(b)
Sole Remedy
. In the event of a breach of the foregoing warranty for any Subject Interest,
Assignees sole remedy shall be to receive payment on each applicable Quarterly Payment Date, out
of Assignors Net Share of Gas from other Wells in excess of that subject to the Royalty Interest,
the royalty interest created pursuant to the Perpetual PDP Conveyance and the royalty interest
created pursuant to the Investor Conveyance (
Assignor Retained Gas
), subject to offset as
provided below and without interest (except such interest payable under this Conveyance on payments
made after the applicable due date as described in Section 5.02 below), of an amount equal to the
difference between (i) Assignee Gas (or the proceeds from the sale thereof) that Assignee would
have received with respect to such Well in the applicable Computation Period if such warranty had
not been breached and (ii) Assignee Gas (or the proceeds from the sale thereof) that Assignee
actually received during that Computation Period with respect to that Well, to the extent such
difference is attributable to the breach of the warranty, but not to the extent that such
difference is attributable to any other cause, and any such amounts of Assignor Retained Gas shall
be treated as Assignee Gas.
(c)
Right of Offset
. If any Subject Interest owned by Assignor ever proves to be larger as of
the Effective Date than the Subject Interest reflected in the exhibits to this Conveyance and if,
as a result, Assignee receives a greater amount of Assignee Gas (or the proceeds from the sale
thereof) with respect to that Subject Interest than Assignee would otherwise have received if the
Subject Interest had been the size warranted, then such increased amounts, whenever received by
Assignee, may be treated by Assignor as a credit or offset (without interest) against any amounts
payable to Assignee under Section 1.04(b).
(d)
DISCLAIMER
. EXCEPT FOR THE WARRANTIES OF TITLE GIVEN IN SECTION 1.04(a), ASSIGNOR MAKES
THIS CONVEYANCE AND ASSIGNS THE ROYALTY INTEREST WITHOUT RECOURSE, COVENANT OR WARRANTY OF TITLE OF
ANY KIND, EXPRESS, IMPLIED OR STATUTORY. ANY COVENANTS OR WARRANTIES IMPLIED BY STATUTE OR LAW BY
THE USE HEREIN OF THE WORDS
GRANT
,
CONVEY
OR OTHER SIMILAR WORDS ARE HEREBY EXPRESSLY
DISCLAIMED, WAIVED AND NEGATED. WITHOUT LIMITING THE GENERALITY OF THE TWO PRECEDING SENTENCES,
ASSIGNEE ACKNOWLEDGES THAT ASSIGNOR HAS NOT MADE, AND ASSIGNOR HEREBY EXPRESSLY DISCLAIMS AND
NEGATES, AND ASSIGNEE HEREBY EXPRESSLY WAIVES, ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT
COMMON LAW, BY STATUTE OR OTHERWISE RELATING TO (i) PRODUCTION RATES, RECOMPLETION OPPORTUNITIES,
DECLINE RATES OR THE QUALITY, QUANTITY OR VOLUME OF THE RESERVES OF HYDROCARBONS, IF ANY,
ATTRIBUTABLE TO THE SUBJECT INTERESTS, (ii) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY,
(iii) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE, (iv) ANY IMPLIED OR
EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF
MATERIALS, AND (v) ANY AND ALL IMPLIED WARRANTIES EXISTING UNDER ANY APPLICABLE LEGAL
REQUIREMENT; IT BEING THE EXPRESS INTENTION OF BOTH ASSIGNEE AND ASSIGNOR THAT THE ROYALTY INTEREST
IS HEREBY ASSIGNED TO ASSIGNEE ON AN AS IS AND WHERE IS BASIS WITH ALL FAULTS, AND
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THAT
ASSIGNEE HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS ASSIGNEE DEEMS APPROPRIATE. ASSIGNOR
AND ASSIGNEE AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LEGAL REQUIREMENTS TO BE EFFECTIVE,
THE DISCLAIMERS OF CERTAIN WARRANTIES CONTAINED IN THIS SECTION ARE CONSPICUOUS DISCLAIMERS FOR
THE PURPOSES OF ANY APPLICABLE LEGAL REQUIREMENT.
(e)
Substitution of Warranty
. This instrument is made with full substitution and subrogation
of Assignee in and to all covenants of warranty by Third Persons (other than Affiliates of
Assignor) heretofore given or made with respect to the Wells, the Subject Interests or any part
thereof or interest therein.
ARTICLE II
DEFINITIONS
This Article II defines certain capitalized words, terms, and phrases used in this Conveyance.
Certain other capitalized words, terms, and phrases used in this Conveyance are defined elsewhere
in this Conveyance.
Affiliate
means, for any specified Person, another Person that controls, is
controlled by, or is under common control with, the specified Person.
Control
, in the
preceding sentence, refers to the possession by one Person, directly or indirectly, of the right or
power to direct or cause the direction of the management and policies of another Person, whether
through the ownership of voting securities, by contract, or otherwise.
AMI Area
means that area depicted on the map set forth on
Exhibit B
as the
AMI Area.
Assignee
is defined in the introduction to this Conveyance and also includes all
permitted successors and assigns of Assignee.
Assignee Conveyances
means for purposes of Section 11.02(a), this Conveyance, the
Term PUD Conveyance, the Perpetual PDP Conveyance, the Perpetual PUD Conveyance and the Investor
Conveyance, considered collectively.
Assignee Gas
is defined in Section 3.01.
Assignee Proceeds
means, for any Computation Period, proceeds received by Assignor
for the account of Assignee, as Assignees marketing and payment agent and representative, from the
sale of Assignee Gas under this Conveyance less Chargeable Costs calculated in accordance with
Section 3.03.
Assignor
is defined in the Introduction to this Conveyance and also includes all
permitted successors and assigns of Assignor.
Assignor Retained Gas
is defined in Section 1.04(b).
Assignors Net Share of Gas
means the share of Subject Gas from each Well that is
attributable to Assignors Net Revenue Interest in that Well.
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Business Day
means any day that is not a Saturday, Sunday, a holiday determined by
the New York Stock Exchange, Inc. as affecting ex dates or any other day on which national
banking institutions in New York, New York are closed as authorized or required by law.
Chargeable Costs
is defined in Section 3.02(a).
Computation Period
means each calendar quarter commencing at the Effective Time,
with each calendar quarter being deemed to have begun at 7:00 a.m. Eastern Time on the first day of
such calendar quarter and to have ended at 7:00 a.m. Eastern Time on the first day of the next
calendar quarter, except for (a) the first Computation Period, which shall be deemed to have begun
at the Effective Time and to have ended at 7:00 a.m. Eastern Time on July 1, 2010, and (b) the
final Computation Period, which shall be deemed to have begun at 7:00 a.m. Eastern Time on the
first day of the calendar quarter in which the Termination Date occurs and to have ended at the
Termination Date.
Conveyance
is defined in the Introduction to this Conveyance.
Development Agreement
means that certain Development Agreement between Assignor and
the Trustee dated as of even date herewith.
Development Well
has the meaning given such term in the Development Agreement.
Drilling Obligation
means Assignors obligation set forth in Section 2.01(a) of the
Development Agreement.
Drilling Obligation Completion Date
has the meaning given to such term in the
Development Agreement.
Effective Time
is defined in the Introduction to this Conveyance.
Encumbrance
means any mortgage, lien, security interest, pledge, charge,
encumbrance, limitation, preferential right to purchase, consent to assignment, irregularity,
burden, or defect.
Excess Costs
means, in any Computation Period, the excess of Chargeable Costs for
that Computation Period over the amount determined by multiplying Assignors Net Share of Gas
produced during the Computation Period by the Sales Price for that Computation Period. Excess
Costs shall bear interest at the Prime Interest Rate from the end of the Computation Period in
which such costs were incurred to the date that Assignor recovers such amounts from Assignee
Proceeds.
Fair Value
means, with respect to any portion of the Royalty Interest to be released
pursuant to Section 11.02 or 11.03 in connection with a sale or release of any Well or Subject
Interest, an amount of net proceeds which could reasonably be expected to be obtained from the
sale of such portion of the Royalty Interest to a party which is not an Affiliate of either the
Assignor or Assignee on an arms-length negotiated basis, taking into account relevant market
conditions and factors existing at the time of any such proposed sale or release, such net proceeds
to be determined by deducting Assignees proportionate share of sales costs,
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commissions and
brokerage fees, if any (based on the ratio of (i) the fair market value of the portion of the
Royalty Interest being released to (ii) the fair market value of the Wells and Subject Interests
being transferred (including the value of the Royalty Interest being released).
Farmout Agreements
means any farmout agreement, participation agreement, exploration
agreement, development agreement or any similar agreement.
Force Majeure
is defined in Section 13.02.
Gas
means natural gas and all other gaseous hydrocarbons, excluding condensate,
butane, and other liquid and liquefiable components that are actually removed from the Gas stream
by separation, processing, or other means. Any oil, gas or mineral lease or other similar
instrument that covers Gas shall be considered a Gas lease hereunder, even if it also covers
other substances.
Governmental Authority
means the United States of America, any state, commonwealth,
territory, or possession thereof, and any political subdivision of any of the foregoing, including
courts, departments, commissions, boards, bureaus, agencies, and other instrumentalities.
Greene County Gathering System
means Assignors Greene County, Pennsylvania
Gathering System.
Investor Conveyance
means that certain Private Investor Overriding Royalty Interest
Conveyance by and between the Private Investors and the Trust dated effective as of the Effective
Time.
Legal Requirement
means any law, statute, ordinance, decree, requirement, order,
judgment, rule, or regulation of, including the terms of any license or permit issued by, any
Governmental Authority.
MBtu
means one thousand British thermal units, and
MMBtu
means one million
British thermal units.
Mcf
means one thousand cubic feet of Gas and
MMcf
means one million cubic
feet of Gas, measured and expressed in each case at the same temperature, pressure, and other
conditions of measurement (a) provided in any contract for the purchase of Gas from the Subject
Interest or, (b) if no such contract exists, provided by applicable state law for purposes of
reporting production to Governmental Authorities.
Mortgages
means, collectively, (i) the Drilling Support Lien (as such term is
defined in the Development Agreement) and (ii) that certain Mortgage, Assignment, Security
Agreement, Fixture Filing and Financing Statement, granted by Assignor in favor of the Trust dated
as of
even date herewith, which agreement grants the Trust a lien and security interest on the
Royalty Interest (as such term is defined in each of the Conveyances).
Net Revenue Interest
means, the interest, stated as a decimal fraction, in Subject
Gas production from a Well that Assignor is entitled to take with respect to Assignors Subject
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Interest in that Well and the associated Subject Lands, subject only to the Permitted Production
Burdens (treated in each case as a reduction in interest rather than as a cost).
Non-Affiliate
means, for any specified Person, any other Person that is not an
Affiliate of the specified Person.
Notice
is defined in Section 14.01.
Party
, when capitalized, refers to Assignor or Assignee.
Parties
, when
capitalized, refers to Assignor and Assignee.
Permitted Encumbrances
means:
(a) the Permitted Production Burdens;
(b) contractual obligations arising under operating agreements, Farmout Agreements,
production sales contracts, leases, assignments, and other similar agreements that may
affect the properties or their titles;
(c) pooling and unitization agreements, declarations, orders, or Legal Requirements to
secure payment of amounts not yet delinquent;
(d) liens that arise in the normal course of operations, such as liens for unpaid
taxes, statutory liens securing unpaid suppliers and contractors, and contractual liens
under operating agreements, in any case, that are not yet delinquent or, if delinquent, are
being contested in good faith in the normal course of business;
(e) conventional rights of reassignment that obligate Assignor to reassign all or part
of any Subject Interest to a Third Person if Assignor intends to release or abandon such
interest before the expiration of the primary term or other termination of such interest;
(f) easements, rights-of-way, servitudes, permits, surface leases, surface use
restrictions, and other surface uses and impediments on, over, or in respect of the Subject
Interests that are not such as to interfere materially with the operation, value, or use of
the Subject Interests;
(g) covenants, conditions, and other terms subject to which Assignor acquired the
Subject Interests, to the extent they do not cause Assignors Net Revenue Interests in any
Well related to the Target Formation to be less than the Net Revenue Interest for that Well,
as stated in
Exhibit A
;
(h) rights reserved to or vested in any Governmental Authority to control or regulate
any Subject Interests in any manner, and all applicable Legal Requirements;
(i) the terms of the instruments creating the Subject Interests and Subject Lands;
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(j) any Prior Reversionary Interests that affect the Subject Interests; and
(k) the Mortgages,
provided that such aforementioned encumbrances are of the type and nature customary in the oil
and gas industry, as conducted in the Appalachian Basin, and do not, alone or in the aggregate,
materially and adversely affect the operation, value, or use of any Subject Interest, and all to
the extent, and for so long as, such Permitted Encumbrances are otherwise valid and enforceable
against the Subject Interests, without recognizing, expressly or by implication, any rights or
interests in any Third Person or Governmental Authority that such Third Person or Governmental
Authority does not otherwise lawfully possess.
Permitted Production Burdens
means (a) all Production Burdens that affected the
Subject Interests when they were acquired by Assignor and (b) all Production Burdens that were
created by Assignor; in each case, to the extent they do not cause Assignors Net Revenue Interest
related to the Target Formation in any Well to be less than the Net Revenue Interest for that Well
reflected in
Exhibit A
.
Perpetual PDP Conveyance
means that certain Perpetual Overriding Royalty Interest
Conveyance (PDP) by and between Assignor and the Trust dated effective as of the Effective Time.
Perpetual PUD Conveyance
means that certain Perpetual Overriding Royalty Interest
Conveyance (PUD) by and between Assignor and the Trust dated effective as of the Effective Time.
Person
means any natural person, corporation, partnership, trust, estate, or other
entity, organization, or association.
Private Investors
means the individuals and entities listed on
Exhibit C
attached hereto.
Post Production Cost Charge
is defined in Section 3.02(c).
Prime Interest Rate
is defined in Section 5.02(b).
Prior Reversionary Interest
means any contract, agreement, Farmout Agreement, lease,
deed, conveyance or operating agreement that exists as of the Effective Time or that burdens the
Subject Interests at the time such Subject Interests are acquired, that by the terms thereof
requires a Person to convey a part of the Subject Interest to another Person or to permanently
cease production of any Well including, any operating agreements, oil and gas leases, coal leases,
and other similar agreements or instruments affecting the Subject Interests.
Production Burdens
means, with respect to any Subject Lands, Subject Interests, or
Subject Gas, all royalty interests, overriding royalty interests, production payments, net profits
interests, Prior Reversionary Interests and other similar interests that constitute a burden on,
are measured by, or are payable out of the production of Gas or the proceeds realized from the sale
or other disposition thereof.
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Quarterly Payment Amount
is defined in Section 5.01(a).
Quarterly Payment Date
is defined in Section 5.01(c).
Reasonably Prudent Operator Standard
means the standard of conduct of a reasonably
prudent oil and gas operator in the AMI Area under the same or similar circumstances, acting with
respect to its own property and disregarding the existence of the Royalty Interest as a burden on
such property.
Reserved Amounts
means those amounts set aside from Assignee Proceeds by Assignor in
accordance with the provisions of Section 5.04 below.
Royalty Interest
is defined in Section 1.01.
Sales Price
means, for any Computation Period, the sale price received by Assignor
per Mcf or per MMBtu for Assignee Gas determined in accordance with the following provisions:
(a) sale refers to any sale, exchange, or other disposition of Assignee Gas for
value, the value of such Gas that is exchanged or otherwise disposed of for valuable
consideration being the sales price that Assignor receives for any such Gas sold pursuant to
Section 4.01 for any such Gas.
(b) amounts of money not paid to Assignor when due by any purchaser of Assignee Gas
(for example, Taxes or other amounts withheld or deducted by any such purchaser) shall not
be included within the Sales Price until actually received by, or credited to the account
of, Assignor;
(c) advance payments and prepayments for future deliveries of Assignee Gas shall be
included within the Sales Price, without interest, when that volume of Gas subject to the
advance payments or prepayments is actually produced;
(d) loan proceeds received by Assignor shall not be treated as a component of the
applicable Sales Price; and
(e) if a controversy or possible controversy exists, whether by reason of any statute,
order, decree, rule, regulation, contract, or otherwise, between Assignor and any purchaser
of Assignee Gas or any other Person, about the correct Sales Price of any Assignee Gas,
about deductions from the Sales Price, about Assignors right to receive the proceeds of any
sale of Assignee Gas, or about any other matter, then monies withheld by the purchaser or
deposited by it with an escrow agent or if Assignor receives any monies and promptly
deposits such monies with a Third Person escrow agent as a
result of such controversy, such monies shall not be included within the Sales Price
until received by or returned to Assignor, as applicable.
Subject Gas
means Gas in and under, and that may be produced, saved, and sold from a
Well, insofar and only insofar as such Gas is produced from the Target Formation, subject to the
following:
8
(a) Subject Gas excludes Gas that is:
(i) lost in the production, gathering, or marketing of Gas;
(ii) used (A) in conformity with ordinary and prudent operations on the Subject
Lands, including drilling and production operations or (B) in connection with plant
operations (whether on or off the Subject Lands) for processing or compressing the
Subject Gas;
(iii) taken by a Third Person to recover costs, or some multiple of costs, paid
or incurred by that Third Person under any operating agreement, unit agreement, or
other agreement in connection with nonconsent operations conducted (or participated
in) by that Third Person;
(iv) retained by a Third Person for gathering, transportation, processing or
marketing services related to the Subject Gas in lieu of or in addition to cash
payment for such services, to the extent such agreement is permitted under this
Conveyance; and
(v) in excess of the percentage attributable to Assignors Net Share of Gas
taken by Assignor to recover costs, or some multiple of costs, paid or incurred by
Assignor under any operating agreement, unit agreement, or other agreement in
connection with nonconsent operations conducted (or participated in) by Assignor.
(b) Subject Gas includes Gas, not otherwise excluded above, that is sold or exchanged
for other Gas, or otherwise disposed of for valuable consideration.
Subject Interests
means Assignors undivided interests in the Subject Lands, whether
as lessee under Gas leases, as an owner of the Subject Gas (or the right to extract such Gas), or
otherwise, by virtue of which undivided interests Assignor has the right to conduct exploration,
drilling, development, and Gas production operations on the Subject Lands, or to cause such
operations to be conducted, or to participate in such operations by paying and bearing all or any
part of the costs, risks, and liabilities of such operations, to drill, test, complete, equip,
operate, and produce Wells to exploit the Gas. Subject Interests includes all extensions of, and
all renewal Gas leases covering, the Subject Lands (or any portion thereof) obtained by Assignor,
or any Affiliate thereof, within six (6) months after the expiration or termination of any such Gas
lease. Subject Interests do not include (a) Assignors rights to substances other than Gas; (b)
Assignors rights to Gas under contracts for the purchase, sale, transportation, storage,
processing, or other handling or disposition of Gas; (c) Assignors interests in, or rights to Gas
with respect to, pipelines, gathering systems, storage facilities, processing facilities, or other
equipment or facilities, other than the Wells; or (d) subject to Section 1.04(c), any
additional, or enlarged interests in the Wells, Subject Lands or Subject Gas, except those
reflected in
Exhibit A
or any extensions and renewals covered by the preceding sentence.
Subject Interests may be owned or claimed by Assignor by virtue of grants or reservations in
deeds, Gas leases, or other instruments, or by virtue of operating agreements, pooling or
unitization agreements or orders, or
9
other kinds of instruments, agreements, or documents, legal or
equitable, recorded or unrecorded. The Subject Interests are subject to the Permitted
Encumbrances.
Subject Lands
means the lands subject to or covered by the oil and gas leases
described in
Exhibit A
, insofar and only insofar as they cover the Target Formation,
subject to the exceptions, exclusions and reservations set forth on such
Exhibit A
.
Target Formation
means what is generally referred to as the Marcellus Shale
formation and for purposes of this Conveyance is defined as that formation located from the bottom
of the Tully Formation (as seen by the ECA Kemsod #1 Well, API number 37-059-25209), at a depth of
7,881 feet, to the top of the Huntersville Chert Formation (as seen by the ECA Kemsod #1 Well, API
number 37-059-25209), at a depth of 8,204 feet.
Term PUD Conveyance
means that certain Term Overriding Royalty Interest Conveyance
(PUD) by and between Assignor and Assignee dated effective as of the Effective Time.
Taxes
is defined in Section 3.02(b).
Term
is defined in Section 1.02.
Termination Date
is defined in Section 1.02.
Third Person
means a Person other than Assignor or Assignee.
Transfer
including its syntactical variants, means any assignment, sale, transfer,
conveyance, or disposition of any property; provided, Transfer as used herein does not include the
granting of a security interest in Assignors interest in any property including the Subject
Interests or Subject Lands.
Trust
means the ECA Marcellus Trust I created by that certain Amended and Restated
Trust Agreement dated as of July 7, 2010.
Well
means the borehole of each Gas well more particularly described in
Exhibit A
.
Working Interest
means with respect to any Well, the interest, stated as a decimal
fraction, in and to such Well that is burdened with the obligation to bear and pay costs and
expenses of maintenance, development and operations on or in connection with such Well.
ARTICLE III
CALCULATION OF ASSIGNEE GAS
Section 3.01 Definition
.
Assignee Gas
is that volume of Gas which Assignee is entitled to receive in any
Computation Period under this Conveyance, calculated in accordance with the following formula:
With respect to any Well:
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Forty-Nine and One-Half Percent (49.5%) X (Assignors Net Share of Gas produced
during that Computation Period).
For purposes of calculating Assignee Gas hereunder, if, during any Computation Period, Assignor is
unable to determine the precise volume of Gas produced, sold and attributable to Assignors Net
Share of Gas, then Assignor shall, in good faith and in accordance with the Reasonably Prudent
Operator Standard, estimate the volume of such Gas produced, sold and attributable to Assignors
Net Share of Gas for such Computation Period. Assignor shall adjust Assignors Net Share of Gas
upward or downward, as the case may be, in the next or subsequent Computation Periods to reflect
the difference between the estimated volume and the actual amount of Gas produced, sold and
attributable to Assignors Net Share of Gas in the Computation Period for which such estimate was
made.
Section 3.02 Chargeable Costs
.
(a)
Definition
. Subject to Section 5.04 hereof, for each Computation Period,
Chargeable
Costs
means the sum of (i) Taxes, (ii) the Post Production Cost Charge and (iii) Excess Costs
from prior Computation Periods that (in each case) are actually paid or are deemed to have been
paid by Assignor during that Computation Period or paid or deemed to have been paid by Assignor
during a prior Computation Period and not included in any prior Computation Periods Chargeable
Costs.
(b)
Taxes
.
Taxes
means general property, ad valorem, production, severance, sales,
gathering, windfall profit, excise, and other taxes, except income taxes, assessed or levied on or
in connection with the Subject Interests, the Royalty Interest, this Conveyance, production of
Subject Gas, Assignors Net Share of Gas, Assignee Gas (or the proceeds from the sale thereof), or
facilities or equipment on the Subject Lands that are used for the production, dehydration,
treatment, processing, gathering, or transportation of Subject Gas, or against Assignor as owner of
the Subject Interests or paid by Assignor on behalf of Assignee as owner of this Royalty Interest.
(c)
Post Production Cost Charge
.
Post Production Cost Charge
means those costs
incurred by Assignor (including, internal costs and Third Person costs) to gather, transport,
compress, process, treat, dehydrate and market the Subject Gas, including any costs as may be
required to make merchantable and to deliver such Gas to market; provided, any internal costs of
Assignor and its Affiliates that are part of the Post Production Cost Charge shall not materially
exceed the costs prevailing in the area where the Subject Gas is being produced for similar
services; and provided, further, with respect to marketing costs, only Non-Affiliate marketing fees
and costs shall be included, and marketing costs of Assignor and its Affiliates with respect to any
Subject Gas will be specifically excluded from the Post Production Cost
Charge; and provided, further, until the Drilling Obligation Completion Date, any such
internal costs of Assignor and its Affiliates (excluding costs for any fuel that is used in the
compression process, including equivalent electricity charges in instances where electric
compressors are used) associated with the Greene County Gathering System shall be limited to $0.52
per MMBtu of Assignee Gas gathered. Any costs, fees or expenses that are properly charged or
allocated to Assignee Gas pursuant to another provision of this Conveyance (including, as provided
for in the definition of Subject Gas) shall not be included as part of the Post Production Cost
Charge.
11
(d)
Operating and Drilling Costs
. All costs associated with or paid or incurred in connection
with the drilling, testing, completing, developing and operating the Wells or associated with the
Subject Interests other than Taxes and Post Production Cost Charges shall be borne solely by
Assignor and shall not be included as Chargeable Costs.
Section 3.03 Assignee Proceeds
.
Assignee Proceeds
means the volume of Assignee Gas (on
an Mcf basis or MMBtu basis, as applicable) for the applicable Computation Period multiplied by the
relevant Sales Price less the Chargeable Costs associated with such Assignee Gas for the applicable
Computation Period.
ARTICLE IV
MARKETING OF ASSIGNEE GAS
Section 4.01 Rights and Duties Regarding Sale of Assignee Gas
. Assignor shall market or shall
cause to be marketed Assignors Net Share of Gas (including Assignee Gas) in good faith and in
accordance with the Reasonably Prudent Operator Standard and Section 4.02(d). Assignor shall use
its reasonable efforts in connection with any sale of Assignors Net Share of Gas (including
Assignee Gas) to obtain, as soon as reasonably practicable, full payment for such Gas; provided,
however, that it shall not be considered a breach of Assignors marketing duty or standard of
conduct for Assignor to market such Gas to an Affiliate of Assignor, so long as Assignor does not
market such Gas at a volume-weighted average price lower than the volume-weighted average price
upon which Assignor pays royalties to the owners of the other royalty interests in the Subject Gas,
save and excepting Chargeable Costs provided for in Article III hereof.
Section 4.02 Assignees Agent and Representative
.
(a)
Appointment
. Assignee appoints Assignor as Assignees agent and representative to market
and deliver or cause to be marketed and delivered all Assignee Gas and to collect and receive all
payments therefrom under any gas purchase agreement or contract without deduction (except to the
extent Chargeable Costs are deducted for any Computation Period). The appointment of Assignor as
Assignees agent and representative for such purpose is a material item of consideration to the
Parties in connection with the execution and delivery of this Conveyance. Assignee may not remove
Assignor from office as Assignees agent and representative, except for cause upon a material
breach by Assignor of its duties to Assignee under this Conveyance.
(b)
Duties and Powers
. As Assignees agent and representative, Assignor shall receive all
payments for the sale of Assignee Gas and account to Assignee, receive and make all communications
with the purchaser of such Gas, and otherwise act and speak for Assignee in connection with the
sale of Assignee Gas. Third Persons may rely conclusively on the authority of Assignor to market
Assignee Gas, and with respect to Third Persons, Assignee shall be conclusively bound by the acts
of Assignor in connection with the sale of Assignee Gas. It shall not be necessary for Assignee to
join Assignor in the execution of any division order, transfer order, or other instrument,
agreement, or document relating to the sale of Assignee Gas. Third Persons may pay all Assignee
Proceeds for the sale of such Gas directly to Assignor,
12
without the necessity of any joinder by or
consent of Assignee or any inquiry into the use or disposition of such proceeds by Assignor.
(c)
Prohibited Acts
. Assignor may not act for or bind Assignee on any matter, except the
marketing and delivery of Assignee Gas under this Article IV.
(d)
Standard of Conduct
. In exercising its powers and performing its duties as Assignees
agent and representative, Assignor shall act in good faith and in accordance with the Reasonably
Prudent Operator Standard. It shall not be a violation of such standard of conduct for Assignor
(i) to sell Assignors Net Share of Gas or Assignee Gas to an Affiliate pursuant to any gas
purchase agreement or contract, or (ii) to delegate some or all of Assignors duties as Assignees
agent and representative to its Affiliates (so long as such Affiliates perform in good faith and in
accordance with the Reasonably Prudent Operator Standard), with Assignor remaining liable to
Assignee for the performance of such Affiliates.
(e)
Termination of Authority
. Assignor may not resign as Assignees agent and representative
without the prior written consent of Assignee, except that Assignor may resign as Assignees agent
and representative without such consent with respect to any Subject Interests assigned, sold,
transferred, or conveyed by Assignor in accordance with the terms of this Conveyance. If such sale
is made subject to the Royalty Interest, Assignor must cause the purchaser to assume the duties of
Assignees agent and representative with respect to the Subject Interests acquired by that
purchaser and to be bound by the provisions of this Article IV.
Section 4.03 Delivery of Subject Gas
. Assignor (whether or not it is serving as Assignees agent
and representative) shall deliver or cause to be delivered Assignors Net Share of Gas (including
Assignee Gas) to the purchasers thereof into the pipelines to which the Wells producing such Gas
are connected.
Section 4.04 Processing
. Assignor may process Assignors Net Share of Gas (including Assignee Gas)
to remove liquid and liquefiable hydrocarbons and may commit any of the Subject Interests
(including the Royalty Interest attributable thereto) to an agreement for processing minerals
(pursuant to which, for example, the plant owner or operator receives a portion of the Subject Gas
or plant products therefrom or proceeds of the sale thereof as a fee for processing), so long as
Assignor enters into such processing arrangements in good faith and in accordance with the
Reasonably Prudent Operator Standard. Assignee shall be bound by such arrangements, shall permit
Assignors Net
Share of Gas (including Assignee Gas) to be processed by Assignor or its contractor, and shall have
no right to any liquid or liquefiable hydrocarbons obtained by such processor or to the proceeds
from the sale thereof. Assignee shall not, however, be personally liable for any costs or risks
associated with such processing operations, but Assignee shall indirectly suffer the Btu reduction
and volume reductions associated with processing through corresponding reductions in the Btu
content and volumes of Assignee Gas.
ARTICLE V
PAYMENT
Section 5.01 Obligation to Pay
.
13
(a)
Quarterly Payment Amount
. On each Quarterly Payment Date, Assignor shall prepare, in good
faith, an estimate of the cash to be paid to Assignee from (A) all of the proceeds (including any
interest earned thereon and payable to Assignee pursuant to Section 5.01(b) or Section 5.01(e)) to
be paid to Assignee from the sale of Assignee Gas produced during such Computation Period; plus (B)
all of the proceeds (including any interest earned thereon and payable to Assignee pursuant to
Section 5.01(b) or Section 5.01(e)) to be paid to Assignee from the sale of Assignee Gas, if any,
produced during any prior Computation Periods, to the extent not previously taken into account for
purposes of determining a Quarterly Payment Amount for any prior Computation Periods, as such sum
may be (x) increased or decreased as a result of any adjustments to the estimates that were
previously made pursuant to this Section 5.01(a) for any prior Computation Periods that are
necessary to accurately report the proceeds from the sale of Assignee Gas for such prior
Computation Periods, (y) increased by the amount of any damages payable to Assignee under Section
1.04(b) (subject to the right of set off in Section 1.04(c)) during the most recently completed
Computation Period prior to such Quarterly Payment Date and (z) decreased by any Reserved Amounts
as provided in Section 5.04 below (
Quarterly Payment Amount
).
(b)
The Obligation
. After each Computation Period and on or before the Quarterly Payment Date
for that Computation Period, Assignor shall tender to Assignee the Quarterly Payment Amount with
respect to the applicable Computation Period. With respect to the final Computation Period,
Assignor shall tender to Assignee all unexpended Reserved Amounts (together with any interest
accrued thereon).
(c)
Quarterly Payment Date
.
Quarterly Payment Date
for each Computation Period
means the thirtieth (30
th
) day after the end of such Computation Period or, for the last
Computation Period, the thirtieth (30
th
) day after the Termination Date. If such day is
not a Business Day, the Quarterly Payment Date shall be the next Business Day.
(d)
No Segregated Account
. All amounts received by Assignor from the sale of Assignors Net
Share of Gas and Assignee Gas, as applicable, for any Computation Period shall be held by Assignor
in one of its general bank accounts and Assignor will not be required to maintain a segregated
account for such funds.
(e)
Disputed Proceeds
. If Assignor receives any amounts of money from the sale of Assignee
Gas that is subject to controversy or, in the reasonable opinion of Assignor, possible controversy,
Assignor shall promptly deposit the money with a Third Person escrow agent in a segregated
interest-bearing account. Such amount shall not be treated as a portion of Assignee Proceeds so
long as it remains with such escrow agent, but shall be treated as a portion of Assignee Proceeds,
along with the accrued interest, when received from such escrow agent and paid over to Assignee.
Section 5.02 Interest on Past Due Payments
.
(a)
Obligation to Pay
. Any Assignee Proceeds or other amounts of money not paid by Assignor
to Assignee when due shall bear, and Assignor will pay, interest at the Prime Interest Rate on the
overdue amount commencing on the sixth (6
th
) day after such due date until such amount
is paid.
14
(b)
Definition
.
Prime Interest Rate
means the lesser of (i) the rate of interest
per annum publicly announced from time to time by The Bank of New York Mellon Trust Company, N.A.,
as its prime rate in effect at its principal office in New York City (each change in the Prime
Rate to be effective on the date such change is publicly announced), with the understanding that
such banks prime rate may be one of several base rates, may serve as a basis upon which
effective rates are from time to time calculated for loans making reference thereto, and may not be
the lowest of such banks base rates or (ii) the maximum rate of interest permitted under
applicable Legal Requirement.
Section 5.03 Overpayments and Refunds
.
(a)
Overpayments
. If Assignor ever pays Assignee more than the amount of money then due and
payable to Assignee under this Conveyance, Assignee shall not be obligated to return the
overpayment, but Assignor may at any time thereafter deduct from Assignee Proceeds and retain for
its own account an amount equal to the overpayment.
(b)
Refunds
. If Assignor is ever legally obligated to pay any Third Person, including any gas
purchaser or Governmental Authority, any refund, interest, penalty, or other amount of money,
because any payment of Assignee Proceeds received by Assignor for the account of Assignee exceeded,
or allegedly exceeded, the amount due or lawful under any applicable contract, Legal Requirement,
or other obligation, Assignor may thereafter deduct from Assignee Proceeds and retain for its own
account an amount equal to such payment.
Section 5.04 Reserved Amounts
. At any time and from time to time under this Conveyance and in
accordance with the Reasonably Prudent Operator Standard, Assignor may set aside from Assignee
Proceeds amounts determined in good faith to economically accrue for a Computation Period with
respect to known or anticipated costs or liabilities (the
Reserved Amounts
) which may be
incurred in future
Computation Periods with respect to Taxes assessed or levied with respect to a time period in
excess of a calendar quarter. As Reserved Amounts are expended by Assignor to cover applicable
Taxes in a Computation Period, Chargeable Costs shall be reduced in such Computation Period by an
amount equal to the Reserved Amounts so expended. In the event that Assignor overestimates the
cost of any Taxes for which it has set aside Reserved Amounts, the excess amount shall be applied
against any other Chargeable Costs (which shall be reduced by an amount equal to such excess
Reserved Amounts so expended), or paid as Assignee Proceeds on the Quarterly Payment Date following
the Computation Period in which it is determined that Assignor has set aside excess Reserved
Amounts.
ARTICLE VI
RECORDS AND REPORTS
Section 6.01 Books, Records, and Accounts
.
(a)
Obligation to Maintain
. Assignor shall maintain true and correct books, records, and
accounts of (i) all transactions required or permitted by this Conveyance and (ii) the financial
information necessary to effect such transactions, including the financial information needed to
calculate each installment of Assignee Proceeds.
15
(b)
Right of Inspection
. Assignee or its representative, at Assignees expense, may inspect
and copy such books, records, and accounts in the offices of Assignor during normal business hours
and upon reasonable notice.
Section 6.02 Statements
.
(a)
Quarterly Statements
. On each Quarterly Payment Date, Assignor shall deliver to Assignee
a statement showing the computation of Assignee Gas and Assignee Proceeds for the preceding
Computation Period.
(b)
Annual Statements
. On the first Quarterly Payment Date after the end of each calendar
year and on the Quarterly Payment Date after the Termination Date, such statement shall also show
the computation of Assignee Proceeds for the preceding calendar year or, for the Quarterly Payment
Date after the Termination Date, for the portion of the calendar year from 7:00 a.m. Eastern Time
on January 1 of that same year through the Termination Date.
(c)
Contents of Statements
. Without limiting the generality of the foregoing provisions in
this Section 6.02, each statement delivered by Assignor to Assignee pursuant to this Section 6.02
shall state, for the relevant period, (i) the total volumes of Subject Gas produced from the
Subject Lands, (ii) the total volumes of the Assignors Net Share of Gas, (iii) the total volumes
of Assignee Gas, (iv) the applicable Sales Price, (v) the amount of Assignee Proceeds due and
payable for the relevant period and (vi) the amounts of money, if any, due and payable by any
purchaser of the Subject Gas or Assignee Gas, the nonpayment of which resulted in the payment to
Assignee of less than Assignee Proceeds for the relevant period. Notwithstanding
the preceding, Assignor shall only be required to provide the preceding information on an
aggregate basis.
Section 6.03 Assignees Exceptions to Quarterly Statements
. If Assignee takes exception to any
item or items included in any quarterly statement required by Section 6.02, Assignee must notify
Assignor in writing within sixty (60) days after Assignees receipt of such quarterly statement.
Such Notice must set forth in reasonable detail the specific charges complained of and to which
exception is taken or the specific credits which should have been made and allowed. Adjustments
shall be made for all complaints and exceptions that are justified. Notwithstanding anything to
the contrary herein, all matters reflected in Assignors statements for the preceding calendar year
(or portion thereof) that are not objected to by Assignee in the manner provided by this Section
6.03 shall be deemed correct as rendered by Assignor to Assignee.
Section 6.04 Other Information
.
(a)
Disclosure
. At Assignees request, subject to applicable restrictions on disclosure and
transfer of information, Assignor shall give Assignee and its designated representatives reasonable
access in Assignors office during normal business hours to all geological, Well, and production
data in Assignors possession or Assignors Affiliates possession, relating to operations on the
Subject Interests.
(b)
Disclaimer of Warranties and Liability
. Assignor makes no representations or warranties
about the accuracy or completeness of any such data, reports, or
16
studies and shall have no
liability to Assignee or any other Person resulting from such data, studies, or reports.
(c)
No Attribution
. Assignee shall not attribute to Assignor or to the consulting engineers
any reports or studies or the contents thereof in any securities filings or reports to Assignee.
(d)
Confidentiality
. All information furnished to Assignee and its designated representatives
pursuant to this Section 6.04 is confidential and for the sole benefit of Assignee and shall not be
disclosed by Assignee or its designated representatives to any other Person, except to the extent
that such information (i) is required in any report, statement or testimony submitted to any
Governmental Authority having or claiming to have jurisdiction over Assignee or submitted to bank
examiners or similar organizations or their successors, (ii) is required in response to any summons
or subpoena or in connection with any litigation, (iii) is believed to be required in order to
comply with any applicable Legal Requirement to Assignee, (iv) was publicly available or otherwise
known to the recipient at the time of disclosure or (v) subsequently becomes publicly available
other than through any act or omission of the recipient; provided, however, with respect to the
disclosures with respect to items (i), (ii) and (iii) above, Assignee will notify Assignor prior to
any such disclosure in order to provide Assignor an opportunity to seek to limit any such required
disclosure.
ARTICLE VII
NO LIABILITY OF ASSIGNEE
Assignee shall not be personally liable or responsible under this Conveyance for any cost,
risk, liability, or obligation associated in any way with the ownership or operation of the Subject
Lands, the Subject Interests, the Wells, or the Subject Gas. The foregoing sentence does not
restrict the right of Assignor to deduct Chargeable Costs or Reserved Amounts in calculating the
volumes of Assignee Gas or Assignee Proceeds.
ARTICLE VIII
OPERATIONS
Section 8.01 Standards of Conduct
. Except as otherwise specifically provided in this Conveyance,
Assignor shall (a) operate and maintain the Subject Interests and (b) make elections under each
applicable lease, operating agreement, unit agreement, contract for development, and other similar
instrument or agreement (including elections concerning abandonment of any Well or release of any
Subject Interest) in good faith and in accordance with the Reasonably Prudent Operator Standard.
Section 8.02 Abandonment of Properties
. Nothing in this Conveyance shall obligate Assignor to
continue to operate any Well or to operate or maintain in force or attempt to maintain in force any
Subject Interest when such Well or Subject Interest ceases to produce, or Assignor determines, in
accordance with Section 8.01 above, that such Well or Subject Interest is not capable of producing
Gas in paying quantities. The expiration of a Subject Interest in accordance with the terms and
conditions applicable thereto shall not be considered to be a voluntary surrender or abandonment
thereof.
17
Section 8.03 Insurance
. Assignor may, but is not required by this Conveyance to, carry insurance
on any Subject Interest or Well, or covering any risk with respect thereto. Assignor shall never
be liable to Assignee on account of any injury or loss to the Subject Interests or any Well,
whether insurable or uninsurable, not covered by insurance. If Assignor elects to carry insurance,
the premiums shall not be included in Chargeable Costs, and Assignor shall retain all proceeds of
such insurance.
ARTICLE IX
POOLING AND UNITIZATION
Section 9.01 Pooling of Subject Interests
. Certain Subject Interests have been, or may have been,
heretofore pooled and unitized for the production of Gas. Such Subject Interests are and shall be
subject to the terms and provisions of the applicable pooling and unitization agreements, and the
Royalty Interest in each pooled or unitized Subject Interest shall apply to and affect only the Gas
produced from such units that
accrues to such Subject Interest under and by virtue of the applicable pooling and unitization
agreements.
Section 9.02 Pooling and Unitization
.
(a)
Right to Pool
. Assignor has the exclusive executive right and power (as between Assignor
and Assignee) to pool or unitize any Subject Interest and to alter, change, amend, or terminate any
pooling or unitization agreements heretofore or hereafter entered into, as to all or any part of
the Subject Lands, as to any one or more of the formations or horizons, and as to any Gas, upon
such terms and provisions as Assignor shall in its sole discretion deem appropriate.
(b)
Effect of Pooling
. If and whenever through the exercise of such right and power, or
pursuant to any Legal Requirement now existing or hereafter enacted or promulgated, any Subject
Interest is pooled or unitized in any manner, the Royalty Interest, insofar as it affects such
Subject Interest, shall also be pooled and unitized, and such Royalty Interest in such Subject
Interest shall apply to and affect only the Gas production that accrues to such Subject Interest
under and by virtue of the applicable pooling and unitization agreement or order. It shall not be
necessary for Assignee to agree to, consent to, ratify, confirm or adopt any exercise of pooling or
unitization of any Subject Interest by Assignor.
ARTICLE X
GOVERNMENT REGULATION
Section 10.01 Legal Requirements
. All obligations of Assignor under this Conveyance are, and shall
be, subject to all applicable Legal Requirements and the instruments, documents, and agreements
creating the Subject Interests.
Section 10.02 Filings
. Assignor shall use its reasonable discretion in making filings for itself
and on behalf of Assignee with any Governmental Authority having jurisdiction with respect to
matters affecting the Subject Interests, the Subject Lands, or the Subject Gas.
18
ARTICLE XI
ASSIGNMENT AND SALE OF SUBJECT INTERESTS
Section 11.01 Assignment by Assignor Subject to Royalty Interest
.
(a)
Right to Sell
. Subject to Section 11.05, Assignor may from time to time Transfer,
mortgage, or pledge its interest in the Wells, the Subject Interests, or any part thereof or
undivided interest therein, subject to the Royalty Interest and this Conveyance. Assignor shall
cause the assignee, purchaser, transferee, grantee, mortgagee, or pledgee of any such
transaction to take the affected Subject Interests subject to the Royalty Interest and this
Conveyance and, from and after the actual date of any such Transfer, to assume Assignors
obligations under this Conveyance with respect to such Subject Interests.
(b)
Effect of Sale
. From and after the actual date of any such Transfer by Assignor, Assignor
shall be relieved of all obligations, requirements, and responsibilities arising under this
Conveyance with respect to the Subject Interests Transferred, except for those that accrued prior
to such date.
(c)
Allocation of Consideration
. Assignee is not entitled to receive any share of the sales
proceeds received by Assignor in any transaction permitted by this Section 11.01.
(d)
Separate Interest
. Effective on the effective date of any Transfer of any Subject
Interest subject to this Section 11.01, Assignee Gas and Assignee Proceeds shall thereafter be
computed separately with respect to such Subject Interests, and the assignee, buyer, transferee, or
grantee of such Subject Interests shall thereafter serve as Assignees agent and representative
under Article IV with respect to such interests and shall pay all corresponding Assignee Proceeds
directly to Assignee.
Section 11.02 Sale and Release of Properties
.
(a)
Transfer
. Subject to Section 11.05, Assignor may from time to time, Transfer the Wells,
the Subject Interests, or any part thereof or undivided interest therein, free of the Royalty
Interest and this Conveyance provided that the aggregate Fair Value of all Royalty Interests
released with respect to the Assignee Conveyances during any twelve (12) month period shall not
exceed $5,000,000.
(b)
Payments
. In connection with any Transfer pursuant to this Section 11.02, Assignor shall
remit to Assignee an amount equal to the Fair Value of the Royalty Interest being released.
Assignor shall make such payment to Assignee on the Quarterly Payment Date for the Computation
Period in which Assignor receives the payment with respect to any such Transfer of the Subject
Interest.
(c)
Release
. In connection with any Transfer provided for in Section 11.02(a), Assignee
shall, on request, execute, acknowledge, and deliver to Assignor a recordable instrument
(reasonably acceptable to Assignor) that releases the Royalty Interest with respect to the Well and
the related Subject Interests and Subject Lands being Transferred.
19
(d)
Effect of Sale
. From and after the actual date of any such Transfer by Assignor, Assignor
and any assignee, purchaser, transferee or grantee of such Subject Interest shall be relieved of
all obligations, requirements, and responsibilities arising under the Royalty Interest or this
Conveyance with respect to the Well or Subject Interests Transferred, except for those that accrued
prior to such date.
Section 11.03 Release of Other Properties
.
(a)
Prior Reversionary Interests
. In the event that any Person notifies Assignor that,
pursuant to a Prior Reversionary Interest, Assignor is required to convey any of the Subject
Interests to such Person or cease production from any Well, Assignor may provide such conveyance
with respect to such Subject Interest or permanently cease Production from any such Well.
(b)
Payments
. In the event that Assignor receives compensation pursuant to any Prior
Reversionary Interest in connection with any conveyance or permanent cessation of production from
any Well, Assignor shall remit to Assignee an amount equal to the product of (x) such amount
actually received by Assignor with respect to such reconveyance or permanent cessation of
production and (y) a fraction the numerator of which is (A) the Fair Value of the Royalty Interest
released and the denominator of which is (B) the Fair Value of the Subject Interest that is being
released. Assignor shall make such payment to Assignee on the Quarterly Payment Date for the
Computation Period in which Assignor receives such payment.
(c)
Release for Prior Reversionary Interests
. In connection with any conveyance or permanent
cessation of production provided for in Section 11.03(a) above, Assignee shall, on request,
execute, acknowledge, and deliver to Assignor a recordable instrument (reasonably acceptable to
Assignor) that releases the Royalty Interest and this Conveyance with respect to any such Well or
Subject Interests.
(d)
Effect of Prior Reversionary Interests
. From and after the actual date of any conveyance
or permanent cessation of production provided for in Section 11.03(a), Assignor and any assignee,
purchaser, transferee or grantee of such Subject Interest shall be relieved of all obligations,
requirements, and responsibilities arising under the Royalty Interest or this Conveyance with
respect to the Subject Interests Transferred, except for those that accrued prior to such date.
Section 11.04 Change in Ownership
.
(a)
Obligation to Give Notice
. No change of ownership or of the right to receive payment of
the Royalty Interest, or of any part thereof, however accomplished, shall bind Assignor until
notice thereof is furnished to Assignor by the Person claiming the benefit thereof, and then only
with respect to payments made after such Notice is furnished.
(b)
Notice of Sale
. Notice of sale, transfer, conveyance, or assignment shall consist of a
certified copy of the recorded instrument accomplishing the same.
(c)
Notice of Other Changes of Ownership
. Notice of change of ownership or of the right to
receive payment accomplished in any other manner (
e.g.
, by dissolution of
20
Assignee) shall consist
of certified copies of recorded documents and complete proceedings legally binding and conclusive
of the rights of all Persons.
(d)
Effect of Lack of Notice
. Until such Notice accompanied by such documentation is
furnished to Assignor in the manner provided above, Assignor may, at Assignors election, either
(i) continue to pay or tender all sums payable on the Royalty Interest in the same manner provided
in this Conveyance, precisely as if no such change in interest or ownership or right to receive
payment had occurred or (ii) suspend payment of Assignee Proceeds without interest until such
documentation is furnished.
(e)
Effect of Nonconforming Notices
. The kinds of Notice provided by this Section 11.03(d)
shall be exclusive, and no other kind, whether actual or constructive, shall bind Assignor.
Section 11.05 Transfer of Subject Lands
. Assignor will not Transfer any Well or any of the Subject
Interests comprising a part of the Subject Lands pursuant to Sections 11.01 and 11.02 prior to the
Drilling Obligation Completion Date.
Section 11.06 One Payee
. Assignor shall never be obligated to pay Assignee Proceeds to more than
one Person. If more than one Person is ever entitled to receive payment of any part of Assignee
Proceeds, Assignor may suspend payments of all Assignee Proceeds until the concurrent owners or
claimants of the Royalty Interest or the right to receive payment of Assignee Proceeds appoint one
Person in writing to receive all payments of Assignee Proceeds on their behalf. Assignor may
thereafter conclusively rely upon the authority of that Person to receive payments of Assignee
Proceeds and shall be under no further duty to inquire into the authority or performance of such
Person.
Section 11.07 Rights of Mortgagee
. If Assignee executes a mortgage or deed of trust covering all
or part of the Royalty Interest, the mortgagees or trustees therein named or the holders of any
obligation secured thereby shall be entitled, to the extent that such mortgage or deed of trust so
provides, to exercise the rights, remedies, powers, and privileges conferred upon Assignee by this
Conveyance and to give or withhold all consents required to be obtained from Assignee. This
Section 11.07 shall not be deemed or construed to impose upon Assignor any obligation or liability
undertaken by Assignee under such mortgage or deed of trust or under the obligation secured
thereby.
ARTICLE XII
AMI AREA
Section 12.01 No Drainage
. Subsequent to the Drilling Obligation Completion Date, neither Assignor
nor any of its Affiliates shall drill any Gas well that will have a perforated segment that will be
within five hundred feet (500) of any perforated interval of any Well which produces oil or gas
from the Target Formation.
21
ARTICLE XIII
FORCE MAJEURE
Section 13.01 Nonperformance
. Assignor shall not be responsible to Assignee for any loss or damage
to Assignee resulting from any delay in performing or failure to perform any obligation under this
Conveyance (other than Assignors obligation to make payments of Assignee Proceeds to Assignee) to
the extent such failure or delay is caused by Force Majeure.
Section 13.02 Force Majeure
.
Force Majeure
means any of the following, to the extent
they are not caused solely by the breach by Assignor of its duty to perform certain obligations
under this Conveyance in accordance with the Reasonably Prudent Operator Standard:
(a) act of God, fire, lightning, landslide, earthquake, storm, hurricane, hurricane warning,
flood, high water, washout, tidal wave, or explosion;
(b) strike, lockout, or other similar industrial disturbance, act of the public enemy, war,
military operation, blockade, insurrection, riot, epidemic, arrest or restraint of Governmental
Authority or people, or national emergency;
(c) the inability of the Assignor to acquire, or the delay on the part of any Third Person
(other than an Affiliate of the Assignor) in acquiring, materials, supplies, machinery, equipment,
servitudes, right-of-way grants, easements, permits, or licenses, or approvals or authorizations by
regulatory bodies needed to enable such Party to perform hereunder;
(d) any breakage of or accident to machinery, equipment, or lines of pipe, the repair,
maintenance, improvement, replacement, alteration to a plant or line of pipe or related facility,
the testing of machinery, equipment or line of pipe, or the freezing of a line of pipe;
(e) any Legal Requirement or the affected Partys compliance therewith; or
(f) any other cause, whether similar or dissimilar to the causes enumerated in (a) through (e)
above, not reasonably within the control of Assignor.
Section 13.03 Force Majeure Notice
. Assignor will give Assignee a Notice of each Force Majeure as
soon as reasonably practicable after the occurrence of the Force Majeure.
Section 13.04 Remedy
. Assignor will use its reasonable efforts to remedy each Force Majeure and
resume full performance under this Conveyance as soon as reasonably practicable, except that the
settlement of strikes, lockouts, or other labor disputes shall be entirely within the discretion of
Assignor.
ARTICLE XIV
NOTICE
Section 14.01 Definition
.
Notice
means any notice, advice, invoice, demand, or other
communication required or permitted by this Conveyance.
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Section 14.02 Written Notice
. Except as otherwise provided by this Conveyance, each Notice shall
be in writing.
Section 14.03 Methods of Giving Notice
. Notice may be given by any reasonable means, including
telecopier, hand delivery, overnight courier, and United States mail.
Section 14.04 Charges
. All Notices shall be properly addressed to the recipient, with all postage
and other charges being paid by the Party giving Notice.
Section 14.05 Effective Date
. Notice shall be effective when actually received by the Party being
notified.
Section 14.06 Addresses
. The addresses of the Parties for purposes of Notice are the addresses in
the Introduction to this Conveyance.
Section 14.07 Change of Address
. Either Party may change its address to another address within the
continental United States by giving ten (10) days Notice to the other Party.
ARTICLE XV
OTHER PROVISIONS
Section 15.01 Successors and Assigns
. Subject to the limitation and restrictions on the assignment
or delegation by the Parties of their rights and interests under this Conveyance, this Conveyance
binds and inures to the benefit of Assignor, Assignee and their respective successors, assigns, and
legal representatives.
Section 15.02 Governing Law
.
WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PRINCIPLES
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION, THIS CONVEYANCE SHALL BE CONSTRUED UNDER AND GOVERNED BY THE LAWS OF THE
COMMONWEALTH OF PENNSYLVANIA (EXCLUDING CHOICE OF LAW AND CONFLICT OF LAW RULES).
Section 15.03 Construction of Conveyance
. In construing this Conveyance, the following principles
shall be followed:
(a) no consideration shall be given to the captions of the articles, sections, subsections, or
clauses, which are inserted for convenience in locating the provisions of this Conveyance and not
as an aid in its construction;
(b) no consideration shall be given to the fact or presumption that one Party had a greater or
lesser hand in drafting this Conveyance;
(c) the word includes and its syntactical variants mean includes, but is not limited to
and corresponding syntactical variant expressions;
(d) a defined term has its defined meaning throughout this Conveyance, regardless of whether
it appears before or after the place in this Conveyance where it is defined;
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(e) the plural shall be deemed to include the singular, and vice versa, unless the content
otherwise requires; and
(f) each exhibit, attachment, and schedule to this Conveyance is a part of this Conveyance,
but if there is any conflict or inconsistency between the main body of this Conveyance and any
exhibit, attachment, or schedule, the provisions of the main body of this Conveyance shall prevail.
Section 15.04 No Waiver
. Failure of either Party to require performance of any provision of this
Conveyance shall not affect either Partys right to require full performance thereof at any time
thereafter, and the waiver by either Party of a breach of any provision hereof shall not constitute
a waiver of a similar breach in the future or of any other breach or nullify the effectiveness of
such provision.
Section 15.05 Relationship of Parties
. This Conveyance does not create a partnership, mining
partnership, joint venture, or relationship of trust or agency (except with respect to Assignors
agency relationship with respect to those matters set forth in Articles IV and V above) between the
Parties.
Section 15.06 Proportionate Reduction
. In the event of failure or deficiency in title to any Well
or Subject Interest, the portion of the Subject Gas production attributable thereto shall be
reduced in the same proportion that such Well or Subject Interest is reduced by such failure or
deficiency. Such proportionate reduction
of the Royalty Interest shall not limit Assignees rights with respect to such reduction under
Section 1.04.
Section 15.07 Further Assurances
. Each Party shall execute, acknowledge, and deliver to the other
Party all additional instruments and other documents reasonably required to describe more
specifically any interests subject hereto, to vest more fully in Assignee the Royalty Interest
conveyed (or intended to be conveyed) by this Conveyance, or to evidence or effect any transaction
contemplated by this Conveyance. Assignor shall also execute and deliver all additional
instruments and other documents reasonably required to transfer interests in state, federal, or
Indian lease interests in compliance with applicable Legal Requirements or agreements. Upon
expiration of the Term, Assignee shall, on request, execute, acknowledge and deliver to Assignor
sufficient numbers of recordable instruments releasing all of the Subject Lands from this
Conveyance.
Section 15.08 The 7:00 A.M. Convention
. Except as otherwise provided in this Conveyance, each
calendar day, month, quarter, and year shall be deemed to begin at 7:00 a.m. Eastern Time on the
stated day or on the first day of the stated month, quarter, or year, and to end at 7:00 a.m.
Eastern Time on the next day or on first day of the next month, quarter, or year, respectively.
Section 15.09 Counterpart Execution
. This Conveyance may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but
all of such counterparts shall constitute for all purposes one Conveyance. As between the Parties,
any signature hereto delivered by a Party by facsimile transmission or email pdf. shall be deemed
an original hereto.
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Section 15.10 Present and Absolute Conveyance
. It is the express intention of Assignor and
Assignee that the Royalty Interest is, and shall be construed for all purposes as, a present,
fully-vested and absolute conveyance.
Section 15.11 Tax Treatment
. Notwithstanding that this Royalty Interest may be a real property
interest for purposes of applicable state law, the Parties agree to treat this Royalty Interest as
a mortgage loan for federal income tax purposes pursuant to Section 636(a) of the Code (and for the
purposes of any similarly calculated state income or franchise taxes) but for no other purposes,
and the Parties agree (a) to file all federal income tax and state income tax and franchise tax
returns consistent with this Section 15.11, (b) to use a comparable yield of 10.8% per month for
purpose of Treasury Regulation Section 1.1275-4(b) and (c) to utilize the projected payment
schedule provided for in Treasury Regulation Section 1.1275-4(b) and attached hereto as Schedule
15.11 for purposes of reporting income and deductions (and adjustments thereto) in respect of the
Royalty Interest. For avoidance of doubt, the parties acknowledge that Assignor (and not Assignee)
is entitled to all tax credits and other applicable tax attributes attributable to this Royalty
Interest and the production of Gas attributable thereto.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, each Party has caused this Conveyance to be executed in its name and
behalf and delivered on the date or dates stated in the acknowledgment certificates appended to
this Conveyance, to be effective as of the Effective Time.
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ENERGY CORPORATION OF AMERICA
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By:
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/s/ Donald C. Supcoe
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Name:
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Donald C. Supcoe
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Title:
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Senior Vice President
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EASTERN MARKETING CORPORATION
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By:
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/s/
Donald C. Supcoe
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Name:
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Donald C. Supcoe
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Title:
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President
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Prepared by:
Vinson & Elkins LLP
1001 Fannin Street
Suite 2500
Houston, TX 77002-6760
Attention: Thomas Herbert
Signature Page to Term Royalty Interest Conveyance
S-1
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THE
STATE OF COLORADO
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§
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§
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COUNTY
OF DENVER
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§
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On
this, the 7
th
day of July, 2010, before me Julie Ann Kitano, a Notary public,
personally appeared Donald C. Supcoe, who acknowledged himself to be the Senior Vice President of
Energy Corporation of America, a West Virginia corporation, and that he as such Senior Vice
President, being authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as Senior Vice President.
In witness whereof, I hereunto set my hand and official seal.
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[SEAL]
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/s/
Julie Ann Kitano
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My
Commission Expires: 4-26-2014
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THE
STATE OF COLORADO
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§
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§
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COUNTY
OF DENVER
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§
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On
this, the 7
th
day of July, 2010, before me Julie Ann Kitano, a Notary public,
personally appeared Donald C. Supcoe, who acknowledged himself to be the President of Eastern
Marketing Corporation, a West Virginia corporation, and that he as such President, being authorized
to do so, executed the foregoing instrument for the purposes therein contained by signing the name
of the corporation by himself as President.
In witness whereof, I hereunto set my hand and official seal.
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[SEAL]
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/s/
Julie Ann Kitano
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My
Commission Expires: 4-26-2014
CERTIFICATE OF RESIDENCE
Eastern Marketing Corporation, as grantee and Assignee hereunder, hereby certifies that its
precise address is:
4643 South Ulster Street
Suite 100
Denver, Colorado 80237-2867
EASTERN MARKETING CORPORATION
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By:
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/s/ Donald C. Supcoe
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Name: Donald C. Supcoe
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Title: President
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Exhibit A
(Attached hereto.)
Exhibit A
Exhibit B
(Attached hereto.)
Exhibit B
Exhibit C
Private Investors
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W. GASTON CAPERTON, III
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CLARK CLEMENT and PAULETTE CLEMENT
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MICHAEL J. COCHRAN, JR.
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PETER H. COORS
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RODNEY D. COX and JENNIFER M. COX
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CURTIS FAMILY REVOCABLE TRUST
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DORGAN LIVING TRUST
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RANDALL C. FARKOSH and SHERRY J. FARKOSH
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JOHN S. FISCHER and FAYE E. FISCHER
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MICHAEL S. FLETCHER and BOBBETTE FLETCHER
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J. MICHAEL FORBES
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MARK A. FRY and TAMMY L. FRY
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THOMAS R. GOODWIN
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DANIEL EARL GRAHAM LIVING TRUST and SALLY QUEREAU GRAHAM LIVING TRUST
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CLINT L. HIPKE
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DAVID E. JORDAN and CAROL JORDAN
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FRANCIS H. McCULLOUGH, III and KATHY L. McCULLOUGH
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KATHERINE F. McCULLOUGH TRUST
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KRISTIN McCULLOUGH TRUST
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LESLEY K. McCULLOUGH TRUST
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MEREDITH B. McCULLOUGH TRUST
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DENNIS L. McGOWAN and N. GAYLE McGOWAN
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ALISON MORK TRUST
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JOHN MORK and JULIE MORK
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KYLE MORK TRUST
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ARTHUR C. NIELSEN, JR. TRUST DATED JULY 14, 2003
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GEORGE OMALLEY
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JAY S. PIFER
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NIKI D. RANDOLPH
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PETER L. REBSTOCK
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R. KENT SCHAMP
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PETER A. SULLIVAN and WENDY H. SULLIVAN
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DONALD C. SUPCOE and PATTY L. SUPCOE
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RODNEY A. WINTERS and TAMMY M. WINTERS
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Exhibit C
Schedule 15.11
(Attached hereto.)
Schedule 15.11
Exhibit 10.6
TERM OVERRIDING ROYALTY INTEREST CONVEYANCE
(PUD)
COMMONWEALTH OF PENNSYLVANIA
INTRODUCTION
THIS TERM OVERRIDING ROYALTY INTEREST CONVEYANCE (this
Conveyance
) from ENERGY
CORPORATION OF AMERICA, a West Virginia corporation, with offices at 4643 South Ulster Street,
Suite 100, Denver, Colorado 80237-2867 (
Assignor
), to Eastern Marketing Corporation, a
West Virginia corporation with offices at 4643 South Ulster Street, Suite 100, Denver, Colorado
80237-2867 (
Assignee
), is delivered to be effective as of 7:00 a.m., Eastern Time, April
1, 2010 (the
Effective Time
). All capitalized terms not otherwise defined herein shall
have the meanings ascribed to such terms in Article II below.
ARTICLE I
CONVEYANCE
Section 1.01 The Grant
. For and in consideration of good and valuable consideration paid by Assignee to Assignor, the
receipt and sufficiency of which are hereby acknowledged, Assignor has, subject to the terms of
this Conveyance, BARGAINED, SOLD, GRANTED, CONVEYED, TRANSFERRED, ASSIGNED, SET OVER, and
DELIVERED, and by these presents does hereby BARGAIN, SELL, GRANT, CONVEY, TRANSFER, ASSIGN, SET
OVER, and DELIVER unto Assignee, for the Term, as a term net overriding royalty interest (the
Royalty Interest
), a variable undivided interest in and to the Subject Interests, to the
extent that the Subject Interests pertain to Gas in, under and that may be produced and saved from
the wellbores of the Development Wells, sufficient to cause Assignee to receive the Assignee Gas or
proceeds thereof calculated and paid in money in accordance with the further terms and conditions
of this Conveyance.
Section 1.02 Term
. The term of the Royalty Interest (the
Term
) shall begin at the Effective Time and end
at March 31, 2030 (the
Termination Date
). At the end of the Term, all of Assignees
interest in and to the Royalty Interest shall automatically terminate and immediately revert to and
revest in Assignor.
Section 1.03 Habendum Clause
. TO HAVE AND TO HOLD the Royalty Interest, together with all and singular the rights and
appurtenances thereto in anywise belonging, unto Assignee, its successors and assigns, for the
Term, subject to terms and provisions of this Conveyance.
1
Section 1.04 Warranty.
(a)
The Warranty
. Assignor warrants to Assignee, its successors and assigns, that the Subject
Interests are free of all Encumbrances created by, through, or under Assignor, but not otherwise,
except for the Permitted Encumbrances.
(b)
Remedies
.
(i) Subject to Section 1.04(b)(ii), in the event of a breach of the foregoing
warranty for any Subject Interest, Assignees sole remedy shall be to receive
payment on each applicable Quarterly Payment Date, out of Assignors Net Share of
Gas from other Development Wells in excess of that subject to the Royalty Interest
and the royalty interest created pursuant to the Perpetual PUD Conveyance (the
Assignor Retained Gas
), without interest (except such interest payable
under this Conveyance on payments made after the applicable due date as described in
Section 5.02 below), of an amount equal to the difference between (x) Assignee Gas
(or the proceeds from the sale thereof) that Assignee would have received with
respect to such Development Well in the applicable Computation Period if such
warranty had not been breached and (y) Assignee Gas (or the proceeds from the sale
thereof) that Assignee actually received during that Computation Period with respect
to that Development Well, to the extent such difference is attributable to the
breach of the warranty, but not to the extent that such difference is attributable
to any other cause, and any such amounts of Assignor Retained Gas shall be treated
as Assignee Gas.
(ii) In the event a breach of the foregoing warranty for any Subject Interest
is due to production burdens in excess of twelve and one half percent (12.5%) with
respect to a Development Well, Assignor shall pay to Assignee on each applicable
Quarterly Payment Date an amount equal to that which Assignee would have received
with respect to such Development Well in the applicable Computation Period if such
warranty had not been breached out of Assignor Retained Gas, and such excess
production burdens will be fully allocated against Assignors retained interest in
such Development Well.
(c)
DISCLAIMER
. EXCEPT FOR THE WARRANTIES OF TITLE GIVEN IN SECTION 1.04(a), ASSIGNOR MAKES
THIS CONVEYANCE AND ASSIGNS THE ROYALTY INTEREST WITHOUT RECOURSE, COVENANT OR WARRANTY OF TITLE OF
ANY KIND, EXPRESS, IMPLIED OR STATUTORY. ANY COVENANTS OR WARRANTIES IMPLIED BY STATUTE OR LAW BY
THE USE HEREIN OF THE WORDS
GRANT
,
CONVEY
OR OTHER SIMILAR WORDS ARE HEREBY EXPRESSLY
DISCLAIMED, WAIVED AND NEGATED. WITHOUT LIMITING THE GENERALITY OF THE TWO PRECEDING SENTENCES,
ASSIGNEE ACKNOWLEDGES THAT ASSIGNOR HAS NOT MADE, AND ASSIGNOR HEREBY EXPRESSLY DISCLAIMS AND
NEGATES, AND ASSIGNEE HEREBY EXPRESSLY WAIVES, ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT
COMMON LAW, BY STATUTE OR OTHERWISE
RELATING TO (i) PRODUCTION RATES, RECOMPLETION OPPORTUNITIES, DECLINE RATES OR THE QUALITY,
QUANTITY OR VOLUME OF THE RESERVES OF
2
HYDROCARBONS, IF ANY, ATTRIBUTABLE TO THE SUBJECT INTERESTS,
(ii) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (iii) ANY IMPLIED OR EXPRESS WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE, (iv) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR
SAMPLES OF MATERIALS, AND (v) ANY AND ALL IMPLIED WARRANTIES EXISTING UNDER ANY APPLICABLE LEGAL
REQUIREMENT; IT BEING THE EXPRESS INTENTION OF BOTH ASSIGNEE AND ASSIGNOR THAT THE ROYALTY INTEREST
IS HEREBY ASSIGNED TO ASSIGNEE ON AN AS IS AND WHERE IS BASIS WITH ALL FAULTS, AND THAT
ASSIGNEE HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS ASSIGNEE DEEMS APPROPRIATE. ASSIGNOR
AND ASSIGNEE AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LEGAL REQUIREMENTS TO BE EFFECTIVE,
THE DISCLAIMERS OF CERTAIN WARRANTIES CONTAINED IN THIS SECTION ARE CONSPICUOUS DISCLAIMERS FOR
THE PURPOSES OF ANY APPLICABLE LEGAL REQUIREMENT.
(d)
Substitution of Warranty
. This instrument is made with full substitution and subrogation
of Assignee in and to all covenants of warranty by Third Persons (other than Affiliates of
Assignor) heretofore given or made with respect to the Development Wells, the Subject Interests or
any part thereof or interest therein.
Section 1.05 Release of Excess Acreage
. After the Drilling Obligation Completion Date, Assignee shall, on request, execute, acknowledge,
and deliver to Assignor a recordable instrument (reasonably acceptable to Assignor) that conveys
the Royalty Interest to Assignor and releases such Royalty Interest and this Conveyance with
respect to all Subject Lands except such portion of any Subject Lands that covers and pertains to
all Subject Gas in, under and that may be produced from any wellbore of any Development Well.
Section 1.06 Development Agreement
. Assignor shall enter into the Development Agreement with Assignee or its permitted successor or
assign.
ARTICLE II
DEFINITIONS
This Article II defines certain capitalized words, terms, and phrases used in this Conveyance.
Certain other capitalized words, terms, and phrases used in this Conveyance are defined elsewhere
in this Conveyance.
Additional Lease
is defined in Section 12.01.
Affiliate
means, for any specified Person, another Person that controls, is
controlled by, or is under common control with, the specified Person.
Control
, in the
preceding sentence, refers to the possession by one Person, directly or indirectly, of the right or
power to direct or
cause the direction of the management and policies of another Person, whether through the
ownership of voting securities, by contract, or otherwise.
AMI Area
means that area depicted on the map set forth on
Exhibit B
as the
AMI Area.
3
Assignee
is defined in the introduction to this Conveyance and also includes all
permitted successors and assigns of Assignee.
Assignee Conveyances
means for purposes of Section 11.02(a), this Conveyance, the
Term PDP Conveyance, the Perpetual PDP Conveyance, the Perpetual PUD Conveyance and the Investor
Conveyance, considered collectively.
Assignee Gas
is defined in Section 3.01.
Assignee Proceeds
means, for any Computation Period, proceeds received by Assignor
for the account of Assignee, as Assignees marketing and payment agent and representative, from the
sale of Assignee Gas under this Conveyance less Chargeable Costs calculated in accordance with
Section 3.03.
Assignor
is defined in the Introduction to this Conveyance and also includes all
permitted successors and assigns of Assignor.
Assignor Retained Gas
is defined in Section 1.04(b)(i).
Assignors Net Share of Gas
means the share of Subject Gas from each Development
Well that is attributable to Assignors Net Revenue Interest in that Development Well.
Business Day
means any day that is not a Saturday, Sunday, a holiday determined by
the New York Stock Exchange, Inc. as affecting ex dates or any other day on which national
banking institutions in New York, New York are closed as authorized or required by law.
Chargeable Costs
is defined in Section 3.02(a).
Computation Period
means each calendar quarter commencing at the Effective Time,
with each calendar quarter being deemed to have begun at 7:00 a.m. Eastern Time on the first day of
such calendar quarter and to have ended at 7:00 a.m. Eastern Time on the first day of the next
calendar quarter, except for (a) the first Computation Period, which shall be deemed to have begun
at the Effective Time and to have ended at 7:00 a.m. Eastern Time on July 1, 2010, and (b) the
final Computation Period, which shall be deemed to have begun at 7:00 a.m. Eastern Time on the
first day of the calendar quarter in which the Termination Date occurs and to have ended at the
Termination Date.
Conveyance
is defined in the Introduction to this Conveyance.
Development Agreement
means that certain Development Agreement between Assignor and
the Trustee dated as of even date herewith.
Development Well
has the meaning given such term in the Development Agreement.
Drilling Obligation
means Assignors obligation set forth in Section 2.01(a) of the
Development Agreement.
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Drilling Obligation Completion Date
has the meaning given to such term in the
Development Agreement.
Effective Time
is defined in the Introduction to this Conveyance.
Encumbrance
means any mortgage, lien, security interest, pledge, charge,
encumbrance, limitation, preferential right to purchase, consent to assignment, irregularity,
burden, or defect.
Excess Costs
means, in any Computation Period, the excess of Chargeable Costs for
that Computation Period over the amount determined by multiplying Assignors Net Share of Gas
produced during the Computation Period by the Sales Price for that Computation Period. Excess
Costs shall bear interest at the Prime Interest Rate from the end of the Computation Period in
which such costs were incurred to the date that Assignor recovers such amounts from Assignee
Proceeds.
Exchange Acreage
has the meaning set forth in Section 12.02.
Excluded Assets
means those oil and gas wells and all oil and gas formations, except
for the Target Formation, in the lands subject to or covered by the oil and gas leases described on
Exhibit C.
Fair Value
means, with respect to any portion of the Royalty Interest to be released
pursuant to Section 11.02 or 11.03 in connection with a sale or release of any Development Well or
Subject Interest, an amount of net proceeds which could reasonably be expected to be obtained from
the sale of such portion of the Royalty Interest to a party which is not an Affiliate of either the
Assignor or Assignee on an arms-length negotiated basis, taking into account relevant market
conditions and factors existing at the time of any such proposed sale or release, such net proceeds
to be determined by deducting Assignees proportionate share of sales costs, commissions and
brokerage fees, if any (based on the ratio of (i) the fair market value of the portion of the
Royalty Interest being released to (ii) the fair market value of the Development Wells and Subject
Interests being transferred (including the value of the Royalty Interest being released).
Farmout Agreements
means any farmout agreement, participation agreement, exploration
agreement, development agreement or any similar agreement.
Force Majeure
is defined in Section 13.02.
Gas
means natural gas and all other gaseous hydrocarbons, excluding condensate,
butane, and other liquid and liquefiable components that are actually removed from the Gas stream
by separation, processing, or other means. Any oil, gas or mineral lease or other similar
instrument that covers Gas shall be considered a Gas lease hereunder, even if it also covers
other substances.
Governmental Authority
means the United States of America, any state, commonwealth,
territory, or possession thereof, and any political subdivision of any of the
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foregoing, including
courts, departments, commissions, boards, bureaus, agencies, and other instrumentalities.
Greene County Gathering System
means Assignors Greene County, Pennsylvania
Gathering System.
Investor Conveyance
means that certain Private Investor Overriding Royalty Interest
Conveyance by and between the Private Investors and the Trust dated effective as of the Effective
Time.
Legal Requirement
means any law, statute, ordinance, decree, requirement, order,
judgment, rule, or regulation of, including the terms of any license or permit issued by, any
Governmental Authority.
MBtu
means one thousand British thermal units, and
MMBtu
means one million
British thermal units.
Mcf
means one thousand cubic feet of Gas, and
MMcf
means one million cubic
feet of Gas, measured and expressed in each case at the same temperature, pressure, and other
conditions of measurement (a) provided in any contract for the purchase of Gas from the Subject
Interest or, (b) if no such contract exists, provided by applicable state law for purposes of
reporting production to Governmental Authorities.
Mortgages
means, collectively, (i) the Drilling Support Lien (as such term is
defined in the Development Agreement) and (ii) that certain Mortgage, Assignment, Security
Agreement, Fixture Filing and Financing Statement, granted by Assignor in favor of the Trust dated
as of even date herewith, which agreement grants the Trust a lien and security interest on the
Royalty Interest (as such term is defined in each of the Conveyances).
Net Revenue Interest
means the interest, stated as a decimal fraction, in Subject
Gas production from a Development Well that Assignor is entitled to take with respect to Assignors
Subject Interest in that Development Well and the associated Subject Lands, subject only to the
Permitted Production Burdens (treated in each case as a reduction in interest rather than as a
cost).
Non-Affiliate
means, for any specified Person, any other Person that is not an
Affiliate of the specified Person.
Notice
is defined in Section 14.01.
Party
, when capitalized, refers to Assignor or Assignee.
Parties
, when
capitalized, refers to Assignor and Assignee.
Permitted Encumbrances
means:
(a) the Permitted Production Burdens;
6
(b) contractual obligations arising under operating agreements, Farmout Agreements,
production sales contracts, leases, assignments, and other similar agreements that may
affect the properties or their titles;
(c) pooling and unitization agreements, declarations, orders, or Legal Requirements to
secure payment of amounts not yet delinquent;
(d) liens that arise in the normal course of operations, such as liens for unpaid
taxes, statutory liens securing unpaid suppliers and contractors, and contractual liens
under operating agreements, in any case, that are not yet delinquent or, if delinquent, are
being contested in good faith in the normal course of business;
(e) conventional rights of reassignment that obligate Assignor to reassign all or part
of any Subject Interest to a Third Person if Assignor intends to release or abandon such
interest before the expiration of the primary term or other termination of such interest;
(f) easements, rights-of-way, servitudes, permits, surface leases, surface use
restrictions, and other surface uses and impediments on, over, or in respect of the Subject
Interests that are not such as to interfere materially with the operation, value, or use of
the Subject Interests;
(g) rights reserved to or vested in any Governmental Authority to control or regulate
any Subject Interests in any manner, and all applicable Legal Requirements;
(h) the terms of the instruments creating the Subject Interests and Subject Lands;
(i) any Prior Reversionary Interests that affect the Subject Interests; and
(j) the Mortgages,
provided that such aforementioned encumbrances are of the type and nature customary in the oil and
gas industry, as conducted in the Appalachian Basin, and do not, alone or in the aggregate,
materially and adversely affect the operation, value, or use of any Subject Interest, and all to
the extent, and for so long as, such Permitted Encumbrances are otherwise valid and enforceable
against the Subject Interests, without recognizing, expressly or by implication, any rights or
interests in any Third Person or Governmental Authority that such Third Person or Governmental
Authority does not otherwise lawfully possess.
Permitted Production Burdens
means (a) all Production Burdens that affected the
Subject Interests when they were acquired by Assignor and (b) all Production Burdens that were
created by Assignor; in each case, provided that the total Permitted Production Burdens for any
Development Well shall not exceed twelve and one half percent (12.5%) (proportionately reduced to
Assignors Working Interest in such Development Well).
7
Perpetual PDP Conveyance
means that certain Perpetual Overriding Royalty Interest
Conveyance (PDP) by and between Assignor and the Trust dated effective as of the Effective Time.
Perpetual PUD Conveyance
means that certain Perpetual Overriding Royalty Interest
Conveyance (PUD) by and between Assignor and the Trust dated effective as of the Effective Time.
Person
means any natural person, corporation, partnership, trust, estate, or other
entity, organization, or association.
Private Investors
means the individuals or entities listed on Exhibit D attached
hereto.
Post Production Cost Charge
is defined in Section 3.02(c).
Prime Interest Rate
is defined in Section 5.02(b).
Prior Reversionary Interest
means any contract, agreement, Farmout Agreement, lease,
deed, conveyance or operating agreement that exists as of the Effective Time, that by the terms
thereof requires a Person to convey a part of the Subject Interest to another Person or to
permanently cease production of any Development Well including, any operating agreements, oil and
gas leases, coal leases, and other similar agreements or instruments affecting the Subject
Interests.
Production Burdens
means, with respect to any Subject Lands, Subject Interests, or
Subject Gas, all royalty interests, overriding royalty interests, production payments, net profits
interests, Prior Reversionary Interests and other similar interests that constitute a burden on,
are measured by, or are payable out of the production of Gas or the proceeds realized from the sale
or other disposition thereof.
Quarterly Payment Amount
is defined in Section 5.01(a).
Quarterly Payment Date
is defined in Section 5.01(c).
Reasonably Prudent Operator Standard
means the standard of conduct of a reasonably
prudent oil and gas operator in the AMI Area under the same or similar circumstances, acting with
respect to its own property and disregarding the existence of the Royalty Interest as a burden on
such property.
Reserved Amounts
means those amounts set aside from Assignee Proceeds by Assignor in
accordance with the provisions of Section 5.04 below.
Royalty Interest
is defined in Section 1.01.
Sales Price
means, for any Computation Period, the sale price received by Assignor
per Mcf or per MMBtu for Assignee Gas determined in accordance with the following provisions:
8
(a) sale refers to any sale, exchange, or other disposition of Assignee Gas for
value, the value of such Gas that is exchanged or otherwise disposed of for valuable
consideration being the sales price that Assignor receives for any such Gas sold pursuant to
Section 4.01 for any such Gas.
(b) amounts of money not paid to Assignor when due by any purchaser of Assignee Gas
(for example, Taxes or other amounts withheld or deducted by any such purchaser) shall not
be included within the Sales Price until actually received by, or credited to the account
of, Assignor;
(c) advance payments and prepayments for future deliveries of Assignee Gas shall be
included within the Sales Price, without interest, when that volume of Gas subject to the
advance payments or prepayments is actually produced;
(d) loan proceeds received by Assignor shall not be treated as a component of the
applicable Sales Price; and
(e) if a controversy or possible controversy exists, whether by reason of any statute,
order, decree, rule, regulation, contract, or otherwise, between Assignor and any purchaser
of Assignee Gas or any other Person, about the correct Sales Price of any Assignee Gas,
about deductions from the Sales Price, about Assignors right to receive the proceeds of any
sale of Assignee Gas, or about any other matter, then monies withheld by the purchaser or
deposited by it with an escrow agent or if Assignor receives any monies and promptly
deposits such monies with a Third Person escrow agent as a result of such controversy, such
monies shall not be included within the Sales Price until received by or returned to
Assignor, as applicable.
Subject Gas
means Gas in and under, and that may be produced, saved, and sold from a
Development Well, insofar and only insofar as such Gas is produced from the Target Formation,
subject to the following:
(a) Subject Gas excludes Gas that is:
(i) lost in the production, gathering, or marketing of Gas;
(ii) used (A) in conformity with ordinary and prudent operations on the Subject
Lands, including drilling and production operations with respect to such Development
Well or (B) in connection with plant operations (whether on or off the Subject
Lands) for processing or compressing the Subject Gas;
(iii) taken by a Third Person to recover costs, or some multiple of costs, paid
or incurred by that Third Person under any operating agreement, unit agreement, or
other agreement in connection with nonconsent operations conducted (or participated
in) by that Third Person;
(iv) retained by a Third Person for gathering, transportation, processing or
marketing services related to the Subject Gas in lieu of or in addition to cash
9
payment for such services, to the extent such agreement is permitted under this
Conveyance; and
(v) in excess of the percentage attributable to Assignors Net Share of Gas
taken by Assignor to recover costs, or some multiple of costs, paid or incurred by
Assignor under any operating agreement, unit agreement, or other agreement in
connection with nonconsent operations conducted (or participated in) by Assignor.
(b) Subject Gas includes Gas, not otherwise excluded above, that is sold or exchanged
for other Gas, or otherwise disposed of for valuable consideration.
Subject Interests
means Assignors undivided interests in the Subject Lands, whether
as lessee under Gas leases, as an owner of the Subject Gas (or the right to extract such Gas), or
otherwise, by virtue of which undivided interests Assignor has the right to conduct exploration,
drilling, development, and Gas production operations on the Subject Lands, or to cause such
operations to be conducted, or to participate in such operations by paying and bearing all or any
part of the costs, risks, and liabilities of such operations, to drill, test, complete, equip,
operate, and produce Development Wells to exploit the Gas. Subject Interests includes all
extensions of, and all renewal Gas leases covering, the Subject Lands (or any portion thereof)
obtained by Assignor, or any Affiliate thereof, within six (6) months after the expiration or
termination of any such Gas lease. Subject Interests do not include (a) Assignors rights to
substances other than Gas; (b) Assignors rights to Gas under contracts for the purchase, sale,
transportation, storage, processing, or other handling or disposition of Gas; (c) Assignors
interests in, or rights to Gas with respect to, pipelines, gathering systems, storage facilities,
processing facilities, or other equipment or facilities, other than the Development Wells; or (d)
any additional, or enlarged interests in the Development Wells, Subject Lands or Subject Gas,
except those reflected in
Exhibit A
, subject to Section 12.01, extensions and renewals
covered by the preceding sentence. Subject Interests may be owned or claimed by Assignor by
virtue of grants or reservations in deeds, Gas leases, or other instruments, or by virtue of
operating agreements, pooling or unitization agreements or orders, or other kinds of instruments,
agreements, or documents, legal or equitable, recorded or unrecorded. The Subject Interests are
subject to the Permitted Encumbrances.
Subject Lands
means the lands subject to or covered by the oil and gas leases
described in Exhibit A, insofar and only insofar as they cover the Target Formation, less and
except the Excluded Assets, and subject to the exceptions, exclusions and reservations set forth on
such Exhibit A, as such Exhibit may be modified pursuant to Section 12.01.
Target Formation
means what is generally referred to as the Marcellus Shale
formation and for purposes of this Conveyance is defined as that formation located from the bottom
of the Tully Formation (as seen by the ECA Kemsod #1 Well, API number 37-059-25209), at a depth of
7,881 feet, to the top of the Huntersville Chert Formation (as seen by the ECA Kemsod #1 Well, API
number 37-059-25209), at a depth of 8,204 feet.
10
Term PDP Conveyance
means that certain Term Overriding Royalty Interest Conveyance
(PDP) by and between Assignor and Assignee dated effective as of the Effective Time.
Taxes
is defined in Section 3.02(b).
Term
is defined in Section 1.02.
Termination Date
is defined in Section 1.02.
Third Person
means a Person other than Assignor or Assignee.
Transfer
including its syntactical variants, means any assignment, sale, transfer,
conveyance, or disposition of any property; provided, Transfer as used herein does not include the
granting of a security interest in Assignors interest in any property including the Subject
Interests or Subject Lands.
Trust
means the ECA Marcellus Trust I created by that certain Amended and Restated
Trust Agreement dated as of July 7, 2010.
Working Interest
means with respect to any Development Well, the interest, stated as
a decimal fraction, in and to such Development Well that is burdened with the obligation to bear
and pay costs and expenses of maintenance, development and operations on or in connection with such
Development Well.
ARTICLE III
CALCULATION OF ASSIGNEE GAS
Section 3.01 Definition
.
Assignee Gas
is that volume of Gas which Assignee is entitled to receive in any
Computation Period under this Conveyance, calculated in accordance with the following formula:
With respect to any Development Well:
Twenty-Five Percent (25%) X (Assignors Net Share of Gas produced during that
Computation Period).
For purposes of calculating Assignee Gas hereunder, if, during any Computation Period, Assignor is
unable to determine the precise volume of Gas produced, sold and attributable to Assignors Net
Share of Gas, then Assignor shall, in good faith and in accordance with the Reasonably Prudent
Operator Standard, estimate the volume of such Gas produced, sold and attributable to Assignors
Net Share of Gas for such Computation Period. Assignor shall adjust Assignors Net Share of Gas
upward or downward, as the case may be, in the next or subsequent Computation Periods to reflect
the difference between the estimated volume and the actual amount of Gas produced, sold and
attributable to Assignors Net Share of Gas in the Computation Period for which such estimate was
made.
Section 3.02 Chargeable Costs.
11
(a)
Definition
. Subject to Section 5.04 hereof, for each Computation Period,
Chargeable
Costs
means the sum of (i) Taxes, (ii) the Post Production Cost Charge and (iii) Excess Costs
from prior Computation Periods that (in each case) are actually paid or are deemed to have been
paid by Assignor during that Computation Period or paid or deemed to have been paid by Assignor
during a prior Computation Period and not included in any prior Computation Periods Chargeable
Costs. All costs associated with or paid or incurred in connection with the initial drilling,
testing, completing, and equipping for production of the Development Wells shall be borne solely by
Assignor and shall not be included as Chargeable Costs.
(b)
Taxes
.
Taxes
means general property, ad valorem, production, severance, sales,
gathering, windfall profit, excise, and other taxes, except income taxes, assessed or levied on or
in connection with the Subject Interests, the Royalty Interest, this Conveyance, production of
Subject Gas, Assignors Net Share of Gas, Assignee Gas (or the proceeds from the sale thereof), or
facilities or equipment on the Subject Lands that are used for the production, dehydration,
treatment, processing, gathering, or transportation of Subject Gas, or against Assignor as owner of
the Subject Interests or paid by Assignor on behalf of Assignee as owner of this Royalty Interest.
(c)
Post Production Cost Charge
.
Post Production Cost Charge
means those costs
incurred by Assignor (including, internal costs and Third Person costs) to gather, transport,
compress, process, treat, dehydrate and market the Subject Gas, including any costs as may be
required to make merchantable and to deliver such Gas to market; provided, any internal costs of
Assignor and its Affiliates that are part of the Post Production Cost Charge shall not materially
exceed the costs prevailing in the area where the Subject Gas is being produced for similar
services; and provided, further, with respect to marketing costs, only Non-Affiliate marketing fees
and costs shall be included, and marketing costs of Assignor and its Affiliates with respect to any
Subject Gas will be specifically excluded from the Post Production Cost Charge; and provided,
further, until the Drilling Obligation Completion Date, any such internal costs of Assignor and its
Affiliates (excluding costs for any fuel that is used in the compression process, including
equivalent electricity charges in instances where electric compressors are used) associated with
the Greene County Gathering System shall be limited to $0.52 per MMBtu of Assignee Gas gathered.
Any costs, fees or expenses that are properly charged or allocated to Assignee Gas pursuant to
another provision of this Conveyance (including, as provided for in the definition of Subject Gas)
shall not be included as part of the Post Production Cost Charge.
(d)
Operating and Drilling Costs
. All costs associated with or paid or incurred in connection
with the drilling, testing, completing, developing and operating the Development Wells or
associated with the Subject Interests other than Taxes and Post Production Cost Charges shall be
borne solely by Assignor and shall not be included as Chargeable Costs.
Section 3.03 Assignee Proceeds
.
Assignee Proceeds
means the volume of Assignee Gas (on an Mcf basis or MMBtu basis, as
applicable) for the applicable Computation Period multiplied by the relevant Sales Price less the
Chargeable Costs associated with such Assignee Gas for the applicable Computation Period.
12
ARTICLE IV
MARKETING OF ASSIGNEE GAS
Section 4.01 Rights and Duties Regarding Sale of Assignee Gas
. Assignor shall market or shall cause to be marketed Assignors Net Share of Gas (including
Assignee Gas) in good faith and in accordance with the Reasonably Prudent Operator Standard and
Section 4.02(d). Assignor shall use its reasonable efforts in connection with any sale of
Assignors Net Share of Gas (including Assignee Gas) to obtain, as soon as reasonably practicable,
full payment for such Gas; provided, however, that it shall not be considered a breach of
Assignors marketing duty or standard of conduct for Assignor to market such Gas to an Affiliate of
Assignor, so long as Assignor does not market such Gas at a volume-weighted average price lower
than the volume-weighted average price upon which Assignor pays royalties to the owners of the
other royalty interests in the Subject Gas, save and excepting Chargeable Costs provided for in
Article III hereof.
Section 4.02 Assignees Agent and Representative.
(a)
Appointment
. Assignee appoints Assignor as Assignees agent and representative to market
and deliver or cause to be marketed and delivered all Assignee Gas and to collect and receive all
payments therefrom under any gas purchase agreement or contract without deduction (except to the
extent Chargeable Costs are deducted for any Computation Period). The appointment of Assignor as
Assignees agent and representative for such purpose is a material item of consideration to the
Parties in connection with the execution and delivery of this Conveyance. Assignee may not remove
Assignor from office as Assignees agent and representative, except for cause upon a material
breach by Assignor of its duties to Assignee under this Conveyance.
(b)
Duties and Powers
. As Assignees agent and representative, Assignor shall receive all
payments for the sale of Assignee Gas and account to Assignee, receive and make all communications
with the purchaser of such Gas, and otherwise act and speak for Assignee in connection with the
sale of Assignee Gas. Third Persons may rely conclusively on the authority of Assignor to market
Assignee Gas, and with respect to Third Persons, Assignee shall be conclusively bound by the acts
of Assignor in connection with the sale of Assignee Gas. It shall not be necessary for Assignee to
join Assignor in the execution of any division order, transfer order, or other instrument,
agreement, or document relating to the sale of Assignee Gas. Third Persons may pay all Assignee
Proceeds for the sale of such Gas directly to Assignor, without the necessity of any joinder by or
consent of Assignee or any inquiry into the use or disposition of such proceeds by Assignor.
(c)
Prohibited Acts
. Assignor may not act for or bind Assignee on any matter, except the
marketing and delivery of Assignee Gas under this Article IV.
(d)
Standard of Conduct
. In exercising its powers and performing its duties as Assignees
agent and representative, Assignor shall act in good faith and in accordance with the Reasonably
Prudent Operator Standard. It shall not be a violation of such standard of conduct for Assignor
(i) to sell Assignors Net Share of Gas or Assignee Gas to an Affiliate pursuant to any gas
purchase agreement or contract, or (ii) to delegate some or all of Assignors
13
duties as Assignees
agent and representative to its Affiliates (so long as such Affiliates perform in good faith and in
accordance with the Reasonably Prudent Operator Standard), with Assignor remaining liable to
Assignee for the performance of such Affiliates.
(e)
Termination of Authority
. Assignor may not resign as Assignees agent and representative
without the prior written consent of Assignee, except that Assignor may resign as Assignees agent
and representative without such consent with respect to any Subject Interests assigned, sold,
transferred, or conveyed by Assignor in accordance with the terms of this Conveyance. If such sale
is made subject to the Royalty Interest, Assignor must cause the purchaser to assume the duties of
Assignees agent and representative with respect to the Subject Interests acquired by that
purchaser and to be bound by the provisions of this Article IV.
Section 4.03 Delivery of Subject Gas
. Assignor (whether or not it is serving as Assignees agent and representative) shall deliver or
cause to be delivered Assignors Net Share of Gas (including Assignee Gas) to the purchasers
thereof into the pipelines to which the Development Wells producing such Gas are connected.
Section 4.04 Processing
. Assignor may process Assignors Net Share of Gas (including Assignee Gas) to remove liquid and
liquefiable hydrocarbons and may commit any of the Subject Interests (including the Royalty
Interest attributable thereto) to an agreement for processing minerals (pursuant to which, for
example, the plant owner or operator receives a portion of the Subject Gas or plant products
therefrom or proceeds of the sale thereof as a fee for processing), so long as Assignor enters into
such processing arrangements in good faith and in accordance with the Reasonably Prudent Operator
Standard. Assignee shall be bound by such arrangements, shall permit Assignors Net Share of Gas
(including Assignee Gas) to be processed by Assignor or its contractor, and shall have no right to
any liquid or liquefiable hydrocarbons obtained by such processor or to the proceeds from the sale
thereof. Assignee shall not, however, be personally liable for any costs or risks associated with
such processing operations, but Assignee shall indirectly suffer the Btu reduction and volume
reductions associated with processing through corresponding reductions in the Btu content and
volumes of Assignee Gas.
ARTICLE V
PAYMENT
Section 5.01 Obligation to Pay.
(a)
Quarterly Payment Amount
. On each Quarterly Payment Date, Assignor shall prepare, in good
faith, an estimate of the cash to be paid to Assignee from (A) all
of the proceeds (including any interest earned thereon and payable to Assignee pursuant to
Section 5.01(b) or Section 5.01(e)) to be paid to Assignee from the sale of Assignee Gas produced
during such Computation Period; plus (B) all of the proceeds (including any interest earned thereon
and payable to Assignee pursuant to Section 5.01(b) or Section 5.01(e)) to be paid to Assignee from
the sale of Assignee Gas, if any, produced during any prior Computation Periods, to the extent not
previously taken into account for purposes of determining a Quarterly Payment Amount for any prior
Computation Periods, as such sum may be (x) increased or decreased as a result of any adjustments
to the estimates that were previously made pursuant to
14
this Section 5.01(a) for any prior
Computation Periods that are necessary to accurately report the proceeds from the sale of Assignee
Gas for such prior Computation Periods, (y) increased by the amount of any damages payable to
Assignee under Section 1.04(b) during the most recently completed Computation Period prior to such
Quarterly Payment Date and (z) decreased by any Reserved Amounts as provided in Section 5.04 below
(
Quarterly Payment Amount
).
(b)
The Obligation
. After each Computation Period and on or before the Quarterly Payment Date
for that Computation Period, Assignor shall tender to Assignee the Quarterly Payment Amount with
respect to the applicable Computation Period. With respect to the final Computation Period,
Assignor shall tender to Assignee all unexpended Reserved Amounts (together with any interest
accrued thereon).
(c)
Quarterly Payment Date
.
Quarterly Payment Date
for each Computation Period
means the thirtieth (30
th
) day after the end of such Computation Period or, for the last
Computation Period, the thirtieth (30
th
) day after the Termination Date. If such day is
not a Business Day, the Quarterly Payment Date shall be the next Business Day.
(d)
No Segregated Account
. All amounts received by Assignor from the sale of Assignors Net
Share of Gas and Assignee Gas, as applicable, for any Computation Period shall be held by Assignor
in one of its general bank accounts and Assignor will not be required to maintain a segregated
account for such funds.
(e)
Disputed Proceeds
. If Assignor receives any amounts of money from the sale of Assignee
Gas that is subject to controversy or, in the reasonable opinion of Assignor, possible controversy,
Assignor shall promptly deposit the money with a Third Person escrow agent in a segregated
interest-bearing account. Such amount shall not be treated as a portion of Assignee Proceeds so
long as it remains with such escrow agent, but shall be treated as a portion of Assignee Proceeds,
along with the accrued interest, when received from such escrow agent and paid over to Assignee.
Section 5.02 Interest on Past Due Payments.
(a)
Obligation to Pay
. Any Assignee Proceeds or other amounts of money not paid by Assignor
to Assignee when due shall bear, and Assignor will pay, interest at the Prime Interest Rate on the
overdue amount commencing on the sixth (6
th
) day after such due date until such amount
is paid.
(b)
Definition
.
Prime Interest Rate
means the lesser of (i) the rate of interest
per annum publicly announced from time to time by The Bank of New York Mellon Trust Company, N.A.
as its prime rate in effect at its principal office in New York City (each change in the Prime
Rate to be effective on the date such change is publicly announced), with the understanding that
such banks prime rate may be one of several base rates, may serve as a basis upon which
effective rates are from time to time calculated for loans making reference thereto, and may not be
the lowest of such banks base rates or (ii) the maximum rate of interest permitted under
applicable Legal Requirement.
Section 5.03 Overpayments and Refunds.
15
(a)
Overpayments
. If Assignor ever pays Assignee more than the amount of money then due and
payable to Assignee under this Conveyance, Assignee shall not be obligated to return the
overpayment, but Assignor may at any time thereafter deduct from Assignee Proceeds and retain for
its own account an amount equal to the overpayment.
(b)
Refunds
. If Assignor is ever legally obligated to pay any Third Person, including any gas
purchaser or Governmental Authority, any refund, interest, penalty, or other amount of money,
because any payment of Assignee Proceeds received by Assignor for the account of Assignee exceeded,
or allegedly exceeded, the amount due or lawful under any applicable contract, Legal Requirement,
or other obligation, Assignor may thereafter deduct from Assignee Proceeds and retain for its own
account an amount equal to such payment.
Section 5.04 Reserved Amounts
. At any time and from time to time under this Conveyance and in accordance with the Reasonably
Prudent Operator Standard, Assignor may set aside from Assignee Proceeds amounts determined in good
faith to economically accrue for a Computation Period with respect to known or anticipated costs or
liabilities (the
Reserved Amounts
) which may be incurred in future Computation Periods
with respect to Taxes assessed or levied with respect to a time period in excess of a calendar
quarter. As Reserved Amounts are expended by Assignor to cover applicable Taxes in a Computation
Period, Chargeable Costs shall be reduced in such Computation Period by an amount equal to the
Reserved Amounts so expended. In the event that Assignor overestimates the cost of any Taxes for
which it has set aside Reserved Amounts, the excess amount shall be applied against any other
Chargeable Costs (which shall be reduced by an amount equal to such excess Reserved Amounts so
expended), or paid as Assignee Proceeds on the Quarterly Payment Date following the Computation
Period in which it is determined that Assignor has set aside excess Reserved Amounts.
ARTICLE VI
RECORDS AND REPORTS
Section 6.01 Books, Records, and Accounts.
(a)
Obligation to Maintain
. Assignor shall maintain true and correct books, records, and
accounts of (i) all transactions required or permitted by this Conveyance and (ii) the financial
information necessary to effect such transactions, including the financial information needed to
calculate each installment of Assignee Proceeds.
(b)
Right of Inspection
. Assignee or its representative, at Assignees expense, may inspect
and copy such books, records, and accounts in the offices of Assignor during normal business hours
and upon reasonable notice.
Section 6.02 Statements
.
(a)
Quarterly Statements
. On each Quarterly Payment Date, Assignor shall deliver to Assignee
a statement showing the computation of Assignee Gas and Assignee Proceeds for the preceding
Computation Period.
(b)
Annual Statements
. On the first Quarterly Payment Date after the end of each calendar
year and on the Quarterly Payment Date after the Termination Date, such
16
statement shall also show
the computation of Assignee Proceeds for the preceding calendar year or, for the Quarterly Payment
Date after the Termination Date, for the portion of the calendar year from 7:00 a.m. Eastern Time
on January 1 of that same year through the Termination Date.
(c)
Contents of Statements
. Without limiting the generality of the foregoing provisions in
this Section 6.02, each statement delivered by Assignor to Assignee pursuant to this Section 6.02
shall state, for the relevant period, (i) the total volumes of Subject Gas produced from the
Subject Lands, (ii) the total volumes of the Assignors Net Share of Gas, (iii) the total volumes
of Assignee Gas, (iv) the applicable Sales Price, (v) the amount of Assignee Proceeds due and
payable for the relevant period and (vi) the amounts of money, if any, due and payable by any
purchaser of the Subject Gas or Assignee Gas, the nonpayment of which resulted in the payment to
Assignee of less than Assignee Proceeds for the relevant period. Notwithstanding the preceding,
Assignor shall only be required to provide the preceding information on an aggregate basis.
Section 6.03 Assignees Exceptions to Quarterly Statements
. If Assignee takes exception to any item or items included in any quarterly statement required by
Section 6.02, Assignee must notify Assignor in writing within sixty (60) days after Assignees
receipt of such quarterly statement. Such Notice must set forth in reasonable detail the specific
charges complained of and to which exception is taken or the specific credits which should have
been made and allowed. Adjustments shall be made for all complaints and exceptions that are
justified. Notwithstanding anything to the contrary herein, all matters reflected in Assignors
statements for the preceding calendar year (or portion thereof) that are not objected to by
Assignee in the manner provided by this Section 6.03 shall be deemed correct as rendered by
Assignor to Assignee.
Section 6.04 Other Information.
(a)
Disclosure
. At Assignees request, subject to applicable restrictions on disclosure and
transfer of information, Assignor shall give Assignee and its designated representatives reasonable
access in Assignors office during normal business hours to all geological, Development Well, and
production data in Assignors possession or Assignors Affiliates possession, relating to
operations on the Subject Interests.
(b)
Disclaimer of Warranties and Liability
. Assignor makes no representations or warranties
about the accuracy or completeness of any such data, reports, or studies and shall have no
liability to Assignee or any other Person resulting from such data, studies, or reports.
(c)
No Attribution
. Assignee shall not attribute to Assignor or to the consulting engineers
any reports or studies or the contents thereof in any securities filings or reports to Assignee.
(d)
Confidentiality
. All information furnished to Assignee and its designated representatives
pursuant to this Section 6.04 is confidential and for the sole benefit of Assignee and shall not be
disclosed by Assignee or its designated representatives to any other Person, except to the extent
that such information (i) is required in any report, statement or testimony
17
submitted to any
Governmental Authority having or claiming to have jurisdiction over Assignee or submitted to bank
examiners or similar organizations or their successors, (ii) is required in response to any summons
or subpoena or in connection with any litigation, (iii) is believed to be required in order to
comply with any applicable Legal Requirement to Assignee, (iv) was publicly available or otherwise
known to the recipient at the time of disclosure or (v) subsequently becomes publicly available
other than through any act or omission of the recipient; provided, however, with respect to the
disclosures with respect to items (i), (ii) and (iii) above, Assignee will notify Assignor prior to
any such disclosure in order to provide Assignor an opportunity to seek to limit any such required
disclosure.
ARTICLE VII
NO LIABILITY OF ASSIGNEE
Assignee shall not be personally liable or responsible under this Conveyance for any cost,
risk, liability, or obligation associated in any way with the ownership or operation of the Subject
Lands, the Subject Interests, the Development Wells, or the Subject Gas. The foregoing sentence
does not restrict the right of Assignor to deduct Chargeable Costs or Reserved Amounts in
calculating the volumes of Assignee Gas or Assignee Proceeds.
ARTICLE VIII
OPERATIONS
Section 8.01 Standards of Conduct
. Except as otherwise specifically provided in this Conveyance, Assignor shall (a) operate and
maintain the Subject Interests and (b) make elections under each applicable lease, operating
agreement, unit agreement, contract for development, and other similar instrument or agreement
(including elections concerning abandonment of any Development Well or release of any Subject
Interest) in good faith and in accordance with the Reasonably Prudent Operator Standard.
Section 8.02 Abandonment of Properties
. Nothing in this Conveyance shall obligate Assignor to continue to operate any Development Well
or to operate or maintain in force or attempt to maintain in force any Subject Interest when such
Development Well or Subject Interest ceases to produce, or Assignor determines, in accordance with
Section 8.01 above, that such Development Well or Subject Interest is not capable of producing Gas
in paying quantities. The expiration of a Subject Interest in accordance with the terms and
conditions applicable thereto shall not be considered to be a voluntary surrender or abandonment
thereof.
Section 8.03 Insurance
. Assignor may, but is not required by this Conveyance to, carry insurance on any Subject Interest
or Development Well, or covering any risk with respect thereto. Assignor shall never be liable to
Assignee on account of any injury or loss to the Subject Interests or any Development Well, whether
insurable or uninsurable, not covered by insurance. If Assignor elects to carry insurance, the
premiums shall not be included in Chargeable Costs, and Assignor shall retain all proceeds of such
insurance.
18
ARTICLE IX
POOLING AND UNITIZATION
Section 9.01 Pooling of Subject Interests
. Certain Subject Interests have been, or may have been, heretofore pooled and unitized for the
production of Gas. Such Subject Interests are and shall be subject to the terms and provisions of
the applicable pooling and unitization agreements, and the Royalty Interest in each pooled or
unitized Subject Interest shall apply to and affect only the Gas produced from such units that
accrues to such Subject Interest under and by virtue of the applicable pooling and unitization
agreements.
Section 9.02 Pooling and Unitization
.
(a)
Right to Pool
. Assignor has the exclusive executive right and power (as between Assignor
and Assignee) to pool or unitize any Subject Interest and to alter, change, amend, or terminate any
pooling or unitization agreements heretofore or hereafter entered into, as to all or any part of
the Subject Lands, as to any one or more of the formations or horizons, and as to any Gas, upon
such terms and provisions as Assignor shall in its sole discretion deem appropriate.
(b)
Effect of Pooling
. If and whenever through the exercise of such right and power, or
pursuant to any Legal Requirement now existing or hereafter enacted or promulgated, any Subject
Interest is pooled or unitized in any manner, the Royalty Interest, insofar as it affects
such Subject Interest, shall also be pooled and unitized, and such Royalty Interest in such
Subject Interest shall apply to and affect only the Gas production that accrues to such Subject
Interest under and by virtue of the applicable pooling and unitization agreement or order. It
shall not be necessary for Assignee to agree to, consent to, ratify, confirm or adopt any exercise
of pooling or unitization of any Subject Interest by Assignor.
ARTICLE X
GOVERNMENT REGULATION
Section 10.01 Legal Requirements
. All obligations of Assignor under this Conveyance are, and shall be, subject to all applicable
Legal Requirements and the instruments, documents, and agreements creating the Subject Interests.
Section 10.02 Filings
. Assignor shall use its reasonable discretion in making filings for itself and on behalf of
Assignee with any Governmental Authority having jurisdiction with respect to matters affecting the
Subject Interests, the Subject Lands, or the Subject Gas.
ARTICLE XI
ASSIGNMENT AND SALE OF SUBJECT INTERESTS
Section 11.01 Assignment by Assignor Subject to Royalty Interest
.
(a)
Right to Sell
. Subject to Section 11.05, Assignor may from time to time Transfer,
mortgage, or pledge its interest in the Development Wells, the Subject Interests, or any part
thereof or undivided interest therein, subject to the Royalty Interest and this Conveyance.
Assignor shall cause the assignee, purchaser, transferee, grantee, mortgagee, or pledgee of any
19
such transaction to take the affected Subject Interests subject to the Royalty Interest and this
Conveyance and, from and after the actual date of any such Transfer, to assume Assignors
obligations under this Conveyance with respect to such Subject Interests.
(b)
Effect of Sale
. From and after the actual date of any such Transfer by Assignor, Assignor
shall be relieved of all obligations, requirements, and responsibilities arising under this
Conveyance with respect to the Subject Interests Transferred, except for those that accrued prior
to such date.
(c)
Allocation of Consideration
. Assignee is not entitled to receive any share of the sales
proceeds received by Assignor in any transaction permitted by this Section 11.01.
(d)
Separate Interest
. Effective on the effective date of any Transfer of any Subject
Interest subject to this Section 11.01, Assignee Gas and Assignee Proceeds shall thereafter be
computed separately with respect to such Subject Interests, and the assignee, buyer,
transferee, or grantee of such Subject Interests shall thereafter serve as Assignees agent
and representative under Article IV with respect to such interests and shall pay all corresponding
Assignee Proceeds directly to Assignee.
Section 11.02 Sale and Release of Properties
.
(a)
Transfer
. Subject to Section 11.05, Assignor may from time to time, Transfer the
Development Wells, the Subject Interests, or any part thereof or undivided interest therein, free
of the Royalty Interest and this Conveyance provided that the aggregate Fair Value of all Royalty
Interests released with respect to the Assignee Conveyances during any twelve (12) month period
shall not exceed $5,000,000 or as provided for in Section 12.02.
(b)
Payments
. In connection with any Transfer pursuant to this Section 11.02, Assignor shall
remit to Assignee an amount equal to the Fair Value of the Royalty Interest being released.
Assignor shall make such payment to Assignee on the Quarterly Payment Date for the Computation
Period in which Assignor receives the payment with respect to any such Transfer of the Subject
Interest.
(c)
Release
. In connection with any Transfer provided for in Section 11.02(a), Assignee
shall, on request, execute, acknowledge, and deliver to Assignor a recordable instrument
(reasonably acceptable to Assignor) that releases the Royalty Interest with respect to the
Development Well and the related Subject Interests and Subject Lands being Transferred.
(d)
Effect of Sale
. From and after the actual date of any such Transfer by Assignor, Assignor
and any assignee, purchaser, transferee or grantee of such Subject Interest shall be relieved of
all obligations, requirements, and responsibilities arising under the Royalty Interest or this
Conveyance with respect to the Development Well or Subject Interests Transferred, except for those
that accrued prior to such date.
Section 11.03 Release of Other Properties
.
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(a)
Prior Reversionary Interests
. In the event that any Person notifies Assignor that,
pursuant to a Prior Reversionary Interest, Assignor is required to convey any of the Subject
Interests to such Person or cease production from any Development Well, Assignor may provide such
conveyance with respect to such Subject Interest or permanently cease Production from any such
Development Well.
(b)
Payments
. In the event that Assignor receives compensation pursuant to any Prior
Reversionary Interest in connection with any conveyance or permanent cessation of production from
any Development Well, Assignor shall remit to Assignee an amount equal to the product of (x) such
amount actually received by Assignor with respect to such reconveyance or permanent cessation of
production and (y) a fraction the numerator of which is (A) the Fair Value of the Royalty Interest
released and the denominator of which is (B) the Fair Value of the
Subject Interest that is being released. Assignor shall make such payment to Assignee on the
Quarterly Payment Date for the Computation Period in which Assignor receives such payment.
(c)
Release for Prior Reversionary Interests
. In connection with any conveyance or permanent
cessation of production provided for in Section 11.03(a) above, Assignee shall, on request,
execute, acknowledge, and deliver to Assignor a recordable instrument (reasonably acceptable to
Assignor) that releases the Royalty Interest and this Conveyance with respect to any such
Development Well or Subject Interests.
(d)
Effect of Prior Reversionary Interests
. From and after the actual date of any conveyance
or permanent cessation of production provided for in Section 11.03(a), Assignor and any assignee,
purchaser, transferee or grantee of such Subject Interest shall be relieved of all obligations,
requirements, and responsibilities arising under the Royalty Interest or this Conveyance with
respect to the Subject Interests Transferred, except for those that accrued prior to such date.
Section 11.04 Farmouts
.
(a)
Farmout
. Assignor may from time to time enter into Farmout Agreements with Third Persons
with respect to the Subject Interests. In the event that Assignor enters into any Farmout
Agreement with a Third Person, the Royalty Interest and this Conveyance shall only burden
Assignors retained interest in the Subject Interest after giving effect to any interest in the
Subject Interest that a counterparty to the Farmout Agreement may earn under such Farmout
Agreement. Only the Assignors retained interest in the Subject Interest will count towards the
Assignors obligation to drill Development Wells under the Development Agreement.
(b)
Release
. In connection with Assignor entering into any Farmout Agreement, Assignee shall,
upon request of Assignor, execute, acknowledge, and deliver to Assignor a recordable instrument
(reasonably acceptable to Assignor) that releases the Royalty Interest and this Conveyance with
respect to the Subject Interests being transferred pursuant to such Farmout Agreement; provided,
the Royalty Interest shall still burden the Subject Interest retained by Assignor.
21
Section 11.05 Transfer of Subject Lands
. Except as provided for in Section 12.02, Assignor will not Transfer any Development Well or any
of the Subject Interests comprising a part of the Subject Lands pursuant to Sections 11.01 and
11.02 prior to the Drilling Obligation Completion Date.
Section 11.06 Change in Ownership
.
(a)
Obligation to Give Notice
. No change of ownership or of the right to receive payment of
the Royalty Interest, or of any part thereof, however accomplished, shall bind
Assignor until notice thereof is furnished to Assignor by the Person claiming the benefit
thereof, and then only with respect to payments made after such Notice is furnished.
(b)
Notice of Sale
. Notice of sale, transfer, conveyance, or assignment shall consist of a
certified copy of the recorded instrument accomplishing the same.
(c)
Notice of Other Changes of Ownership
. Notice of change of ownership or of the right to
receive payment accomplished in any other manner (
e.g.
, by dissolution of Assignee) shall consist
of certified copies of recorded documents and complete proceedings legally binding and conclusive
of the rights of all Persons.
(d)
Effect of Lack of Notice
. Until such Notice accompanied by such documentation is
furnished to Assignor in the manner provided above, Assignor may, at Assignors election, either
(i) continue to pay or tender all sums payable on the Royalty Interest in the same manner provided
in this Conveyance, precisely as if no such change in interest or ownership or right to receive
payment had occurred or (ii) suspend payment of Assignee Proceeds without interest until such
documentation is furnished.
(e)
Effect of Nonconforming Notices
. The kinds of Notice provided by this Section 11.03(d)
shall be exclusive, and no other kind, whether actual or constructive, shall bind Assignor.
Section 11.07 One Payee
. Assignor shall never be obligated to pay Assignee Proceeds to more than one Person. If more
than one Person is ever entitled to receive payment of any part of Assignee Proceeds, Assignor may
suspend payments of all Assignee Proceeds until the concurrent owners or claimants of the Royalty
Interest or the right to receive payment of Assignee Proceeds appoint one Person in writing to
receive all payments of Assignee Proceeds on their behalf. Assignor may thereafter conclusively
rely upon the authority of that Person to receive payments of Assignee Proceeds and shall be under
no further duty to inquire into the authority or performance of such Person.
Section 11.08 Rights of Mortgagee
. If Assignee executes a mortgage or deed of trust covering all or part of the Royalty Interest,
the mortgagees or trustees therein named or the holders of any obligation secured thereby shall be
entitled, to the extent that such mortgage or deed of trust so provides, to exercise the rights,
remedies, powers, and privileges conferred upon Assignee by this Conveyance and to give or withhold
all consents required to be obtained from Assignee. This Section 11.08 shall not be deemed or
construed to impose upon Assignor any obligation or liability undertaken by Assignee under such
mortgage or deed of trust or under the obligation secured thereby.
22
ARTICLE XII
AMI AREA
Section 12.01 Additional Leases
. In the event that Assignor acquires any additional leases (
Additional Lease
) other
than the Subject Interests in the AMI Area prior the Drilling Obligation Completion Date, (i)
Assignor shall be subject to all of the limitations hereunder and under the Development Agreement
with respect to such Additional Leases(s), and (ii), subject to Section 12.03, at Assignors
option, Assignor and Assignee shall execute, acknowledge, and deliver an instrument that amends
this Conveyance so that such Additional Lease will be subject to the Royalty Interest and be part
of the Subject Interests and Subject Lands hereunder; provided that in no event shall Assignor
extend any well into such Additional Lease(s) unless and until this Conveyance is amended to
include such Additional Leases(s) as part of the Subject Interests.
Section 12.02 Exchange of Subject Lands
. Subject to Section 12.03, Assignor may, at its option at any time prior to the Drilling
Obligation Completion Date, cause Assignee to execute, acknowledge, and deliver to Assignor a
recordable instrument (reasonably acceptable to Assignor) that releases from the Royalty Interest
and this Conveyance portions of the Subject Interests in connection with Assignors exchange of
such Subject Interests for other properties within the AMI, which such other properties will made
subject to the Royalty Interests in this Conveyance (such other properties being hereafter referred
to as
Exchange Acreage
).
Section 12.03 Limitations
. In no event, however, may any Additional Lease be made subject to the Royalty Interest and this
Conveyance pursuant to Section 12.01, or any exchange be effected pursuant to Section 12.02 unless
Assignor certifies to Assignee that (a) no Development Well will be spud on the Additional Lease or
the Exchange Acreage, (b) the aggregate acreage attributable to all Additional Leases and all
Exchange Acreage will not exceed 5% of the Subject Lands as such exist as of the date of this
Conveyance, (c) if the Additional Lease and Exchange Acreage were treated as Subject Lands, the
portion of the Subject Lands that covers and pertains to Subject Gas in, under and that may be
produced from all horizontal wells to be drilled by Assignor pursuant to the Drilling Obligation
that extend into Additional Leases and Exchange Acreage and that may be retained by Assignee
pursuant to Section 1.05 hereof following the Drilling Obligation Completion Date will not
constitute more than 5% of the Subject Lands that cover and pertain to Subject Gas in, under and
that may be produced from all Development Wells (including horizontal wells that extend into
Additional Leases and Exchange Acreage) and that may be retained by Assignee pursuant to Section
1.05 hereof following the Drilling Obligation Completion Date, (d) in the case of an Additional
Lease, the reserve profile of such Additional Lease is consistent with reserve profiles of other
portions of the Subject Interests that would, but for the acquisition of the Additional Lease, be
tapped from a Development Well having the entire length of all of its perforated laterals located
within the Subject Interests and (e) in the case of an exchange pursuant to Section 12.02, the
reasonably projected quantity of proved undeveloped reserves attributable to the Exchange Acreage
does not significantly differ from the reasonably projected quantity of proved undeveloped reserves
attributable to the portion of the Subject Interests to be given in exchange therefor.
Section 12.04 No Drainage
. Subsequent to the Drilling Obligation Completion Date, neither Assignor nor any of its
Affiliates shall drill any Gas well that will have a perforated
23
segment that will be within five
hundred feet (500) of any perforated interval of any Development Well which produces oil or gas
from the Target Formation.
ARTICLE XIII
FORCE MAJEURE
Section 13.01 Nonperformance
. Assignor shall not be responsible to Assignee for any loss or damage to Assignee resulting from
any delay in performing or failure to perform any obligation under this Conveyance (other than
Assignors obligation to make payments of Assignee Proceeds to Assignee) to the extent such failure
or delay is caused by Force Majeure.
Section 13.02 Force Majeure
.
Force Majeure
means any of the following, to the extent they are not caused solely by
the breach by Assignor of its duty to perform certain obligations under this Conveyance in
accordance with the Reasonably Prudent Operator Standard:
(a) act of God, fire, lightning, landslide, earthquake, storm, hurricane, hurricane warning,
flood, high water, washout, tidal wave, or explosion;
(b) strike, lockout, or other similar industrial disturbance, act of the public enemy, war,
military operation, blockade, insurrection, riot, epidemic, arrest or restraint of Governmental
Authority or people, or national emergency;
(c) the inability of the Assignor to acquire, or the delay on the part of any Third Person
(other than an Affiliate of the Assignor) in acquiring, materials, supplies, machinery, equipment,
servitudes, right-of-way grants, easements, permits, or licenses, or approvals or authorizations by
regulatory bodies needed to enable such Party to perform hereunder;
(d) any breakage of or accident to machinery, equipment, or lines of pipe, the repair,
maintenance, improvement, replacement, alteration to a plant or line of pipe or related facility,
the testing of machinery, equipment or line of pipe, or the freezing of a line of pipe;
(e) any Legal Requirement or the affected Partys compliance therewith; or
(f) any other cause, whether similar or dissimilar to the causes enumerated in (a) through (e)
above, not reasonably within the control of Assignor.
Section 13.03 Force Majeure Notice
. Assignor will give Assignee a Notice of each Force Majeure as soon as reasonably practicable
after the occurrence of the Force Majeure.
Section 13.04 Remedy
. Assignor will use its reasonable efforts to remedy each Force Majeure and resume full
performance under this Conveyance as soon as reasonably practicable, except that the settlement of
strikes, lockouts, or other labor disputes shall be entirely within the discretion of Assignor.
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ARTICLE XIV
NOTICE
Section 14.01 Definition
.
Notice
means any notice, advice, invoice, demand, or other communication required or
permitted by this Conveyance.
Section 14.02 Written Notice
. Except as otherwise provided by this Conveyance, each Notice shall be in writing.
Section 14.03 Methods of Giving Notice
. Notice may be given by any reasonable means, including telecopier, hand delivery, overnight
courier, and United States mail.
Section 14.04 Charges
. All Notices shall be properly addressed to the recipient, with all postage and other charges
being paid by the Party giving Notice.
Section 14.05 Effective Date
. Notice shall be effective when actually received by the Party being notified.
Section 14.06 Addresses
. The addresses of the Parties for purposes of Notice are the addresses in the Introduction to
this Conveyance.
Section 14.07 Change of Address
. Either Party may change its address to another address within the continental United States by
giving ten (10) days Notice to the other Party.
ARTICLE XV
OTHER PROVISIONS
Section 15.01 Successors and Assigns
. Subject to the limitation and restrictions on the assignment or delegation by the Parties of
their rights and interests under this Conveyance, this Conveyance binds and inures to the benefit
of Assignor, Assignee and their respective successors, assigns, and legal representatives.
Section 15.02 Governing Law
.
WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PRINCIPLES THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION, THIS CONVEYANCE SHALL BE CONSTRUED UNDER AND
GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA (EXCLUDING CHOICE OF LAW AND CONFLICT OF
LAW RULES).
Section 15.03 Construction of Conveyance
. In construing this Conveyance, the following principles shall be followed:
(a) no consideration shall be given to the captions of the articles, sections, subsections, or
clauses, which are inserted for convenience in locating the provisions of this Conveyance and not
as an aid in its construction;
(b) no consideration shall be given to the fact or presumption that one Party had a greater or
lesser hand in drafting this Conveyance;
25
(c) the word includes and its syntactical variants mean includes, but is not limited to
and corresponding syntactical variant expressions;
(d) a defined term has its defined meaning throughout this Conveyance, regardless of whether
it appears before or after the place in this Conveyance where it is defined;
(e) the plural shall be deemed to include the singular, and vice versa, unless the content
otherwise requires; and
(f) each exhibit, attachment, and schedule to this Conveyance is a part of this Conveyance,
but if there is any conflict or inconsistency between the main body of this Conveyance and any
exhibit, attachment, or schedule, the provisions of the main body of this Conveyance shall prevail.
Section 15.04 No Waiver
. Failure of either Party to require performance of any provision of this Conveyance shall not
affect either Partys right to require full performance thereof at any time thereafter, and the
waiver by either Party of a breach of any provision hereof shall not constitute a waiver of a
similar breach in the future or of any other breach or nullify the effectiveness of such provision.
Section 15.05 Relationship of Parties
. This Conveyance does not create a partnership, mining partnership, joint venture, or
relationship of trust or agency (except with respect to Assignors agency relationship with respect
to those matters set forth in Articles IV and V above) between the Parties.
Section 15.06 Proportionate Reduction
. In the event of failure or deficiency in title to any Development Well or Subject Interest
(other than burdens in excess of twelve and one half percent (12.5%)), the portion of the Subject
Gas production attributable thereto shall be reduced in the same proportion that such Development
Well or Subject Interest is reduced by such failure or deficiency. Such proportionate reduction of
the Royalty Interest shall not limit Assignees rights with respect to such reduction under Section
1.04.
Section 15.07 Further Assurances
. Each Party shall execute, acknowledge, and deliver to the other Party all additional instruments
and other documents reasonably required to describe more specifically any interests subject hereto,
to vest more fully in Assignee the Royalty Interest conveyed (or intended to be conveyed) by this
Conveyance, or to evidence or effect any transaction contemplated by this Conveyance. Assignor
shall also execute and deliver all additional instruments and other documents reasonably required
to transfer interests in state, federal, or Indian lease interests in compliance with applicable
Legal Requirements or agreements. Upon expiration of the Term, Assignee shall, on request,
execute, acknowledge and deliver to Assignor sufficient numbers of recordable instruments releasing
all of the Subject Lands from this Conveyance.
Section 15.08 The 7:00 A.M. Convention
. Except as otherwise provided in this Conveyance, each calendar day, month, quarter, and year
shall be deemed to begin at 7:00 a.m. Eastern Time on the stated day or on the first day of the
stated month, quarter, or year, and to end at 7:00 a.m. Eastern Time on the next day or on first
day of the next month, quarter, or year, respectively.
26
Section 15.09 Counterpart Execution
. This Conveyance may be executed in any number of counterparts, and each such counterpart hereof
shall be deemed to be an original instrument, but all of such counterparts shall constitute for all
purposes one Conveyance. As between the Parties, any signature hereto delivered by a Party by
facsimile transmission or email pdf. shall be deemed an original hereto.
Section 15.10 Present and Absolute Conveyance
. It is the express intention of Assignor and Assignee that the Royalty Interest is, and shall be
construed for all purposes as, a present, fully-vested and absolute conveyance.
Section 15.11 Tax Treatment
. Notwithstanding that this Royalty Interest may be a real property interest for purposes of
applicable state law, the Parties agree to treat this Royalty Interest as a mortgage loan for
federal income tax purposes pursuant to Section 636(a) of the Code (and for the purposes of any similarly
calculated state income or franchise taxes) but for no other purposes, and the Parties agree (a) to
file all federal income tax and state income tax and franchise tax returns consistent with this
Section 15.11, (b) to use a comparable yield of 10.8% per month for purpose of Treasury Regulation
Section 1.1275-4(b) and (c) to utilize the projected payment schedule provided for in Treasury
Regulation Section 1.1275-4(b) and attached hereto as Schedule 15.11 for purposes of reporting
income and deductions (and adjustments thereto) in respect of the Royalty Interest. For avoidance
of doubt, the parties acknowledge that Assignor (and not Assignee) is entitled to all tax credits
and other applicable tax attributes attributable to this Royalty Interest and the production of Gas
attributable thereto.
[Remainder of page intentionally left blank.]
27
IN WITNESS WHEREOF, each Party has caused this Conveyance to be executed in its name and
behalf and delivered on the date or dates stated in the acknowledgment certificates appended to
this Conveyance, to be effective as of the Effective Time.
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ENERGY CORPORATION OF AMERICA
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By:
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/s/ Donald C. Supcoe
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Name:
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Donald C. Supcoe
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Title:
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Senior Vice President
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EASTERN MARKETING CORPORATION
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By:
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/s/ Donald C. Supcoe
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Name:
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Donald C. Supcoe
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Title:
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President
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Prepared by:
Vinson & Elkins LLP
1001 Fannin Street
Suite 2500
Houston, TX 77002-6760
Attention: Thomas Herbert
Signature Page to Term Overriding Royalty Interest Conveyance
S-1
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THE
STATE OF COLORADO
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§
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§
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COUNTY
OF DENVER
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§
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On
this, the 7
th
day of July, 2010, before me Julie Ann Kitano, a
Notary public,
personally appeared Donald C. Supcoe, who acknowledged himself to be the Senior Vice President of
Energy Corporation of America, a West Virginia corporation, and that he as such Senior Vice
President, being authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as Senior Vice President.
In witness whereof, I hereunto set my hand and official seal.
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[SEAL]
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/s/ Julie Ann Kitano
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My
Commission Expires: 4-26-2014
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THE
STATE OF COLORADO
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§
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§
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COUNTY
OF Denver
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§
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On
this, the 7
th
day of
July,
2010, before me Julie Ann Kitano, a
Notary public,
personally appeared Donald C. Supcoe, who acknowledged himself to be the President of Eastern
Marketing Corporation, a West Virginia corporation, and that he as such President, being authorized
to do so, executed the foregoing instrument for the purposes therein contained by signing the name
of the corporation by himself as President.
In witness whereof, I hereunto set my hand and official seal.
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[SEAL]
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/s/ Julie Ann Kitano
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My
Commission Expires: 4-26-2014
CERTIFICATE OF RESIDENCE
Eastern Marketing Corporation, as grantee and Assignee hereunder, hereby certifies that its
precise address is:
4643 South Ulster Street
Suite 100
Denver, Colorado 80237-2867
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EASTERN MARKETING CORPORATION
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By:
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/s/ Donald C. Supcoe
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Name:
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Donald C. Supcoe
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Title:
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President
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Exhibit A
(Attached hereto.)
Exhibit A
Exhibit B
(Attached hereto.)
Exhibit B
Exhibit C
(Attached hereto.)
Exhibit C
Exhibit D
Private Investors
W. GASTON CAPERTON, III
CLARK CLEMENT and PAULETTE CLEMENT
MICHAEL J. COCHRAN, JR.
PETER H. COORS
RODNEY D. COX and JENNIFER M. COX
CURTIS FAMILY REVOCABLE TRUST
DORGAN LIVING TRUST
RANDALL C. FARKOSH and SHERRY J. FARKOSH
JOHN S. FISCHER and FAYE E. FISCHER
MICHAEL S. FLETCHER and BOBBETTE FLETCHER
J. MICHAEL FORBES
MARK A. FRY and TAMMY L. FRY
THOMAS R. GOODWIN
DANIEL EARL GRAHAM LIVING TRUST and SALLY QUEREAU GRAHAM LIVING TRUST
CLINT L. HIPKE
DAVID E. JORDAN and CAROL JORDAN
FRANCIS H. McCULLOUGH, III and KATHY L. McCULLOUGH
KATHERINE F. McCULLOUGH TRUST
KRISTIN McCULLOUGH TRUST
LESLEY K. McCULLOUGH TRUST
MEREDITH B. McCULLOUGH TRUST
DENNIS L. McGOWAN and N. GAYLE McGOWAN
ALISON MORK TRUST
JOHN MORK and JULIE MORK
KYLE MORK TRUST
ARTHUR C. NIELSEN, JR. TRUST DATED JULY 14, 2003
GEORGE OMALLEY
JAY S. PIFER
NIKI D. RANDOLPH
PETER L. REBSTOCK
R. KENT SCHAMP
PETER A. SULLIVAN and WENDY H. SULLIVAN
DONALD C. SUPCOE and PATTY L. SUPCOE
RODNEY A. WINTERS and TAMMY M. WINTERS
Exhibit D
Schedule 15.11
(Attached hereto.)
Exhibit D
Exhibit 10.8
Execution
Version
DEVELOPMENT AGREEMENT
INTRODUCTION
THIS DEVELOPMENT AGREEMENT (this
Development Agreement
) by and between ENERGY
CORPORATION OF AMERICA, a West Virginia corporation, with offices at 4643 South Ulster Street,
Suite 1100, Denver, Colorado 80237-2867 (
Assignor
), and The Bank of New York Mellon
Trust Company, N.A., a national banking association organized under the laws of the State of New
York, with offices at 919 Congress Avenue, Suite 500, Austin, Texas 78701, as trustee (the
Trustee
), acting not in its individual capacity but solely as trustee of the ECA
Marcellus Trust I, a statutory trust formed under the laws of the State of Delaware (the
Trust
) under that certain Amended and Restated Trust Agreement dated as of July 7, 2010
(as the same may be amended from time to time, the
Trust Agreement
) is delivered to be
effective as of 7:00 a.m., Eastern Time, July 7 2010 (the
Effective Time
). All
capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in
Article I
below.
WHEREAS
, Assignor and Eastern Marketing Corporation, a wholly-owned subsidiary of Assignor
(
Eastern Marketing Corporation
) have entered into that certain Term Overriding Royalty
Interest Conveyance (PUD) dated effective as of July 7, 2010 (
Term Conveyance
). Assignor
and the Trustee have entered into that certain Perpetual Overriding Royalty Interest Conveyance
(PUD) dated effective as of July 7, 2010 (
Perpetual Conveyance
and together with the Term
Conveyance collectively the
Conveyances
). Eastern Marketing Corporation has assigned the
Term Conveyance to the Trustee; and
WHEREAS
, in connection with the Conveyances, Assignor has agreed to undertake certain
obligations during the Term with respect to the Subject Interests and the Development Wells.
NOW
,
THEREFORE
, in consideration of the premises and the covenants hereinafter contained and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intended to be legally bound hereby, it is agreed as follows:
ARTICLE I
DEFINITIONS
This
Article I
defines certain capitalized words, terms, and phrases used in this
Development Agreement. Certain other capitalized words, terms, and phrases used in this
Development Agreement are defined elsewhere in this Development Agreement.
Additional Lease
is defined in each of the Conveyances, as applicable.
Adjusted Development Well Amount
means the amount, for each Development Well drilled
or caused to be drilled by Assignor during the Term, equal to the result of:
(a) one (1),
multiplied by
1
(b) the Working Interest (stated as a decimal fraction or 1.00, where Assignor holds a 100%
Working Interest) that Assignor is required to bear in such Development Well,
multiplied by
(c) the Adjusted Horizontal Well Factor.
For example, if Assignor holds an eighty-five percent (85%) Working Interest in a Development
Well and the Adjusted Horizontal Well Factor is 1, the computation would be:
1 x .85 x 1 = .85
therefore, such Development Well would have a .85 Adjusted Development Well Amount.
If Assignor holds an eighty-five percent (85%) Working Interest in a Development Well and the
Adjusted Horizontal Well Factor is 0.8, then the computation would be:
1 x .85 x 0.8 = .68
in which case such Development Well would have a .68 Adjusted Development Well Amount.
Adjusted Horizontal Well Factor
means the amount, with respect to each Development
Well drilled or caused to be drilled horizontally to the Target Formation by Assignor during the
Term, obtained by dividing its Horizontal Lateral Distance by 2,500 feet.
For examples, if the Horizontal Lateral Distance of a Development Well is 2,000 feet, the
computation would be:
2,000 / 2,500 = 0.8
therefore, such Development Well would have a 0.8 Adjusted Horizontal Well Factor.
If the Horizontal Lateral Distance of a Development Well is 3,000 feet, then the computation
would be:
3,000 / 2,500 = 1.2
in which case such Development Well would have a 1.2 Adjusted Horizontal Well Factor.
With respect to any Development Well, the maximum Horizontal Lateral Distance taken into
account for purposes of determining the Adjusted Horizontal Well Factor for such Development Well
shall be 3,500 feet. In the event that Assignor commences the drilling of a Development Well, but
fails to drill beyond the midpoint of the curve, such Development Well will have an Adjusted
Horizontal Well Factor of zero (0).
Affiliate
means, for any specified Person, another Person that controls, is
controlled by, or is under common control with, the specified Person.
Control
, in the
preceding sentence, refers to the possession by one Person, directly or indirectly, of the right or
power to direct or cause the direction of the management and policies of another Person, whether
through the ownership of voting securities, by contract or otherwise.
2
AMI Area
means that area depicted on the map set forth on
Exhibit B
as the
AMI Area.
Assignor
is defined in the Introduction to this Development Agreement and also
includes all permitted successors and assigns of Assignor.
Assignors Net Share of Gas
means the share of Subject Gas from each Development
Well that is attributable to Assignors Net Revenue Interest in that Development Well.
Conveyances
is defined in the introductory paragraph of this Development Agreement.
Development Well
means any Gas well spudded after March 23, 2010 that is located on
the Subject Development Lands.
Development Agreement
is defined in the introductory paragraph of this Development
Agreement.
Drilling Support Lien
is defined in
Section 2.08(b)
.
Drilling Obligation Completion Date
means the date that is the earlier of the date
that the Total Drilling Target has been reached or March 31, 2013, as such date may be extended
pursuant to
Section 2.01(c)
;
provided, however
, that Assignor has delivered to the Trustee
(a) a certificate executed by the President or any Vice President of Assignor certifying that
Assignors drilling obligation was satisfied as of such date and (b) such other documentation as
the Trustee may reasonably request to establish satisfaction of Assignors drilling obligation
hereunder.
Eastern Marketing Corporation
is defined in the introductory paragraph of this
Development Agreement.
Effective Time
is defined in the introductory paragraph of this Development
Agreement.
Farmout Agreements
means any farmout agreement, participation agreement, exploration
agreement, development agreement or any similar agreement.
Gas
means natural gas and all other gaseous hydrocarbons, excluding condensate,
butane, and other liquid and liquefiable components that are actually removed from the Gas stream
by separation, processing, or other means. Any oil and gas lease or other similar instrument that
covers Gas shall be considered a Gas lease hereunder, even if it also covers other substances.
Horizontal Lateral Distance
means the distance of a horizontal well measured from
the midpoint of the curve to the end of the lateral.
Net Revenue Interest
means the interest, stated as a decimal fraction, in Subject
Gas production from a Development Well that Assignor is entitled to take with respect to Assignors
Subject Interest in that Development Well and the associated Subject Development Lands, subject
only to the Permitted Production Burdens (treated in each case as a reduction in interest rather
than as a cost).
3
Party
, when capitalized, refers to Assignor or Trustee.
Parties
, when
capitalized, refers to Assignor and Trustee.
Permitted Production Burdens
means (a) all Production Burdens that affected the
Subject Interests when they were acquired by Assignor and (b) all Production Burdens that were
created by Assignor; in each case, provided that the total Permitted Production Burdens for any
Development Well shall not exceed twelve and one half percent (12.5%) (proportionately reduced to
Assignors Working Interest in such Development Well).
Perpetual Conveyance
is defined in the introductory paragraph of this Development
Agreement.
Person
means any natural person, corporation, partnership, trust, estate, or other
entity, organization, or association.
Prior Reversionary Interest
means any contract, agreement, Farmout Agreement, lease,
deed, conveyance or operating agreement that exists as of the Effective Time or that burdens the
Subject Interests at the time such Subject Interests are acquired, that by the terms thereof
requires a Person to convey a part of the Subject Interest to another Person or to permanently
cease production of any Development Well including, any operating agreements, oil and gas leases,
coal leases, and other similar agreements or instruments affecting the Subject Interests.
Production Burdens
means, with respect to any Subject Development Lands, Subject
Interests, or Subject Gas, all royalty interests, overriding royalty interests, production
payments, net profits interests, Prior Reversionary Interests and other similar interests that
constitute a burden on, are measured by, or are payable out of the production of Gas or the
proceeds realized from the sale or other disposition thereof.
Reasonably Prudent Operator Standard
means the standard of conduct of a reasonably
prudent oil and gas operator in the AMI Area under the same or similar circumstances, acting with
respect to its own property and disregarding the existence of the Royalty Interest as a burden on
such property.
Royalty Interest
means, collectively, the Royalty Interest created under each of the
Conveyances.
Subject Development Lands
means the lands subject to or covered by the oil and gas
leases described in
Exhibit A
to each of the Conveyances and included in the AMI Area,
insofar and only insofar as they cover the Target Formation, subject to the exceptions, exclusions
and reservations (including depth limitations) set forth on such
Exhibit A
, as such exhibit
may be modified pursuant to
Section 2.06
, and/or other reservations and exceptions
contained in the Conveyances.
Subject Gas
means Gas in and under, and that may be produced, saved, and sold from a
Development Well, insofar and only insofar as such Gas is produced from the Target Formation,
subject to the following:
(a) Subject Gas excludes Gas that is:
4
(i) lost in the production, gathering, or marketing of Gas;
(ii) used (A) in conformity with ordinary and prudent operations on the Subject Development
Lands, including drilling and production operations with respect to such Development Well or (B) in
connection with plant operations (whether on or off the Subject Development Lands) for processing
or compressing the Subject Gas;
(iii) taken by a Third Person to recover costs, or some multiple of costs, paid or incurred by
that Third Person under any operating agreement, unit agreement, or other agreement in connection
with nonconsent operations conducted (or participated in) by that Third Person;
(iv) retained by a Third Person for gathering, transportation, processing or marketing
services related to the Subject Gas in lieu of or in addition to cash payment for such services, to
the extent such agreement is permitted under the Conveyances; and
(v) in excess of the percentage attributable to Assignors Net Share of Gas taken by Assignor
to recover costs, or some multiple of costs, paid or incurred by Assignor under any operating
agreement, unit agreement, or other agreement in connection with nonconsent operations conducted
(or participated in) by Assignor.
(b) Subject Gas includes Gas, not otherwise excluded above, that is sold or exchanged for
other Gas, or otherwise disposed of for valuable consideration.
Subject Interests
means Assignors undivided interests as of the date hereof in the
Subject Development Lands, whether as lessee under Gas leases, as an owner of the Subject Gas (or
the right to extract such Gas), or otherwise, by virtue of which undivided interests Assignor has
the right to conduct exploration, drilling, development, and Gas production operations on the
Subject Development Lands, or to cause such operations to be conducted, or to participate in such
operations by paying and bearing all or any part of the costs, risks, and liabilities of such
operations, to drill, test, complete, equip, operate, and produce Development Wells to exploit the
Gas. Subject Interests includes all extensions of, and all renewals of Gas leases covering, the
Subject Development Lands (or any portion thereof) obtained by Assignor, or any Affiliate thereof,
within six (6) months after the expiration or termination of any such Gas lease. Subject
Interests do not include (a) Assignors rights to substances other than Gas; (b) Assignors rights
to Gas under contracts for the purchase, sale, transportation, storage, processing, or other
handling or disposition of Gas; (c) Assignors interests in, or rights to Gas with respect to,
pipelines, gathering systems, storage facilities, processing facilities, or other equipment or
facilities, other than the Development Wells; or (d) subject to the offset provision as set forth
in Section 1.03(c) of the Perpetual Conveyance or Section 1.04(c) of the Term Conveyance, any
additional, or enlarged interests in the Development Wells, Subject Development Lands or Subject
Gas, beyond those reflected in
Exhibit A
to each of the Conveyances or any Additional
Lease, extensions and renewals covered by the preceding sentence. Subject Interests may be owned
or claimed by Assignor by virtue of grants or reservations in deeds, Gas leases, or other
instruments, or by virtue of operating agreements, pooling or unitization agreements or orders, or
other kinds of instruments, agreements, or documents, legal or equitable, recorded or unrecorded.
5
The Subject Interests are subject to the Permitted Encumbrances (as defined in each of the
Conveyances).
Target Formation
means what is generally referred to as the Marcellus Shale
formation and for purposes of this Development Agreement defined as that formation located from the
bottom of the Tully Formation (as seen by ECA Kemsod #1 Well, API number 37-059-25209), at a depth
of 7,881 feet to the top of the Huntersville Chert Formation (as seen by the ECA Kemsod #1 Well,
API number 37-059-25209), at a depth of 8,204 feet.
Term
means that period from the Effective Time to the Drilling Obligation Completion
Date.
Term Conveyance
is defined in the introductory paragraph of this Development
Agreement.
Third Person
means a Person other than Assignor or Trustee.
Total Drilling Target
means that number of Development Wells where the cumulative
total of all the Adjusted Development Well Amounts for such Development Wells drilled by or caused
to be drilled by Assignor equals at least 52.
Trust
is defined in the Introduction to this Development Agreement.
Trust Agreement
is defined in the Introduction to this Development Agreement.
Trustee
is defined in the Introduction to this Development Agreement and also
includes all successor and substitute trustees under the Trust Agreement.
Working Interest
means with respect to any Development Well, the interest, stated as
a decimal fraction, in and to such Development Well that is burdened with the obligation to bear
and pay costs and expenses of maintenance, development and operations on or in connection with such
Development Well.
ARTICLE II
DEVELOPMENT OF THE SUBJECT DEVELOPMENT LANDS
Section 2.01 Drilling Program
.
(a)
Obligation to Drill
. During the Term, Assignor shall, subject to the terms of this
Article II
, drill, or cause to be drilled, at Assignors sole cost, such number of
Development Wells that is necessary to achieve the Total Drilling Target prior to the Drilling
Obligation Completion Date.
(b)
Meaning of Drill.
For purposes of this
Section 2.01
, to drill means to spud a
Development Well, and thereafter to drill that Development Well diligently to the Target Formation
in accordance with the Reasonably Prudent Operator Standard.
6
(c)
Extension of Drilling Obligation Completion Date.
If Assignor has not reached the Total
Drilling Target by March 31, 2013, the Drilling Obligation Completion Date shall be automatically
extended to March 31, 2014.
Section 2.02 Obligation to Complete and Equip
. Assignor shall, at Assignors sole cost attempt to
complete each Development Well in the Target Formation that reasonably appears to Assignor, acting
in accordance with the Reasonably Prudent Operator Standard, to be capable of producing Gas in
quantities sufficient to pay completion, equipping, and operating costs. Assignor shall, at
Assignors sole cost, equip for production each Development Well that is successfully completed
and, when it is equipped and connected to a gathering line or pipeline, shall commence production.
Assignor shall plug and abandon, at Assignors sole cost, all Development Wells that are
unsuccessful.
Section 2.03 Termination
. After the drilling obligations in
Section 2.01(a)
have been
satisfied in addition to all other obligations under this Development Agreement, this Development
Agreement shall terminate and shall forthwith become null and void as of such date.
Section 2.04 Costs and Expenses of Development Wells
. All costs associated with or paid or
incurred in connection with the drilling, testing, completing, and equipping for production,
operating and/or plugging and abandoning of the Development Wells shall be borne solely by
Assignor, but Assignor may use any Subject Gas in such operations without any duty to account to
Trustee or the Trust under any of the Royalty Interests or Conveyances.
Section 2.05 Operations of Development Wells.
Assignor shall operate at least 90% of the
Development Wells during the period from the Effective Time to the date that is at the end of the
fourth full calendar quarter following the Drilling Obligation Completion Date.
Section 2.06 Additional Leases
. To the extent that there are any Additional Leases prior to
Assignors satisfaction of Assignors drilling requirements in
Section 2.01
, such
Additional Lease, without any further action hereunder, shall become part of the Subject Interests
and Subject Development Lands hereunder at such time.
Section 2.07 Title Due Diligence
. Prior to commencing the drilling of any Development Well,
Assignor will perform such title due diligence and such title curative work as would be performed
by an oil and gas operator drilling a well and acting in accordance with the Reasonably Prudent
Operator Standard.
Section 2.08 Wells
.
(a) Prior to the Drilling Obligation Completion Date, Assignor shall not, and shall cause its
Affiliates not to, nor permit any other Person within its control to, drill and complete any well
in the Target Formation of the AMI Area that will not be a Development Well hereunder.
(b) Assignor hereby covenants and agrees to enter into a Mortgage, Assignment, Security
Agreement, Fixture Filing and Financing Statement (the
Drilling Support Lien
) in order
that Assignor shall have granted a lien and security interest creating a valid,
7
perfected first
priority lien and security interest in and to any of the undeveloped portions of the Subject
Development Lands or any Additional Lease located in the AMI Area designated the Greene County
AMI on Exhibit B solely in order to secure the performance of Assignors development obligations
under
Section 2.01
above. Notwithstanding the preceding, for purposes of the Drilling
Support Lien only, the maximum amount recoverable by virtue of the mortgage upon a failure by
Assignor to satisfy its obligations under
Section 2.01
shall be $91,000,000, and such
amount shall automatically be reduced by an amount that is equal to the product of $1,750,000
multiplied by the cumulative total of all Adjusted Development Well Amounts for all Development
Wells drilled under this Development Agreement as Assignor completes its development obligations
under
Section 2.01
. In addition, upon Assignors request and at Assignors expense, the
lien and security interest created by the Drilling Support Lien shall be released as to each
Development Well and the drilling unit associated therewith as the same is completed in accordance
with this Development Agreement.
(c) Subsequent to the satisfaction of Assignors drilling requirements in
Section
2.01
, neither Assignor nor any of its Affiliates shall drill and complete any well that will
have a perforated segment that will be within 500 feet of any perforated interval of any
Development Well or such other wells conveyed to the Trustee by Assignor as of the date hereof
which produces oil or gas from the Target Formation.
(d) If Assignor fails to achieve the Total Drilling Target by March 31, 2014, Assignor shall
be in default of its obligations under this Agreement and Trustee shall be entitled to pursue, in
its sole discretion, any and all remedies available pursuant to Article III of the Drilling Support
Lien.
ARTICLE III
OTHER PROVISIONS
Section 3.01 Successors and Assigns
. Subject to the limitation and restrictions on the assignment
or delegation by the Parties of their rights and interests under this Development Agreement, this
Development Agreement binds and inures to the benefit of Assignor, Trustee, the Trust and their
respective successors, assigns, and legal representatives.
Section 3.02 Governing Law
.
THIS DEVELOPMENT AGREEMENT SHALL BE CONSTRUED UNDER AND GOVERNED BY
THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW
PRINCIPLES THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
Section 3.03 Construction of Development Agreement
. In construing this Development Agreement, the
following principles shall be followed:
(a) no consideration shall be given to the captions of the articles, sections, subsections, or
clauses, which are inserted for convenience in locating the provisions of this Development
Agreement and not as an aid in its construction;
(b) no consideration shall be given to the fact or presumption that one Party had a greater or
lesser hand in drafting this Development Agreement;
8
(c) the word includes and its syntactical variants mean includes, but is not limited to
and corresponding syntactical variant expressions;
(d) a defined term has its defined meaning throughout this Development Agreement, regardless
of whether it appears before or after the place in this Development Agreement where it is defined;
(e) the plural shall be deemed to include the singular, and vice versa; and
(f) each exhibit, attachment, and schedule to this Development Agreement is a part of this
Development Agreement, but if there is any conflict or inconsistency between the main body of this
Development Agreement and any exhibit, attachment, or schedule, the provisions of the main body of
this Development Agreement shall prevail.
Section 3.04 No Waiver
. Failure of either Party to require performance of any provision of this
Development Agreement shall not affect either Partys right to require full performance thereof at
any time thereafter, and the waiver by either Party of a breach of any provision hereof shall not
constitute a waiver of a similar breach in the future or of any other breach or nullify the
effectiveness of such provision.
Section 3.05 Relationship of Parties
. This Development Agreement does not create a partnership,
mining partnership, joint venture, or relationship of trust or agency between the Parties.
Section 3.06 Further Assurances
. Each Party shall execute, acknowledge, and deliver to the other
Party all additional instruments and other documents reasonably required to evidence or effect any
transaction contemplated by this Development Agreement.
Section 3.07 The 7:00 A.M. Convention
. Except as otherwise provided in this Development Agreement, each calendar day, month, quarter,
and year shall be deemed to begin at 7:00 a.m. Eastern Time on the stated day or on the first day
of the stated month, quarter, or year, and to end at 7:00 a.m. Eastern Time on the next day or on
first day of the next month, quarter, or year, respectively.
Section 3.08 Counterpart Execution
. This Development Agreement may be executed in any number of
counterparts with the same effect as if all parties to this Development Agreement had signed the
same document. All counterparts shall be construed together and shall constitute one and the same
instrument.
Section 3.09 Limitation of Liability
. It is expressly understood and agreed by the parties hereto
that (a) this Development Agreement is executed and delivered by the Trustee not individually or
personally, but solely as Trustee in the exercise of the powers and authority conferred and vested
in it and (b) under no circumstances shall the Trustee be liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken by the Trust under this
Development Agreement. It is further expressly understood and agreed by the parties hereto that
neither the Trust nor the Trustee, in its capacity as Trustee or individually, shall have any
authority over, or responsibility or liability for, the drilling of the Development Wells or any of
the other business or commercial activities contemplated by this Development
9
Agreement, all of
which are hereby agreed to be the sole responsibility of Assignor, and Assignor hereby agrees to
and hereby does indemnify and agree to hold harmless each of the Trust and the Trustee, in its
capacity as Trustee and individually, from and against any and all damages, liabilities, expenses,
fines, judgments, amounts paid in settlement, reasonable attorneys fees and costs of investigation,
and other expenses reasonably incurred by any of them in connection with or as a result of any of
the business or commercial activities contemplated by this Development Agreement or any other
matter arising out of this Development Agreement or any such matter. Assignor further agrees to
advance any such attorneys fees, costs of investigation and other expenses described above as they
are incurred.
Section 3.10 Severability
. If any provision of this Development Agreement or the application
thereof to any party to this Development Agreement or circumstance shall be held invalid or
unenforceable to any extent, the remainder of this Development Agreement and the application of
such provision to the other party to this Development Agreement or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.
[Remainder of page intentionally left blank.]
10
IN WITNESS WHEREOF, each Party has caused this Development Agreement to be executed in its
name and behalf and delivered on the date or dates stated in the acknowledgment certificates
appended to this Development Agreement, to be effective as of the Effective Time.
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ENERGY CORPORATION OF AMERICA
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By:
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/s/ Donald C. Supcoe
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Name: Donald C. Supcoe
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Title: Senior Vice President
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S-1
[Signature Page to Development Agreement]
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ECA MARCELLUS TRUST I
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By: The
Bank of New York Mellon Trust Company, N.A.
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By:
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/s/
Michael J. Ulrich
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Name: Michael J. Ulrich
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Title: Authorized Signatory
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S-1
[Signature Page to Development Agreement]
Exhibit 10.10
Execution Version
WHEN RECORDED OR FILED,
PLEASE RETURN TO:
Vinson & Elkins L.L.P.
1001 Fannin Street, Suite 2500
Houston, Texas 77002
Attention: Linda Daugherty
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Space above for County Recorders Use
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MORTGAGE, ASSIGNMENT OF LEASES,
SECURITY AGREEMENT, FIXTURE FILING
AND FINANCING STATEMENT
FROM
ENERGY CORPORATION OF AMERICA,
as MORTGAGOR
TO
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
AS TRUSTEE OF ECA MARCELLUS TRUST I,
as MORTGAGEE
Dated as of July 7, 2010
A CARBON, PHOTOGRAPHIC, FACSIMILE, OR OTHER REPRODUCTION OF
THIS INSTRUMENT IS SUFFICIENT AS A FINANCING STATEMENT.
THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.
THIS INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES PURSUANT TO 42 PA.C.S. § 8144.
THIS INSTRUMENT COVERS MINERALS AND OTHER SUBSTANCES OF VALUE WHICH MAY BE EXTRACTED FROM THE EARTH
(INCLUDING WITHOUT LIMITATION OIL AND GAS) AND THE ACCOUNTS RELATED THERETO. THIS FINANCING
STATEMENT IS TO BE FILED OR FILED FOR RECORD, AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS OR
SIMILAR RECORDS OF THE RECORDERS OF THE COUNTIES LISTED ON THE EXHIBITS HERETO. THE MORTGAGOR HAS
AN INTEREST OF RECORD IN THE REAL ESTATE AND IMMOVABLE PROPERTY CONCERNED, WHICH INTEREST IS
DESCRIBED IN THE EXHIBITS ATTACHED HERETO.
PORTIONS OF THE MORTGAGED PROPERTIES ARE GOODS WHICH ARE OR ARE TO BECOME AFFIXED TO OR FIXTURES ON
THE LAND DESCRIBED IN OR REFERRED TO IN THE EXHIBITS HERETO. THIS FINANCING STATEMENT IS TO BE
FILED FOR RECORD OR RECORDED, AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS OR SIMILAR RECORDS OF
EACH COUNTY IN WHICH SAID LAND OR ANY PORTION THEREOF IS LOCATED. THE MORTGAGOR IS THE OWNER OF
RECORD INTEREST IN THE REAL ESTATE CONCERNED. THIS INSTRUMENT IS ALSO TO BE INDEXED IN THE INDEX
OF FINANCING STATEMENTS OR THE UCC RECORDS.
- ii -
MORTGAGE, ASSIGNMENT OF LEASES,
SECURITY AGREEMENT, FIXTURE FILING
AND FINANCING STATEMENT
THIS MORTGAGE, ASSIGNMENT OF LEASES, SECURITY AGREEMENT, FIXTURE FILING AND FINANCING
STATEMENT (this
Mortgage
) is entered into as of July 7, 2010 by Energy Corporation of America, a
West Virginia corporation (herein called
Mortgagor
), whose address for notice is 4643 South
Ulster Street, Suite 1100, Denver, CO 80237, and The Bank of New York Mellon Trust Company, N.A.,
acting not in its individual capacity but solely as trustee of ECA Marcellus Trust I, a Delaware
statutory trust, as mortgagee (
Mortgagee
) whose address for notice is c/o The Bank of New York
Mellon Trust Company, N.A., 919 Congress Avenue, Suite 500, Austin Texas 78701.
R
E
C
I
T
A
L
S
:
A. By means of (1) a Term Overriding Royalty Interest Conveyance (PUD) dated as of July 7,
2010 (the
Term Conveyance (PUD)
) from Mortgagor to Eastern Marketing Corporation, a true and
correct copy of which is annexed hereto as Annex A-1 and made a part hereof and (2) a Perpetual
Overriding Royalty Interest Conveyance (PUD) dated as of July 7, 2010 (the
Perpetual Conveyance
(PUD)
and together with the Term Conveyance (PUD) collectively the
Conveyances
) from Mortgagor
to Mortgagee, a true and correct copy of which is annexed hereto as Annex A-2 and made a part
hereof, Mortgagor has conveyed and assigned to Mortgagee or Eastern Marketing Corporation, as
applicable, the
Royalty Interest
, as defined therein and herein so called. Reference is made to
the Conveyances for the meaning of capitalized terms that are defined therein (and not otherwise
defined herein), which terms shall have the same meanings when used herein.
B. Eastern Marketing Corporation has assigned the Term Conveyance (PUD) and all rights
thereunder to the Mortgagee, and consequently the Mortgagee holds all of the Royalty Interest
described above.
C. Mortgagor is executing and delivering this Mortgage in order to secure the drilling
obligations of the Mortgagor under that certain Development Agreement dated as of July 7, 2010 (the
Development Agreement
) between Mortgagor and Mortgagee.
D. Each Royalty Interest is carved out of the applicable Subject Interests.
E. The Mortgaged Properties (as hereinafter defined) include (but are not limited to)
interests in the Subject Lands described on Exhibit A to each of the Conveyances attached hereto,
which Exhibits A are incorporated herein by reference for all purposes. This Mortgage is to be
recorded in Greene County, Pennsylvania.
F. Mortgagee has conditioned its execution and delivery of the Conveyances and the Development
Agreement upon the execution and delivery by Mortgagor of this Mortgage, and Mortgagor has agreed
to enter into this Mortgage.
- 1 -
NOW, THEREFORE, in order to comply with the terms and conditions of the Conveyances and the
Development Agreement and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Mortgagor hereby agrees with Mortgagee as follows:
ARTICLE I.
Granting Clauses; Secured Obligations
Section 1.1
Grant and Mortgage
. Mortgagor, in order to secure the payment and
performance of the secured obligations hereinafter referred to and the performance of the
obligations, covenants, agreements, warranties and undertakings of Mortgagor hereinafter described,
does hereby GRANT, BARGAIN, SELL, ALIEN, CONVEY, TRANSFER, MORTGAGE, ASSIGN, WARRANT, PLEDGE,
HYPOTHECATE and CONFIRM to Mortgagee, its successors and assigns, for the benefit of Mortgagee,
with mortgage covenants, and upon the statutory mortgage condition for the breach of which this
Mortgage may be subject to foreclosure as provided by applicable law, all of the following
described rights, interests and properties which are located in Greene County, Pennsylvania (the
Mortgaged Properties
):
(a) All of Mortgagors right, title, interest and estate now owned or hereafter
acquired in and to those certain oil, gas or other mineral leases (the
Gas Leases
) in the
Subject Lands more particularly described on Exhibit A to the Conveyances attached hereto
and Additional Leases (as defined in the Conveyances) within the Target Formation within the
AMI Area (the
Retained Mineral Interests
);
(b) All easements, servitudes, rights-of-way, surface leases and other surface rights
on and over the Subject Lands (the
Surface Rights
) which are now or hereafter used, or
held for use, in connection with the Retained Mineral Interest;
(c) All licenses, permits and other regulatory approvals held by Mortgagor to the
extent relating to the Retained Mineral Interests;
(d) All proceeds of all of the rights, titles and interests of Mortgagor described in
the foregoing paragraphs (a) through (c) (exclusive of rents, revenues, royalties and
profits arising under the Gas Leases) whether such proceeds or payments are goods, money,
documents, instruments, chattel paper, securities, accounts, payment intangibles, general
intangibles, fixtures, real, personal or other assets; and
(e) Any and all liens, security interests, financing statements or similar interests of
Mortgagor attributable to the Retained Mineral Interests arising under or created by any
statutory provision, judicial decision or otherwise.
TO HAVE AND TO HOLD the Mortgaged Properties unto Mortgagee, and Mortgagees successor and
assigns, for the benefit of the Mortgagee, upon the terms, provisions and conditions herein set
forth.
- 2 -
Section 1.2
Grant of Security Interest; Fixture Filing
. In order to further secure
the payment of the secured obligations hereinafter referred to and the performance of the
obligations, covenants, agreements, warranties, indemnities and undertakings of Mortgagor
hereinafter described, Mortgagor does hereby grant to Mortgagee a security interest in and to the
Mortgaged Properties (whether now owned or hereafter acquired by operation of law or otherwise)
insofar as the Mortgaged Properties consists of personal property of any kind or character defined
in and subject to the provisions of Article 9 of the Uniform Commercial Code as in effect from time
to time as part of the laws applicable to this Mortgage (the
Applicable UCC
), (such personal
property being the
Collateral
). Except as otherwise expressly provided in this Mortgage, all
terms in this Mortgage relating to the Mortgaged Properties and the grant of the foregoing security
interest which are defined in the Applicable UCC shall have the meanings assigned to them in
Article 9 (or, absent definition in Article 9, in any other Article) of the Applicable UCC, as
those meanings may be amended, revised or replaced from time to time. Notwithstanding the
foregoing, the parties intend that the terms used herein which are defined in the Applicable UCC
have, at all times, the broadest and most inclusive meanings possible. If the Applicable UCC shall
in the future be amended or held by a court to define any term used herein more narrowly, or less
inclusively, than the UCC in effect on the date of this Mortgage, such amendment or holding shall
be disregarded in defining terms used in this Mortgage.
This Mortgage constitutes a security agreement, fixture filing and financing statement as
those terms are used in the Uniform Commercial Code of the State in which the Mortgaged Property is
located (the
PA UCC
). For purposes of this
Section 1.2
, this Mortgage is to be filed and
recorded in, among other places, the real estate records of the County in which the Mortgaged
Properties are is located and the following information is included: (1) Mortgagor shall be deemed
the Debtor with the address set forth for Mortgagor on the first page of this Mortgage which
Mortgagor certifies is accurate; (2) Mortgagee shall be deemed to be the Secured Party with the
address set forth for Mortgagee on the first page of this Mortgage and shall have all of the rights
of a secured party under the PA UCC; (3) this Mortgage covers goods which are or are to become
fixtures; (4) the name of the record owner of the Gas Leases and Surface Rights is Energy
Corporation of America, the Debtor; (5) the organizational identification number of the Debtor is
none; (6) the Debtor is a corporation organized under the laws of the State of West Virginia; and
(7) the legal name of the Debtor is Energy Corporation of America. The Debtor hereby authorizes
Mortgagee to file any financing statements and terminations thereof or amendments or modifications
thereto without the signature of the Debtor, where permitted by law; provided, however, this
authorization does not release Mortgagor from its general duty under this Mortgage, the Development
Agreement or the Conveyances to take all actions necessary to perfect and maintain the perfected
interest of Mortgagee in the Mortgaged Properties.
Section 1.3
Assignment of Leases
.
(a) This Mortgage is also an absolute and unconditional assignment to Mortgagee of the
Gas Leases, whether now in existence or hereafter arising, for the purpose of vesting in
Mortgagee, subject to the Permitted Encumbrances (as defined in the Conveyances attached
hereto as Annex A-1 and Annex A-2), a, perfected security interest in the Gas Leases.
Mortgagor hereby assigns, transfers and sets over to Mortgagee all
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of the Gas Leases.
(b) So long as no default (as hereinafter defined) has occurred and is then continuing,
Mortgagor shall have a license, revocable at the will of Mortgagee following the occurrence
and continuation of a default, to enforce the Gas Leases and exercise Mortgagors rights
thereunder.
(c) Notwithstanding any legal presumption to the contrary, Mortgagee shall not be
obligated by reason of its acceptance of this assignment to perform any obligation of
Mortgagor as lessee under any Gas Lease. The acceptance of this assignment shall not
constitute a waiver of any rights of Mortgagee under the Development Agreement or the
Conveyances or constitute a cure of any default by Mortgagor thereunder.
Section 1.4
Development Agreement and Other Obligations
. This Mortgage is made to
secure and enforce the payment and performance of the following, obligations, indebtedness and
liabilities:
(a) The full performance of all obligations, covenants, agreements and undertakings of
and by Mortgagor from time to time owing to Mortgagee under Article II of the Development
Agreement;
(b) Any sums advanced or expenses or costs incurred by the Mortgagee (or any receiver
appointed hereunder) which are made or incurred pursuant to, or permitted by, the terms
hereof, plus interest thereon at the Applicable Rate (as defined hereinafter) or otherwise
agreed upon, from the date of the advances or the incurring of such expenses or costs until
reimbursed; and
(c) Without limiting the generality of the foregoing, all post-petition interest,
expenses, and other duties, damages and liabilities with respect to indebtedness or other
obligations described above in this
Section 1.4
, which would be owed but for the
fact that they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization, or similar proceeding.
Section 1.5
Secured Obligations
. The obligations referred to in
Section 1.4
,
and all renewals, extensions and modifications thereof, and all substitutions therefor, in whole or
in part, are herein sometimes referred to as the
secured obligations
or the
obligations secured
hereby
. It is contemplated and acknowledged that the secured obligations may include obligations
hereafter arising and that this Mortgage shall have effect, as of the date hereof, to secure all
secured obligations, regardless of whether any amounts exist on the date hereof or arise on a later
date or, whether having arisen or been advanced, are later repaid in part or in whole and further
obligations arise or advances are made at a later date.
Section 1.6
Limitation on Obligations
. The Mortgagor and Mortgagee hereby agree and
acknowledge that, as of the date hereof, the maximum value of such drilling obligations secured by
this Mortgage is $91,000,000,
provided
that such amount will be adjusted downward, from time to
time, pursuant to Section 2.08 of the Development Agreement. Mortgagor and
Mortgagee further agree and acknowledge that as the value of the drilling obligations secured
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hereby reduces pursuant to the Development Agreement, the lien and security interest created by
this Mortgage shall be released as to each Development Well as the same is completed in accordance
with the Development Agreement. Upon Mortgagors request and at Mortgagors expense, Mortgagee
shall execute and deliver a partial release, which will release in full any lien and/or security
interest created by this Mortgage with respect to such Development Well and the proration unit
related to such Development Well.
Section 1.7
Maturity Date
. The obligations, covenants, agreements and undertakings of
and by Mortgagor from time to time owing to Mortgagee are due to be performed on and before the
Drilling Obligation Completion Date (as defined in the Development Agreement), which is 7:00 a.m.,
Eastern Time, on March 31, 2013, unless extended pursuant to the terms of the Development Agreement
to March 31, 2014. The Drilling Obligation Completion Date (as defined in the Development
Agreement) shall be the maturity date of this Mortgage, provided that the Total Drilling Target (as
defined in the Development Agreement) has been met. If the Total Drilling Target (as defined in
the Development Agreement) has not been met by such date, this Mortgage shall continue in full
force and effect.
ARTICLE II.
Covenants
Section 2.1 Mortgagor warrants, represents, covenants and agrees that the Mortgaged Properties
are free and clear of all liens, security interests and other Encumbrances, subject only to the
Permitted Encumbrances and that, to Mortgagors knowledge, Mortgagor is lawfully seized of the
estates and interests granted to Mortgagor under the Gas Leases and any instruments evidencing
Surface Rights. This Mortgage is subject to (but in no event shall this Mortgage be an assumption
of) the Permitted Encumbrances, in each case to the extent and only for so long as the same are
valid and subsisting and affect title to the Mortgaged Properties; provided that, the foregoing is
not intended to, and shall not, subordinate the first priority lien created hereby.
Section 2.2 Mortgagor hereby covenants with the Mortgagee as follows:
(a)
Further Assurance
. Mortgagor will, on request of Mortgagee, (i) promptly
correct any defect, error or omission which may be discovered in the contents of this
Mortgage, or in the execution or acknowledgment of this Mortgage; (ii) execute,
acknowledge, deliver and record or file such further instruments (including further
mortgages, security agreements, financing statements, continuation statements, and
assignments of accounts, funds, contract rights, and general intangibles) and do such
further acts as may be necessary, desirable or proper to carry out more effectively the
purposes of this Mortgage; and (iii) execute, acknowledge, deliver, and file or record any
document or instrument (including specifically any financing statement) reasonably requested
by Mortgagee to protect the lien or the security interest hereunder against the rights or
interests of third persons. Mortgagor shall pay all reasonable costs connected with any of
the foregoing.
(b)
Name and Place of Business
. Mortgagor will not cause or permit any change
to be made in its name, identity, limited liability company structure, federal
- 5 -
employer
identification number or state of organization (whether by merger or otherwise) unless
Mortgagor shall have notified Mortgagee of such change at least ten (10) days prior to the
effective date of such change, and shall have first taken all action required by Mortgagee
for the purpose of further perfecting or protecting the liens and security interests in the
Mortgaged Properties created hereby. Mortgagors exact name is the name set forth in this
Mortgage. Mortgagor is a corporation organized under the laws of the State of West
Virginia.
Section 2.3 Except as permitted in Section 11.02 of the applicable Conveyance, Mortgagor will
not Transfer any of the Mortgaged Properties without the prior written consent of the Trustee. If
any Mortgaged Property is permitted to be Transferred pursuant to Section 11.02 of the applicable
Conveyance, the Trustee will execute, acknowledge and deliver a release of this Mortgage to the
extent applicable to such Mortgaged Properties proposed to be Transferred pursuant to Section 11.02
of the applicable Conveyance.
ARTICLE III.
Remedies Upon Default
Section 3.1
Default
. The term
default
as used in this Mortgage means:
(a) the failure by Mortgagor to perform or pay when due any obligation of Mortgagor
under Article II of the Development Agreement or this Mortgage, which failure continues for
thirty days after receipt by Mortgagor of written notice from Mortgagee demanding such
payment or performance;
(b) failure by the Mortgagor, within thirty (30) days after notice thereof from the
Mortgagee, to cure a breach in the due performance or observance of any covenant or
agreement contained in this instrument or in Article II of the Development Agreement and not
constituting a failure to pay any obligation secured hereby; or
(c) this Mortgage shall fail to constitute a lien on and prior perfected security
interest in any part of the Mortgaged Properties (subject only to Permitted Encumbrances),
and such failure is not cured within thirty (30) days after written notice to Mortgagor or
Mortgagor otherwise obtains knowledge thereof.
Section 3.2
Remedies
.
(a) If a default shall occur and be continuing, to the extent provided by applicable
law, the Mortgagee shall have the right and option to (i) proceed with an action in mortgage
foreclosure and to sell all or any portion of such Mortgaged Properties at one or more
sales, as an entirety or in parcels, at such place or places in otherwise such manner and
upon such notice as may be required by law, or, in the absence of any such requirement, as
the Mortgagee may deem appropriate, and to make conveyance to the purchaser or
purchasers; or (ii) obtain a judgment for the secured obligations (including amounts
advanced by Mortgagee hereunder to protect the Mortgaged Properties or the liens and
security interests in the Mortgaged Properties created hereby, all costs and expenses of
- 6 -
collection and suit, including any bankruptcy or insolvency proceeding affecting Mortgagor,
and reasonable attorneys fees incurred in connection with the foregoing) together with
interest on such judgment until payment in full is received by Mortgagee. Mortgagee shall
have the authority while so in possession to insure (at Mortgagors expense) against all
risks by reason of having taken such possession and Mortgagor will transfer and deliver to
the Mortgagee all policies of insurance upon the Mortgaged Properties not theretofore
transferred and delivered to Mortgagee and Mortgagee shall have the right to obtain
execution upon the Mortgaged Properties on account of such judgment. Where the Mortgaged
Properties are situated in more than one jurisdiction, notice as above provided shall be
posted and filed in all such jurisdictions (if such notices are required by applicable law),
and all such Mortgaged Properties may be sold in any such jurisdiction and any such notice
shall designate the jurisdiction where such Mortgaged Properties are to be sold. Nothing
contained in this
Section 3.2
shall be construed so as to limit in any way any
rights to sell the Mortgaged Properties or any portion thereof by private sale if and to the
extent that such private sale is permitted under the applicable law of the applicable
jurisdiction or by public or private sale after entry of a judgment by any court of
competent jurisdiction so ordering. The Mortgagor hereby irrevocably appoints, effective
upon the occurrence and during the continuance of a default, the Mortgagee, with full power
of substitution, to be the attorney-in-fact of the Mortgagor and in the name and on behalf
of the Mortgagor to execute and deliver any deeds, transfers, conveyances, assignments,
assurances and notices which the Mortgagor ought to execute and deliver and do and perform
any and all such acts and things which the Mortgagor ought to do and perform under the
covenants herein contained and generally, to use the name of the Mortgagor in the exercise
of all or any of the powers hereby conferred on the Mortgagee. At any such sale: (1) it
shall not be necessary for the Mortgagee to have physical or constructive possession of the
Mortgaged Properties (the Mortgagor hereby covenanting and agreeing to deliver any portion
of the Mortgaged Properties not actually or constructively possessed by the Mortgagee
immediately upon the Mortgagees demand) and the title to and right of possession of any
such property shall pass to the purchaser thereof as completely as if the same had been
actually present and delivered to purchaser at such sale, (2) each instrument of conveyance
executed by the Mortgagee shall contain a special warranty of title, binding upon the
Mortgagor and its successors and assigns, (3) each and every recital contained in any
instrument of conveyance made by the Mortgagee shall conclusively establish the truth and
accuracy of the matters recited therein, including, without limitation, nonpayment or
nonperformance of the secured obligations, advertisement and conduct of such sale in
accordance with applicable law, (4) any and all prerequisites to the validity thereof shall
be conclusively presumed to have been performed, (5) the receipt of the Mortgagee or of such
other party or officer making the sale shall be a sufficient discharge to the purchaser or
purchasers for its purchase money and no such purchaser or purchasers, or its assigns or
personal representatives, shall thereafter be obligated to see to the application of such
purchase money, or be in any way answerable for any loss, misapplication or nonapplication
thereof, (6) to the fullest extent permitted by
applicable law, the Mortgagor shall be completely and irrevocably divested of all of
its right, title, interest, claim and demand whatsoever, either at law or in equity, in and
to the Mortgaged Property sold and such sale shall be a perpetual bar both at law and in
equity against the Mortgagor, and against any and all other persons claiming or to claim the
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property sold or any part thereof, by, through or under the Mortgagor, and (7) to the extent
and under such circumstances as are permitted by law, the Mortgagee may be a purchaser at
any such sale, and shall have the right, after paying or accounting for all costs of said
sale or sales, to credit the amount of the bid upon the amount of the secured obligations
(in the order of priority set forth in
Section 3.4
) in lieu of cash payment.
(b) If a default shall occur and be continuing, Mortgagee may exercise its rights of
enforcement with respect to the Collateral under the Applicable UCC, or under any other
statute in force in any state to the extent the same is applicable law. Cumulative of the
foregoing and the other provisions of this
Section 3.2
, to the extent permitted by
applicable law:
(i) upon the occurrence and during the continuance of a default Mortgagee may
enter upon the Mortgaged Properties or otherwise upon Mortgagors premises to take
possession of, assemble and collect the Collateral or to render it unusable;
(ii) upon the occurrence and during the continuance of a default Mortgagee may
require Mortgagor to assemble the Collateral and make it available at a place
Mortgagee designates which is mutually convenient to allow Mortgagee to take
possession or dispose of the Collateral;
(iii) written notice mailed to Mortgagor as provided herein at least ten (10)
days prior to the date of public sale of the Collateral or prior to the date after
which private sale of the Collateral will be made shall constitute reasonable
notice;
(iv) in the event of a foreclosure of the liens, privileges or security
interests evidenced hereby, the Collateral, or any part thereof, and the Mortgaged
Properties, or any part thereof, may, at the option of Mortgagee, be sold, as a
whole or in parts, together or separately (including, without limitation, where a
portion of the Mortgaged Properties is sold, the Collateral related thereto may be
sold in connection therewith);
(v) the expenses of sale provided for in clause FIRST of
Section 3.4
shall include the reasonable expenses of retaking the Collateral, or any part
thereof, holding the same and preparing the same for sale or other disposition;
(vi) should, under this subsection, the Collateral be disposed of other than by
sale, any proceeds of such disposition shall be treated as if the same were sales
proceeds; and
(vii) upon the occurrence and during the continuance of a default, Mortgagee
may, to the extent permitted under applicable law, elect to treat the fixtures
included in the Collateral either as real property or as personal property, or both,
and proceed to exercise such rights as apply thereto. With respect to any sale of
real property included in the Mortgaged Properties made under the powers of sale
herein granted and conferred, Mortgagee may, to the extent permitted by
- 8 -
applicable
law, include in such sale any personal property and fixtures included in the
Collateral and relating to such real property.
(c) To the extent permitted by applicable law, the sale hereunder of less than the
whole of the Mortgaged Properties shall not exhaust the right to judicial foreclosure, and
one or more successive sales may be made until the whole of the Mortgaged Properties shall
be sold, and, if the proceeds of such sale of less than the whole of the Mortgaged
Properties shall be less than the aggregate of the obligations secured hereby and the
expense of conducting such sale, this Mortgage and the liens, privileges and security
interests hereof shall remain in full force and effect as to the unsold portion of the
Mortgaged Properties just as though no sale had been made; provided, however, that Mortgagor
shall never have any right to require the sale of less than the whole of the Mortgaged
Properties. In the event any sale hereunder is not completed or is defective in the opinion
of Mortgagee, such sale shall not exhaust the right to judicial foreclosure, and Mortgagee
shall have the right to cause a subsequent sale or sales to be made. Any sale may be
adjourned by announcement at the time and place appointed for such sale without further
notice except as may be required by applicable law. Any and all statements of fact or other
recitals made in any deed or deeds, or other instruments of transfer, given in connection
with a sale as to nonpayment of the secured obligations or as to the occurrence of any
default, or as all of the secured obligations having been declared to be due and payable, or
as to the request to sell, or as to notice of time, place and terms of sale and the
properties to be sold having been duly given, or as to any other act or thing having been
duly done, shall be taken as rebuttably presumptive evidence of the truth of the facts so
stated and recited. Notwithstanding any reference herein to the Development Agreement, all
persons dealing with the Mortgaged Properties shall be entitled to rely on any document, or
certificate, of Mortgagee as to the occurrence of an event, such as a default, and shall not
be charged with or forced to review any provision of any other document to determine the
accuracy thereof. With respect to any sale held in foreclosure of the liens or security
interests covered hereby, it shall not be necessary for the Mortgagee, any public officer
acting under execution or order of the court or any other party to have physically present
or constructively in his/her or its possession, either at the time of or prior to such sale,
the Mortgaged Properties or any part thereof.
Section 3.3
Receiver
. In addition to all other remedies herein provided for,
Mortgagor agrees that, during the continuance of a default, Mortgagee shall as a matter of right be
entitled to the appointment of a receiver or receivers for all or any part of the Mortgaged
Properties, whether such receivership be incident to a proposed sale (or sales) of such property or
otherwise, and without regard to the value of the Mortgaged Properties or the solvency of any
person or persons liable for the payment of the obligations secured hereby, and Mortgagor does
hereby consent to the appointment of such receiver or receivers, waives any and all defenses to
such appointment, and
agrees not to oppose any application therefor by Mortgagee. Mortgagor expressly waives the
necessity for bond or an accounting by the receiver. Nothing herein is to be construed to deprive
Mortgagee of any other right, remedy or privilege it may now or hereafter have under the law to
have a receiver appointed. Any money advanced by Mortgagee in connection with any such
receivership shall be a demand obligation (which obligation Mortgagor hereby expressly promises to
pay) owing by Mortgagor to Mortgagee and shall bear interest (the
Applicable Rate
), from the
- 9 -
date
of making such advancement by Mortgagee until paid, provided, however, that in no instance will the
Applicable Rate be greater than the highest rate of interest that Mortgagee may charge to Mortgagor
under applicable law.
Section 3.4
Proceeds of Foreclosure
. The proceeds of any sale held in foreclosure of
the liens or security interests evidenced hereby shall be applied as follows, except as otherwise
required by applicable law:
FIRST
, to the payment of all necessary costs and expenses incident to such
foreclosure sale, including but not limited to reasonable attorneys fees, all court costs
and charges of every character in the event foreclosed by suit or any judicial proceeding,
if any;
SECOND
, to be applied to the secured obligations as provided in the Development
Agreement; and
THIRD
, the remainder, if any there shall be, shall be paid to Mortgagor, or to
Mortgagors successors or assigns, or such other persons as may be entitled thereto by law.
Section 3.5
Foreclosure as to Matured Debt
. If a default shall occur and be
continuing, Mortgagee shall have the right to proceed with foreclosure of the liens, privileges or
security interests evidenced hereby without any requirement that the entire secured obligations
have become due, and in such event, any such foreclosure sale may be made subject to the unmatured
part of the secured obligations, in which event such foreclosure sale shall not in any manner
affect the unmatured part of the secured obligations but, as to such unmatured part, this Mortgage
shall remain in full force and effect as though no sale had been made. The proceeds of such sale
shall be applied as provided in
Section 3.4
. Several sales may be made hereunder without
exhausting the right of sale for any unmatured part of the secured obligations.
Section 3.6
Remedies Cumulative
. All remedies herein provided for are cumulative of
each other and of all other remedies existing at law or in equity and are cumulative of any and all
other remedies provided for in the Development Agreement, and, in addition to the remedies herein
provided, there shall continue to be available all such other remedies as may now or hereafter
exist at law or in equity for the collection of the secured obligations and the enforcement of the
covenants herein and the foreclosure of the liens or security interests evidenced hereby, and the
resort to any remedy provided for hereunder or under the Development Agreement or provided for by
applicable law shall not prevent the concurrent or subsequent employment of any other appropriate
remedy or remedies.
Section 3.7
Discretion as to Security
. Mortgagee may resort to any security given by
this Mortgage or to any guaranty of the obligations secured hereby, in whole or in part, and in
such
portions and in such order as may seem best to Mortgagee in its sole and uncontrolled
discretion, and any such action shall not in any way be considered as a waiver of any of the
rights, benefits, liens or security interests evidenced by this Mortgage.
Section 3.8
Mortgagors Waiver of Certain Rights
. To the full extent Mortgagor may do
so, Mortgagor agrees that Mortgagor will not at any time insist upon, plead, claim or take the
benefit or advantage of any law now or hereafter in force providing for any appraisement,
- 10 -
valuation, stay, extension or redemption, and Mortgagor, for Mortgagor, Mortgagors successors and
assigns, and for any and all persons ever claiming any interest in the Mortgaged Properties, to the
extent permitted by applicable law, hereby waives and releases all rights of appraisement,
valuation, stay of execution, redemption, notice of intention to mature or declare due the whole of
the secured obligations, notice of election to mature or declare due the whole of the secured
obligations and all rights to a marshaling of assets of Mortgagor, including the Mortgaged
Properties, or to a sale in inverse order of alienation in the event of foreclosure of the liens or
security interests hereby created. Mortgagor shall not have or assert any right under any statute
or rule of law pertaining to the marshaling of assets, sale in inverse order of alienation, the
exemption of homestead, the administration of estates of decedents, or other matters whatever to
defeat, reduce or affect the right under the terms of this Mortgage to a sale of the Mortgaged
Properties for the collection of the secured obligations without any prior or different resort for
collection, or the right under the terms of this Mortgage to the payment of the secured obligations
out of the proceeds of sale of the Mortgaged Properties in preference to every other claimant
whatever. If any law referred to in this section and now in force, of which Mortgagor or
Mortgagors successors or assigns or any other persons claiming any interest in the Mortgaged
Properties or the Collateral might take advantage despite this section, shall hereafter be repealed
or cease to be in force, such law shall not thereafter be deemed to preclude the application of
this section.
Section 3.9
No Release of Obligations
. Neither Mortgagor nor any other Person
hereafter obligated for payment of all or any part of the secured obligations shall be relieved of
such secured obligations by reason of (i) the failure of Mortgagee or any other Person so obligated
to foreclose the lien of this Mortgage or to enforce any provision hereunder or under the
Development Agreement; or (ii) the release, regardless of consideration, of the Mortgaged
Properties or any portion thereof or interest therein or the addition of any other property to the
Mortgaged Properties. Mortgagee may release, regardless of consideration, any part of the
Mortgaged Properties without, as to the remainder, in any way impairing, affecting, subordinating
or releasing the lien or security interest created in or evidenced by this Mortgage or its stature
as a first and prior lien and security interest in and to the Mortgaged Properties, and without in
any way releasing or diminishing the liability of any person or entity liable for the repayment or
performance of the secured obligations. For payment of the secured obligations, Mortgagee may
resort to any other security therefor held by Mortgagee in such order and manner as Mortgagee may
elect.
Section 3.10
Discontinuance of Proceedings
. In case Mortgagee shall have proceeded to
invoke any right, remedy or recourse permitted hereunder or under the Development Agreement and
shall thereafter elect to discontinue or abandon same for any reason, Mortgagee shall have the
unqualified right to do so and, in such an event, Mortgagor and Mortgagee shall be restored to
their former positions with respect to the secured obligations, this Mortgage, the Development
Agreement, the Mortgaged Properties and otherwise, and the rights, remedies, recourses and
powers of Mortgagee shall continue as if same had never been invoked.
ARTICLE IV.
Miscellaneous
- 11 -
Section 4.1
Effective as a Financing Statement
. This Mortgage, among other things,
covers goods which are or are to become fixtures on the real property described herein and covers
as-extracted collateral related to the real property described herein. This Mortgage shall be
effective as a financing statement (i) filed as a fixture filing with respect to all fixtures
included within the Mortgaged Properties, and (ii) covering all other Mortgaged Properties. This
Mortgage is to be filed for record in the real property records of each county where any part of
the Mortgaged Properties is situated and may also be filed in the offices of the Bureau of Land
Management or any relevant state agency (or any successor agencies). The mailing address of
Mortgagor is the address of Mortgagor set forth at the end of this Mortgage and the address of
Mortgagee from which information concerning the security interests hereunder may be obtained is the
address of Mortgagee set forth at the end of this Mortgage. Nothing contained in this paragraph
shall be construed to limit the scope of this Mortgage nor its effectiveness as a financing
statement covering any type of Mortgaged Properties.
Section 4.2
Reproduction of Mortgage as Financing Statement; Authorization to File
. A
carbon, photographic, facsimile or other reproduction of this Mortgage or of any financing
statement relating to this Mortgage shall be sufficient as a financing statement for any of the
purposes referred to in
Section 4.1
. Without limiting any other provision herein,
Mortgagor hereby authorizes Mortgagee to file, in any filing or recording office, one or more
financing statements describing the Collateral and any renewal or continuation statements thereof.
Section 4.3
Notice to Account Debtors
. In addition to, but without limitation of, the
rights granted in Article III hereof, Mortgagee may, at any time after a default has a occurred
that is continuing, notify the account debtors or obligors of any accounts, chattel paper,
negotiable instruments or other evidences of obligations included in the Collateral to pay
Mortgagee directly.
Section 4.4
Waivers
. Mortgagee may at any time and from time to time in writing waive
compliance by Mortgagor with any covenant herein made by Mortgagor to the extent and in the manner
specified in such writing, or consent to Mortgagors doing any act which hereunder Mortgagor is
prohibited from doing, or to Mortgagors failing to do any act which hereunder Mortgagor is
required to do, to the extent and in the manner specified in such writing, or release any part of
the Mortgaged Properties or any interest therein from the lien and security interest of this
Mortgage. Any party liable, either directly or indirectly, for the secured obligations or for any
covenant herein or in the Development Agreement may be released from all or any part of such
obligations without impairing or releasing the liability of any other party. No such act shall in
any way impair any rights or powers hereunder except to the extent specifically agreed to in such
writing.
Section 4.5
No Impairment of Security
. To the extent allowed by applicable law, the
lien, privilege, security interest and other security rights hereunder shall not be impaired by any
indulgence, moratorium or release which may be granted including, but not limited to, any renewal,
extension or modification which may be granted with respect to any secured obligations, or any
surrender, compromise, release, renewal, extension, exchange or substitution which may be granted
in respect of the Mortgaged Properties, or any part thereof or any interest therein, or any release
or indulgence granted to any endorser, guarantor or surety of any secured obligations.
- 12 -
Section 4.6
Acts Not Constituting Waiver
. Any default may be waived without waiving
any other prior or subsequent default. Any default may be remedied without waiving the default
remedied. Neither failure to exercise, nor delay in exercising, any right, power or remedy upon
any default shall be construed as a waiver of such default or as a waiver of the right to exercise
any such right, power or remedy at a later date. No single or partial exercise of any right, power
or remedy hereunder shall exhaust the same or shall preclude any other or further exercise thereof,
and every such right, power or remedy hereunder may be exercised at any time and from time to time.
No modification or waiver of any provision hereof nor consent to any departure by Mortgagor
therefrom shall in any event be effective unless the same shall be in writing and signed by
Mortgagee and then such waiver or consent shall be effective only in the specific instances, for
the purpose for which given and to the extent therein specified. No notice nor demand on Mortgagor
in any case shall of itself entitle Mortgagor to any other or further notice or demand in similar
or other circumstances. Acceptance of any payment in an amount less than the amount then due on
any secured obligations shall be deemed an acceptance on account only and shall not in any way
excuse the existence of a default hereunder.
Section 4.7
Forbearance or Extension
. No forbearance and no extension of the time for
the payment of the obligations secured hereby, shall operate to release, discharge, modify, change
or affect, in whole or in part, the liability of Mortgagor hereunder for the payment of the
obligations or performance of the obligations secured hereby, or the liability of any other person
hereunder or for the payment of the obligations secured hereby.
Section 4.8
Place of Payment
. All secured obligations which may be owing hereunder at
any time by Mortgagor shall be payable at the place designated in the Development Agreement (or if
no such designation is made, at the address of Mortgagee indicated at the end of this Mortgage), or
at such other place as Mortgagee may designate in writing.
Section 4.9
Application of Payments to Certain Obligations
. If any part of the
secured obligations cannot be lawfully secured by this Mortgage or if any part of the Mortgaged
Properties cannot be lawfully subject to the lien, privilege and security interest hereof to the
full extent of such obligations, then all payments made shall be applied on said obligations first
in discharge of that portion thereof which is not secured by this Mortgage.
Section 4.10
Compliance With Usury Laws
. It is the intent of Mortgagor and Mortgagee
to contract in strict compliance with applicable usury law from time to time in effect. In
furtherance thereof, it is stipulated and agreed that none of the terms and provisions contained
herein, in the Development Agreement or in the Conveyances shall ever be construed to create a
contract to pay, for the use, forbearance or detention of money, interest in excess of the maximum
amount of interest permitted to be collected, charged, taken, reserved or received by
applicable law from time to time in effect.
Section 4.11
Release of Mortgage
. In addition to the partial releases required
pursuant to
Section 1.5
hereof, if Mortgagor has satisfied its obligations under Article II
of the Development Agreement, upon request by Mortgagor, Mortgagee shall promptly cause
satisfaction, discharge and release of this Mortgage to be entered upon the record at the expense
of Mortgagor and shall
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execute and deliver or cause to be executed and delivered such instruments
of satisfaction, reassignment and/or release as may be appropriate.
Section 4.12
Notice
. All notices, requests, consents, demands and other
communications required or permitted hereunder or under the Development Agreement shall be in
writing and, unless otherwise specifically provided in the Development Agreement, shall be deemed
sufficiently given or furnished if delivered by personal delivery, by telefacsimile, by delivery
service with proof of delivery, or by registered or certified United States mail, postage prepaid,
at the addresses specified at the end of this Mortgage (unless changed by similar notice in writing
given by the particular party whose address is to be changed). Any such notice or communication
shall be deemed to have been given (a) in the case of personal delivery or delivery service, as of
the date of first attempted delivery at the address and in the manner provided herein, (b) in the
case of telefacsimile, upon receipt, and (c) in the case of registered or certified United States
mail, three (3) days after deposit in the mail. Notwithstanding the foregoing, or anything else in
the Development Agreement which may appear to the contrary, any notice given in connection with a
foreclosure of the liens or security interests created hereunder, or otherwise in connection with
the exercise by Mortgagee of its rights hereunder or under the Development Agreement, which is
given in a manner permitted by applicable law shall constitute proper notice; without limitation of
the foregoing, notice given in a form required or permitted by statute shall (as to the portion of
the Mortgaged Properties to which such statute is applicable) constitute proper notice.
Section 4.13
Invalidity of Certain Provisions
. A determination that any provision of
this Mortgage is unenforceable or invalid shall not affect the enforceability or validity of any
other provision and the determination that the application of any provision of this Mortgage to any
person or circumstance is illegal or unenforceable shall not affect the enforceability or validity
of such provision as it may apply to other persons or circumstances.
Section 4.14
Gender; Titles; Construction
. All references in this Mortgage to
articles, sections, subsections and other subdivisions refer to corresponding articles, sections,
subsections and other subdivisions of this Mortgage unless expressly provided otherwise. Titles
appearing at the beginning of any of such subdivisions are for convenience only and shall not
constitute part of such subdivisions and shall be disregarded in construing the language contained
in such subdivisions. The words
this Mortgage
,
this instrument
,
herein
,
hereof
,
hereunder
and words of similar import refer to this Mortgage as a whole and not to any
particular subdivision unless expressly so limited. Unless the context otherwise requires:
including
and its grammatical variations mean including without limitation;
or
is not
exclusive; words in the singular form shall be construed to include the plural and vice versa;
words in any gender include all other genders; references herein to any instrument or agreement
refer to such instrument or agreement as it may be from time to time amended or supplemented; and
references herein to any
Person include such Persons successors and assigns. All references in this Mortgage to
exhibits and schedules refer to exhibits and schedules to this Mortgage unless expressly provided
otherwise, and all such exhibits and schedules are hereby incorporated herein by reference and made
a part hereof for all purposes. This Mortgage has been drafted with the joint participation of
Mortgagor and Mortgagee and shall be construed neither against nor in favor of either such party
but rather in accordance with the fair meaning hereof.
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Section 4.15
Recording
. Mortgagor will cause this Mortgage and all amendments and
supplements thereto and substitutions therefor and all financing statements and continuation
statements relating thereto to be recorded, filed, re-recorded and refiled in such manner and in
such places as Mortgagee shall reasonably request and will pay all such recording, filing,
re-recording and refiling taxes, fees and other charges.
Section 4.16
Certain Obligations of Mortgagor
. Without limiting Mortgagors
obligations hereunder, Mortgagors liability hereunder and the obligations secured hereby shall
extend to and include all post petition interest, expenses and other duties and liabilities with
respect to Mortgagors obligations hereunder which would be owed but for the fact that the same may
be unenforceable due to the existence of a bankruptcy, reorganization or similar proceeding.
Section 4.17
Authority of Mortgagee
. All persons shall be entitled to rely on the
releases, waivers, consents, approvals, notifications and other acts of Mortgagee without the
joinder of any party other than Mortgagee in such releases, waivers, consents, approvals,
notifications or other acts.
Section 4.18
Counterparts
. This Mortgage may be executed in several counterparts, all
of which are identical, except that, to facilitate recordation, certain counterparts hereof may
include only that portion of the applicable Exhibit A to the Conveyances which contains
descriptions of the properties located in (or otherwise subject to the recording or filing
requirements or protections of the recording or filing acts or regulations of) the recording
jurisdiction in which the particular counterpart is to be recorded, and other portions of the
applicable Exhibit A to the Conveyances shall be included in such counterparts by reference only.
All of the counterparts hereof together shall constitute one and the same instrument. An executed
counterpart of this Mortgage containing the full text to the entire Exhibit is recorded in the real
property records of Greene County, Pennsylvania.
Section 4.19
Successors and Assigns
. The terms, provisions, covenants,
representations, indemnifications and conditions hereof shall be binding upon Mortgagor, and the
successors and assigns of Mortgagor, and shall inure to the benefit of Mortgagee and its respective
successors and assigns, and shall constitute covenants running with the Mortgaged Properties. All
references in this Mortgage to Mortgagor or Mortgagee shall be deemed to include all such
successors and assigns.
Section 4.20
FINAL AGREEMENT OF THE PARTIES
. THE WRITTEN TRANSACTION DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Section 4.21
CHOICE OF LAW
. WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW THAT MAY CAUSE THE APPLICATION OF LAWS OF ANY OTHER JURISDICTION, THIS MORTGAGE SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA.
- 15 -
Section 4.22
Exculpation Provisions
.
EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS MORTGAGE; AND AGREES THAT IT IS CHARGED WITH
NOTICE AND KNOWLEDGE OF THE TERMS OF THIS MORTGAGE; THAT IT HAS IN FACT READ THIS MORTGAGE AND IS
FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS
MORTGAGE; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE
NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS MORTGAGE; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY
IN ENTERING INTO THIS MORTGAGE; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS MORTGAGE
RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND
RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND
COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF
THIS MORTGAGE ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE
PROVISION IS NOT CONSPICUOUS.
[Signature Page Follows]
- 16 -
IN WITNESS WHEREOF, this Mortgage is executed by Mortgagor on the date set forth in the
acknowledgement below, to be effective immediately after the granting of the Conveyances and
simultaneously with the execution and delivery of the Development Agreement.
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ENERGY CORPORATION OF AMERICA
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By:
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/s/ Donald C. Supcoe
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Name:
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Donald C. Supcoe
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Title:
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Senior Vice President
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The address of Mortgagor is:
Energy Corporation of America
4643 South Ulster Street
Suite 1100
Denver, Colorado 80237
Attention: Michael S. Fletcher
Facsimile No.: (303) 694-2763
With a copy to:
501 56th Street
Charleston, West Virginia 25304
Attention: Donald C. Supcoe
Facsimile No.: (304) 925-3285
With a copy to:
Vinson & Elkins L.L.P.
1001 Fannin Street, Suite 3500
Houston, Texas 77002
Attention: David P. Oelman
Facsimile No. (713) 615-5861
Prepared by:
Vinson & Elkins LLP
1001 Fannin Street
Suite 2500
Houston, TX 77002-6760
Attention: Thomas Herbert
Signature Page to Mortgage
CERTIFICATE OF RESIDENCE
I do hereby certify that the address of Mortgagee is:
The Bank of New York Mellon Trust Company, N.A.
919 Congress Avenue, Suite 500
Austin, Texas 78701
Attn: Michael J. Ulrich
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ECA MARCELLUS TRUST I
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By: The Bank of New York Mellon Trust Company, N.A.
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By:
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/s/ Michael J. Ulrich
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Name:
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Michael J. Ulrich
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Title:
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Authorized Signatory
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Signature Page to Mortgage
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THE
STATE OF COLORADO
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§
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§
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COUNTY
OF DENVER
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On
this, the 7
th
day of July, 2010, before me Julie Ann Kitano, a Notary public,
personally appeared Donald C. Supcoe, who acknowledged himself to be the Senior Vice President of
Energy Corporation of America, a West Virginia corporation, and that he as such Senior Vice
President, being authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as Senior Vice President.
In witness whereof, I hereunto set my hand and official seal.
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[SEAL]
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/s/ Julie Ann Kitano
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My
Commission Expires: 4-26-2014
Acknowledgment to Signature Page to Mortgage
ANNEX A-1
COPY OF TERM ROYALTY CONVEYANCE (PUD)
Annex A-1 to Mortgage
ANNEX A-2
COPY OF PERPETUAL ROYALTY CONVEYANCE (PUD)
Annex A-2 to Mortgage
Exhibit 10.11
Execution Version
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WHEN RECORDED OR FILED,
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PLEASE RETURN TO:
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Vinson & Elkins L.L.P.
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1001 Fannin Street, Suite 2500
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Houston, Texas 77002
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Attention: Linda Daugherty
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Space above for County Recorders Use
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MORTGAGE, ASSIGNMENT OF LEASES,
SECURITY AGREEMENT, FIXTURE FILING
AND FINANCING STATEMENT
FROM
ENERGY CORPORATION OF AMERICA,
as MORTGAGOR
TO
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
AS TRUSTEE OF ECA MARCELLUS TRUST I,
as MORTGAGEE
Dated as of July 7, 2010
A CARBON, PHOTOGRAPHIC, FACSIMILE, OR OTHER REPRODUCTION OF THIS
INSTRUMENT IS SUFFICIENT AS A FINANCING STATEMENT.
THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.
THIS INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES PURSUANT TO 42 PA.C.S. § 8144.
THIS INSTRUMENT COVERS PRODUCTS AND PROCEEDS OF THE MORTGAGED PROPERTIES.
THIS INSTRUMENT COVERS MINERALS AND OTHER SUBSTANCES OF VALUE WHICH MAY BE EXTRACTED FROM THE EARTH
(INCLUDING WITHOUT LIMITATION OIL AND GAS) AND THE ACCOUNTS RELATED THERETO, WHICH WILL BE FINANCED
AT THE WELLHEADS OF THE WELL OR WELLS LOCATED ON THE MORTGAGED PROPERTIES DESCRIBED HEREIN. THIS
FINANCING STATEMENT IS TO BE FILED OR FILED FOR RECORD, AMONG OTHER PLACES, IN THE REAL ESTATE
RECORDS OR SIMILAR RECORDS OF THE RECORDERS OF THE COUNTIES LISTED ON THE EXHIBITS HERETO. THE
MORTGAGOR HAS AN INTEREST OF RECORD IN THE REAL ESTATE AND IMMOVABLE PROPERTY CONCERNED, WHICH
INTEREST IS DESCRIBED IN THE EXHIBITS ATTACHED HERETO.
PORTIONS OF THE MORTGAGED PROPERTIES ARE GOODS WHICH ARE OR ARE TO BECOME AFFIXED TO OR FIXTURES ON
THE LAND DESCRIBED IN OR REFERRED TO IN THE EXHIBITS HERETO. THIS FINANCING STATEMENT IS TO BE
FILED FOR RECORD OR RECORDED, AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS OR SIMILAR RECORDS OF
EACH COUNTY IN WHICH SAID LAND OR ANY PORTION THEREOF IS LOCATED. THE MORTGAGOR IS THE OWNER OF
RECORD INTEREST IN THE REAL ESTATE CONCERNED. THIS INSTRUMENT IS ALSO TO BE INDEXED IN THE INDEX
OF FINANCING STATEMENTS OR THE UCC RECORDS.
- ii -
MORTGAGE, ASSIGNMENT OF LEASES,
SECURITY AGREEMENT, FIXTURE FILING
AND FINANCING STATEMENT
THIS MORTGAGE, ASSIGNMENT OF LEASES, SECURITY AGREEMENT, FIXTURE FILING AND FINANCING
STATEMENT (this
Mortgage
) is entered into as of July 7, 2010 by Energy Corporation of America, a
West Virginia corporation (herein called
Mortgagor
), whose address for notice is 4643 South
Ulster Street, Suite 1100, Denver, CO 80237, and The Bank of New York Mellon Trust Company, N.A.,
acting not in its individual capacity but solely as trustee of ECA Marcellus Trust I, a Delaware
statutory trust (the
Trust
), as mortgagee (
Mortgagee
) whose address for notice is c/o The Bank
of New York Mellon Trust Company, N.A., 919 Congress Avenue, Suite 500, Austin Texas 78701.
R
E
C
I
T
A
L
S
:
A. By means of (1) a Term Overriding Royalty Interest Conveyance (PUD) dated as of July 7,
2010 (the
Term Conveyance (PUD)
) from Mortgagor to Eastern Marketing Corporation, a true and
correct copy of which is annexed hereto as Annex A-1 and made a part hereof, (2) a Term Overriding
Royalty Interest Conveyance (PDP) dated as of July 7, 2010 (the
Term Conveyance (PDP)
and
together with Term Conveyance (PUD) collectively the
Term Conveyances
) from Mortgagor to Eastern
Marketing Corporation, a true and correct copy of which is annexed hereto as Annex A-2 and made a
part hereof, (3) a Perpetual Overriding Royalty Interest Conveyance (PUD) dated as of July 7, 2010
(the
Perpetual Conveyance (PUD)
) from Mortgagor to Mortgagee, a true and correct copy of which is
annexed hereto as Annex A-3 and made a part hereof, and (4) a Perpetual Overriding Royalty Interest
Conveyance (PDP) dated as of July 7, 2010 (the
Perpetual Conveyance (PDP)
and together with the
Perpetual Conveyance (PUD) collectively the
Perpetual Conveyances
) from Mortgagor to Mortgagee, a
true and correct copy of which is annexed hereto as Annex A-4 and made a part hereof, Mortgagor has
conveyed and assigned to Mortgagee or Eastern Marketing Corporation, as applicable, the
Royalty
Interest
, as defined therein and herein so called. Each of the Term Conveyances and the Perpetual
Conveyances are hereinafter referred to each individually a
Conveyance
, and collectively
Conveyances
. Reference is made to the Conveyances for the meaning of capitalized terms that are
defined therein (and not otherwise defined herein), which terms shall have the same meanings when
used herein.
B. Eastern Marketing Corporation has assigned the Term Conveyances and all rights
thereunder to the Mortgagee, and consequently the Mortgagee holds all of the Royalty Interest
described above.
C. Mortgagor is executing and delivering this Mortgage in order to provide protection to
the Trust, in the event of a bankruptcy of Mortgagor, against the risk that the Royalty Interests
created by the Conveyances to Mortgagee or Eastern Marketing Corporation, as applicable, were not
considered a real property interest.
- 1 -
D. Each Royalty Interest is carved out of the applicable Subject Interests. Mortgagors
interests in each of the Subject Interests (including Mortgagors reversionary interests therein),
after giving effect to the Conveyances, are herein called the
Retained Interests
.
E. The Mortgaged Properties (as hereinafter defined) include (but are not limited to)
interests in the Subject Lands described on Exhibit A to each of the Conveyances attached hereto
and conveyed to Mortgagee or Eastern Marketing Corporation, as applicable, which Exhibits A are
incorporated herein by reference for all purposes. This Mortgage is to be recorded in Greene
County, Pennsylvania.
F. Mortgagee has conditioned its execution and delivery of the Conveyances upon the execution
and delivery by Mortgagor of this Mortgage, and Mortgagor has agreed to enter into this Mortgage.
NOW, THEREFORE, in order to comply with the terms and conditions of the Conveyances and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Mortgagor hereby agrees with Mortgagee as follows:
ARTICLE I.
Granting Clauses; Secured Obligations
Section 1.1
Grant and Mortgage
. Mortgagor, in order to secure the payment and
performance of the secured obligations hereinafter referred to and the performance of the
obligations, covenants, agreements, warranties and undertakings of Mortgagor hereinafter described,
does hereby GRANT, BARGAIN, SELL, ALIEN, CONVEY, TRANSFER, MORTGAGE, ASSIGN, WARRANT, PLEDGE,
HYPOTHECATE and CONFIRM to Mortgagee, its successors and assigns, for the benefit of Mortgagee,
with mortgage covenants, and upon the statutory mortgage condition for the breach of which this
Mortgage may be subject to foreclosure as provided by applicable law, all of the following
described rights, interests and properties, to the extent applicable and subject to the
Conveyances, which are located in Greene County, Pennsylvania (the
Mortgaged Properties
):
(a) All of Mortgagors right, title, interest and estate, if any, in and to the Subject
Interests conveyed to Mortgagee or Eastern Marketing Corporation, as applicable, pursuant to
the Conveyances, including those certain oil, gas or other mineral leases (the
Gas Leases
)
in the Subject Lands more particularly described on Exhibit A to the Conveyances attached
hereto and Additional Leases within the Target Formation within the AMI Area, except the
Retained Interests (the
Mortgaged Interests
) and expressly limited to such Mortgaged
Interests pertaining to Gas in, under and that may be produced, saved or sold from the
Target Formation from the wellbores of the Wells or the Development Wells, sufficient to
cause the Trust to receive a volume of Trust Gas or Assignee Gas, as applicable, calculated
in accordance with the provisions of the Conveyances;
(b) All rights, titles, interests and estates now owned or hereafter acquired by
Mortgagor in and to all Subject Gas, including all oil, gas, casinghead gas, condensate,
- 2 -
distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined
therefrom and all other minerals (collectively called the
Hydrocarbons
) which may be
produced and saved from or are attributable to the Mortgaged Interests, including all oil in
tanks and all profits, proceeds, products, revenues and other income from or attributable to
the Hydrocarbons produced from the Mortgaged Interests, except the Retained Interests
(collectively the
Mortgaged Gas
) and expressly limited to such Mortgaged Gas pertaining to
Gas in, under and that may be produced, saved or sold from the Target Formation from the
wellbores of the Wells or the Development Wells, sufficient to cause the Trust to receive a
volume of Trust Gas or Assignee Gas, as applicable, calculated in accordance with the
provisions of the Conveyances;
(c) All easements, servitudes, rights-of-way, surface leases and other surface rights
on and over the Subject Lands (the
Surface Rights
) which are now or hereafter used, or
held for use, in connection with the Mortgaged Interest;
(d) All licenses, permits and other regulatory approvals held by Mortgagor to the
extent relating to the Mortgaged Interests;
(e) All proceeds of all of the rights, titles and interests of Mortgagor described in
the foregoing paragraphs (a) through (d) whether such proceeds or payments are goods, money,
documents, instruments, chattel paper, securities, accounts, payment intangibles, general
intangibles, fixtures, real, personal or other assets; and
(f) Any and all liens, security interests, financing statements or similar interests of
Mortgagor attributable to the Mortgaged Interests or the Mortgaged Gas and proceeds of runs
therefrom arising under or created by any statutory provision, judicial decision or
otherwise.
TO HAVE AND TO HOLD the Mortgaged Properties unto Mortgagee, and Mortgagees successor and
assigns, for the benefit of the Mortgagee, upon the terms, provisions and conditions herein set
forth.
Section 1.2
Grant of Security Interest; Fixture Filing
. In order to further secure
the payment of the secured obligations hereinafter referred to and the performance of the
obligations, covenants, agreements, warranties, indemnities and undertakings of Mortgagor
hereinafter described, Mortgagor does hereby grant to Mortgagee a security interest in and to the
Mortgaged Properties (whether now owned or hereafter acquired by operation of law or otherwise)
insofar as the Mortgaged Properties consists of personal property of any kind or character defined
in and subject to the provisions of Article 9 of the Uniform Commercial Code as in effect from time
to time as part of the laws applicable to this Mortgage (the
Applicable UCC
), including the
proceeds and products from any and all of such personal property (such personal property and
proceeds and products therefrom being herein sometimes collectively called the
Collateral
).
Except as otherwise expressly provided in this Mortgage, all terms in this Mortgage relating to the
Mortgaged Properties and the grant of the foregoing security interest which are defined in the
Applicable UCC shall have the meanings assigned to them in Article 9 (or, absent definition in
Article 9, in any other Article) of the Applicable UCC, as those meanings may be amended,
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revised or replaced from time to time. Notwithstanding the foregoing, the parties intend that
the terms used herein which are defined in the Applicable UCC have, at all times, the broadest and
most inclusive meanings possible. If the Applicable UCC shall in the future be amended or held by
a court to define any term used herein more narrowly, or less inclusively, than the UCC in effect
on the date of this Mortgage, such amendment or holding shall be disregarded in defining terms used
in this Mortgage.
This Mortgage constitutes a security agreement, fixture filing and financing statement as
those terms are used in the Uniform Commercial Code of the State in which the Mortgaged Property is
located (the
PA UCC
). For purposes of this
Section 1.2
, this Mortgage is to be filed and
recorded in, among other places, the real estate records of the County in which the Mortgaged
Properties are is located and the following information is included: (1) Mortgagor shall be deemed
the Debtor with the address set forth for Mortgagor on the first page of this Mortgage which
Mortgagor certifies is accurate; (2) Mortgagee shall be deemed to be the Secured Party with the
address set forth for Mortgagee on the first page of this Mortgage and shall have all of the rights
of a secured party under the PA UCC; (3) this Mortgage covers goods which are or are to become
fixtures; (4) the name of the record owner of the Mortgaged Properties is Energy Corporation of
America, the Debtor; (5) the organizational identification number of the Debtor is none; (6) the
Debtor is a corporation organized under the laws of the State of West Virginia; and (7) the legal
name of the Debtor is Energy Corporation of America. The Debtor hereby authorizes Mortgagee to
file any financing statements and terminations thereof or amendments or modifications thereto
without the signature of the Debtor, where permitted by law; provided, however, this authorization
does not release Mortgagor from its general duty under this Mortgage, or the Conveyances to take
all actions necessary to perfect and maintain the perfected interest of Mortgagee in the Mortgaged
Properties.
Section 1.3
Assignment of Leases and Income
.
(a) This Mortgage is also an absolute and unconditional assignment to Mortgagee of the
Gas Leases, whether now in existence or hereafter arising, for the purpose of vesting in
Mortgagee, subject to the Permitted Encumbrances (as defined in the Conveyances attached
hereto as Annex A-1, Annex A-2, Annex A-3 and Annex A-4), a, perfected security interest in
the Gas Leases. Mortgagor hereby assigns, transfers and sets over to Mortgagee all of the
Gas Leases insofar and only insofar to the extent pertaining to the Mortgaged Interests.
(b) So long as no default (as hereinafter defined) has occurred and is then continuing,
Mortgagor shall have a license, revocable at the will of Mortgagee following the occurrence
and continuation of a default, to enforce the Gas Leases and exercise Mortgagors rights
thereunder.
(c) Notwithstanding any legal presumption to the contrary, Mortgagee shall not be
obligated by reason of its acceptance of this assignment to perform any obligation of
Mortgagor as lessee under any Gas Lease. The acceptance of this assignment shall not
constitute a waiver of any rights of Mortgagee under the Conveyances or constitute a cure of
any default by Mortgagor thereunder.
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Section 1.4
Conveyances and Other Obligations
. This Mortgage is made to secure and
enforce the payment and performance of the following, obligations, indebtedness and liabilities in
the event that the Mortgagor has filed for bankruptcy and the Royalty Interest is determined by a
bankruptcy court to be not a real property interest:
(a) The full performance of all obligations, covenants, agreements and undertakings of
and by Mortgagor from time to time owing to Mortgagee under the Conveyances for the delivery
of such volume of Trust Gas or Assignee Gas, as applicable, calculated in accordance with
the provisions of the Conveyances;
(b) Any sums advanced or expenses or costs incurred by the Mortgagee (or any receiver
appointed hereunder) which are made or incurred pursuant to, or permitted by, the terms
hereof, plus interest thereon at the Applicable Rate (as defined hereinafter) or otherwise
agreed upon, from the date of the advances or the incurring of such expenses or costs until
reimbursed; and
(c) Without limiting the generality of the foregoing, all post-petition interest,
expenses, and other duties, damages and liabilities with respect to indebtedness or other
obligations described above in this
Section 1.4
, which would be owed but for the
fact that they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization, or similar proceeding.
Section 1.5
Secured Obligations
. The obligations referred to in
Section 1.4
,
and all renewals, extensions and modifications thereof, and all substitutions therefor, in whole or
in part, are herein sometimes referred to as the
secured obligations
or the
obligations secured
hereby
. It is contemplated and acknowledged that the secured obligations may include obligations
hereafter arising and that this Mortgage shall have effect, as of the date hereof, to secure all
secured obligations, regardless of whether any amounts exist on the date hereof or arise on a later
date or, whether having arisen or been advanced, are later repaid in part or in whole and further
obligations arise or advances are made at a later date.
Section 1.6
Maturity Date
. The obligations, covenants, agreements and undertakings of
and by Mortgagor from time to time owing to Mortgagee are due to be performed on and before the
date that the Trust is terminated, such date of termination of the Trust shall be the maturity date
of this Mortgage.
ARTICLE II.
Covenants
Section 2.1 Subject to the Conveyances, Mortgagor warrants, represents, covenants and agrees
that at the time of the execution of Conveyances to Mortgagee or Eastern Marketing Corporation, as
applicable, the Mortgaged Properties were free and clear of all liens, security interests and other
Encumbrances, subject only to the Permitted Encumbrances and the Drilling Support Lien, and that,
to Mortgagors knowledge, as of the date of the Conveyances, Mortgagor was lawfully seized of the
estates and interests granted to Mortgagor under the Gas Leases and any instruments evidencing
Surface Rights. Mortgagor has heretofore conveyed its interest in and to
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the Mortgaged Properties to Mortgagee or Eastern Marketing Corporation, as applicable, and
this Mortgage is only being granted to provide protection to the Trust in the event of bankruptcy
of Mortgagor against the risk that the Royalty Interests were not real property interests. This
Mortgage is subject to (but in no event shall this Mortgage be an assumption of) the Permitted
Encumbrances and the Drilling Support Lien, in each case to the extent and only for so long as the
same are valid and subsisting and affect title to the Mortgaged Properties;
provided
that, with the
exception of the Drilling Support Lien, the foregoing is not intended to, and shall not,
subordinate the first priority lien on the entire right, title and interest, if any, of the
Mortgagor in the Mortgaged Properties created hereby.
Section 2.2 Mortgagor hereby covenants with the Mortgagee as follows:
(a)
Further Assurance
. Mortgagor will, on request of Mortgagee, (i) promptly
correct any defect, error or omission which may be discovered in the contents of this
Mortgage, or in the execution or acknowledgment of this Mortgage; (ii) execute,
acknowledge, deliver and record or file such further instruments (including further
mortgages, security agreements, financing statements, continuation statements, and
assignments of accounts, funds, contract rights, and general intangibles) and do such
further acts as may be necessary, desirable or proper to carry out more effectively the
purposes of this Mortgage; and (iii) execute, acknowledge, deliver, and file or record any
document or instrument (including specifically any financing statement) reasonably requested
by Mortgagee to protect the lien or the security interest hereunder against the rights or
interests of third persons. Mortgagor shall pay all reasonable costs connected with any of
the foregoing.
(b)
Name and Place of Business
. Mortgagor will not cause or permit any change
to be made in its name, identity, limited liability company structure, federal employer
identification number or state of organization (whether by merger or otherwise) unless
Mortgagor shall have notified Mortgagee of such change at least ten (10) days prior to the
effective date of such change, and shall have first taken all action required by Mortgagee
for the purpose of further perfecting or protecting the liens and security interests in the
Mortgaged Properties created hereby. Mortgagors exact name is the name set forth in this
Mortgage. Mortgagor is a corporation organized under the laws of the State of West
Virginia.
ARTICLE III.
Assignment of Production, Accounts, and Proceeds
Section 3.1
Assignment of Production
. Subject to the Conveyances, to further secure
the secured obligations, Mortgagor hereby assigns, transfers and conveys unto Mortgagee, its
successors and assigns, all of Mortgagors right, title and interests in and to the Hydrocarbons
attributable to the Trust Gas or Assignee Gas (but specifically excluding all Gas pertaining to the
Retained Interests) and the revenues and proceeds attributable to such Hydrocarbons and all
accounts arising therefrom or in connection therewith and all payments in lieu of such Hydrocarbons
such as take or pay payments or settlements (all of the foregoing, the
Production
- 6 -
Proceeds
). Upon the occurrence and during the continuation of a default, Mortgagee is fully
authorized to receive and receipt for the Production Proceeds; to endorse and cash any and all
checks and drafts payable to the order of Mortgagor or Mortgagee for the account of Mortgagor
received from or in connection with the Production Proceeds; and to execute transfer and division
orders in the name of Mortgagor, or otherwise, with warranties binding Mortgagor. All Production
Proceeds received by Mortgagee pursuant to this
Section 3.1
during the continuance of a
default, or otherwise from time to time in the possession of Mortgagee, shall be applied to the
secured obligations due hereunder and in the event no secured obligations are currently due or are
fully paid, any remaining Production Proceeds will be paid to Mortgagor. Mortgagee shall not be
liable for any delay, neglect or failure to effect collection of any Production Proceeds or to take
any other action in connection therewith or hereunder; but Mortgagee shall have the right,
exercisable at its election at any time after a default has occurred and is continuing, in the name
of Mortgagor or otherwise, to prosecute and defend any and all actions or legal proceedings deemed
advisable by Mortgagee in order to collect such funds and to protect the interests of Mortgagee or
Mortgagor, with all costs, expenses and attorneys fees incurred in connection therewith being paid
by Mortgagor and until so paid being a part of the secured obligations secured by this Mortgage.
Mortgagor agrees to perform all such acts, and to execute all such further assignments, transfer
orders and division orders, and other instruments as may be required or desired by Mortgagee or any
party in order to effectuate the provisions contained in this
Section 3.1
.
Section 3.2
No Modification of Payment Obligations
. Nothing herein contained shall
modify or otherwise alter, limit or modify the absolute obligation of Mortgagor to make prompt
payment of all secured obligations when and as the same become due regardless of whether the
Production Proceeds are sufficient to pay the same and the rights provided in accordance with the
foregoing assignment provision shall be cumulative of all other security of any and every character
now or hereafter existing to secure payment of the secured obligations.
Section 3.3
Effectuating Payment of Production Proceeds to Mortgagee
. If under any
existing sales agreements, other than division orders or transfer orders, any Production Proceeds
are required to be paid by the purchaser to Mortgagor so that under such existing agreements
payment cannot be made of such Production Proceeds to Mortgagee, Mortgagors interest in all
Production Proceeds under such sales agreements and in all other Production Proceeds which for any
reason may be paid to Mortgagor during the continuance of a default shall, when received by
Mortgagor, constitute trust funds in Mortgagors hands and shall be immediately paid over to
Mortgagee.
Section 3.4
Release from Liability
. Mortgagee and its successors and assigns are
hereby released and absolved from all liability for failure to enforce collection of the Production
Proceeds and from all other responsibility in connection therewith, except the responsibility of
each to account to Mortgagor for funds actually received by each.
ARTICLE IV.
Remedies Upon Default
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Section 4.1
Default
. The term
default
as used in this Mortgage means:
(a) Mortgagor or its successor shall (i) voluntarily commence any proceeding or file
any petition seeking liquidation, reorganization or other relief under any federal or state
bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii)
consent to the institution of, or fail to contest within 60 days in an appropriate manner,
any involuntary bankruptcy, insolvency or receivership proceeding or petition commenced or
filed against Mortgagor (collectively, a
Bankruptcy Proceeding
) and the Mortgaged
Properties are in any way determined by the applicable bankruptcy court to be a part of the
Mortgagors bankruptcy estate; and
(b) failure by the Mortgagor, within thirty (30) days after notice thereof from the
Mortgagee, to cure a breach of payment default occurring under the Conveyances existing at
the time of, or occurring after, such filing of the Bankruptcy Proceeding.
Section 4.2
Remedies
.
(a) If a default shall occur and be continuing, to the extent provided by applicable
law, the Mortgagee shall have the right and option to (i) proceed with an action in mortgage
foreclosure and to sell all or any portion of such Mortgaged Properties at one or more
sales, as an entirety or in parcels, at such place or places in otherwise such manner and
upon such notice as may be required by law, or, in the absence of any such requirement, as
the Mortgagee may deem appropriate, and to make conveyance to the purchaser or purchasers;
or (ii) obtain a judgment for the secured obligations (including amounts advanced by
Mortgagee hereunder to protect the Mortgaged Properties or the liens and security interests
in the Mortgaged Properties created hereby, all costs and expenses of collection and suit,
including any bankruptcy or insolvency proceeding affecting Mortgagor, and reasonable
attorneys fees incurred in connection with the foregoing) together with interest on such
judgment until payment in full is received by Mortgagee. Mortgagee shall have the authority
while so in possession to insure (at Mortgagors expense) against all risks by reason of
having taken such possession and Mortgagor will transfer and deliver to the Mortgagee all
policies of insurance upon the Mortgaged Properties not theretofore transferred and
delivered to Mortgagee and Mortgagee shall have the right to obtain execution upon the
Mortgaged Properties on account of such judgment. Where the Mortgaged Properties are
situated in more than one jurisdiction, notice as above provided shall be posted and filed
in all such jurisdictions (if such notices are required by applicable law), and all such
Mortgaged Properties may be sold in any such jurisdiction and any such notice shall
designate the jurisdiction where such Mortgaged Properties are to be sold. Nothing
contained in this
Section 4.2
shall be construed so as to limit in any way any
rights to sell the Mortgaged Properties or any portion thereof by private sale if and to the
extent that such private sale is permitted under the applicable law of the applicable
jurisdiction or by public or private sale after entry of a judgment by any court of
competent jurisdiction so ordering. The Mortgagor hereby irrevocably appoints, effective
upon the occurrence and during the continuance of a default, the Mortgagee, with full power
of substitution, to be the attorney-in-fact of the Mortgagor and in the name and on behalf
of the Mortgagor to execute and deliver any deeds, transfers, conveyances,
- 8 -
assignments, assurances and notices which the Mortgagor ought to execute and deliver
and do and perform any and all such acts and things which the Mortgagor ought to do and
perform under the covenants herein contained and generally, to use the name of the Mortgagor
in the exercise of all or any of the powers hereby conferred on the Mortgagee. At any such
sale: (1) it shall not be necessary for the Mortgagee to have physical or constructive
possession of the Mortgaged Properties (the Mortgagor hereby covenanting and agreeing to
deliver any portion of the Mortgaged Properties not actually or constructively possessed by
the Mortgagee immediately upon the Mortgagees demand) and the title to and right of
possession of any such property shall pass to the purchaser thereof as completely as if the
same had been actually present and delivered to purchaser at such sale, (2) each instrument
of conveyance executed by the Mortgagee shall contain a special warranty of title, binding
upon the Mortgagor and its successors and assigns, (3) each and every recital contained in
any instrument of conveyance made by the Mortgagee shall conclusively establish the truth
and accuracy of the matters recited therein, including, without limitation, nonpayment or
nonperformance of the secured obligations, advertisement and conduct of such sale in
accordance with applicable law, (4) any and all prerequisites to the validity thereof shall
be conclusively presumed to have been performed, (5) the receipt of the Mortgagee or of such
other party or officer making the sale shall be a sufficient discharge to the purchaser or
purchasers for its purchase money and no such purchaser or purchasers, or its assigns or
personal representatives, shall thereafter be obligated to see to the application of such
purchase money, or be in any way answerable for any loss, misapplication or nonapplication
thereof, (6) to the fullest extent permitted by applicable law, the Mortgagor shall be
completely and irrevocably divested of all of its right, title, interest, claim and demand
whatsoever, either at law or in equity, in and to the Mortgaged Property sold and such sale
shall be a perpetual bar both at law and in equity against the Mortgagor, and against any
and all other persons claiming or to claim the property sold or any part thereof, by,
through or under the Mortgagor, and (7) to the extent and under such circumstances as are
permitted by law, the Mortgagee may be a purchaser at any such sale, and shall have the
right, after paying or accounting for all costs of said sale or sales, to credit the amount
of the bid upon the amount of the secured obligations (in the order of priority set forth in
Section 4.4
) in lieu of cash payment.
(b) If a default shall occur and be continuing, Mortgagee may exercise its rights of
enforcement with respect to the Collateral under the Applicable UCC, or under any other
statute in force in any state to the extent the same is applicable law. Cumulative of the
foregoing and the other provisions of this
Section 4.2
, to the extent permitted by
applicable law:
(i) upon the occurrence and during the continuance of a default Mortgagee may
enter upon the Mortgaged Properties or otherwise upon Mortgagors premises to take
possession of, assemble and collect the Collateral or to render it unusable;
(ii) upon the occurrence and during the continuance of a default Mortgagee may
require Mortgagor to assemble the Collateral and make it available
- 9 -
at a place Mortgagee designates which is mutually convenient to allow Mortgagee
to take possession or dispose of the Collateral;
(iii) written notice mailed to Mortgagor as provided herein at least ten (10)
days prior to the date of public sale of the Collateral or prior to the date after
which private sale of the Collateral will be made shall constitute reasonable
notice;
(iv) in the event of a foreclosure of the liens, privileges or security
interests evidenced hereby, the Collateral, or any part thereof, and the Mortgaged
Properties, or any part thereof, may, at the option of Mortgagee, be sold, as a
whole or in parts, together or separately (including, without limitation, where a
portion of the Mortgaged Properties is sold, the Collateral related thereto may be
sold in connection therewith);
(v) the expenses of sale provided for in clause FIRST of
Section 4.4
shall include the reasonable expenses of retaking the Collateral, or any part
thereof, holding the same and preparing the same for sale or other disposition;
(vi) should, under this subsection, the Collateral be disposed of other than by
sale, any proceeds of such disposition shall be treated as if the same were sales
proceeds; and
(vii) upon the occurrence and during the continuance of a default, Mortgagee
may, to the extent permitted under applicable law, elect to treat the fixtures
included in the Collateral either as real property or as personal property, or both,
and proceed to exercise such rights as apply thereto. With respect to any sale of
real property included in the Mortgaged Properties made under the powers of sale
herein granted and conferred, Mortgagee may, to the extent permitted by applicable
law, include in such sale any personal property and fixtures included in the
Collateral and relating to such real property.
(c) To the extent permitted by applicable law, the sale hereunder of less than the
whole of the Mortgaged Properties shall not exhaust the right to judicial foreclosure, and
one or more successive sales may be made until the whole of the Mortgaged Properties shall
be sold, and, if the proceeds of such sale of less than the whole of the Mortgaged
Properties shall be less than the aggregate of the obligations secured hereby and the
expense of conducting such sale, this Mortgage and the liens, privileges and security
interests hereof shall remain in full force and effect as to the unsold portion of the
Mortgaged Properties just as though no sale had been made; provided, however, that Mortgagor
shall never have any right to require the sale of less than the whole of the Mortgaged
Properties. In the event any sale hereunder is not completed or is defective in the opinion
of Mortgagee, such sale shall not exhaust the right to judicial foreclosure, and Mortgagee
shall have the right to cause a subsequent sale or sales to be made. Any sale may be
adjourned by announcement at the time and place appointed for such sale without further
notice except as may be required by applicable law. Any and all statements of fact or other
recitals made in any deed or deeds, or other instruments of transfer, given in
- 10 -
connection with a sale as to nonpayment of the secured obligations or as to the
occurrence of any default, or as all of the secured obligations having been declared to be
due and payable, or as to the request to sell, or as to notice of time, place and terms of
sale and the properties to be sold having been duly given, or as to any other act or thing
having been duly done, shall be taken as rebuttably presumptive evidence of the truth of the
facts so stated and recited. Notwithstanding any reference herein to the Conveyances, all
persons dealing with the Mortgaged Properties shall be entitled to rely on any document, or
certificate, of Mortgagee as to the occurrence of an event, such as a default, and shall not
be charged with or forced to review any provision of any other document to determine the
accuracy thereof. With respect to any sale held in foreclosure of the liens or security
interests covered hereby, it shall not be necessary for the Mortgagee, any public officer
acting under execution or order of the court or any other party to have physically present
or constructively in his/her or its possession, either at the time of or prior to such sale,
the Mortgaged Properties or any part thereof.
Section 4.3
Receiver
. In addition to all other remedies herein provided for,
Mortgagor agrees that, during the continuance of a default, Mortgagee shall as a matter of right be
entitled to the appointment of a receiver or receivers for all or any part of the Mortgaged
Properties, whether such receivership be incident to a proposed sale (or sales) of such property or
otherwise, and without regard to the value of the Mortgaged Properties or the solvency of any
person or persons liable for the payment of the obligations secured hereby, and Mortgagor does
hereby consent to the appointment of such receiver or receivers, waives any and all defenses to
such appointment, and agrees not to oppose any application therefor by Mortgagee. Mortgagor
expressly waives the necessity for bond or an accounting by the receiver. Nothing herein is to be
construed to deprive Mortgagee of any other right, remedy or privilege it may now or hereafter have
under the law to have a receiver appointed. Any money advanced by Mortgagee in connection with any
such receivership shall be a demand obligation (which obligation Mortgagor hereby expressly
promises to pay) owing by Mortgagor to Mortgagee and shall bear interest (the
Applicable Rate
),
from the date of making such advancement by Mortgagee until paid, provided, however, that in no
instance will the Applicable Rate be greater than the highest rate of interest that Mortgagee may
charge to Mortgagor under applicable law.
Section 4.4
Proceeds of Foreclosure
. The proceeds of any sale held in foreclosure of
the liens or security interests evidenced hereby shall be applied as follows, except as otherwise
required by applicable law:
FIRST
, to the payment of all necessary costs and expenses incident to such
foreclosure sale, including but not limited to reasonable attorneys fees, all court costs
and charges of every character in the event foreclosed by suit or any judicial proceeding,
if any;
SECOND
, to be applied to the secured obligations as described in
Section
1.4(a)
; and
THIRD
, the remainder, if any there shall be, shall be paid to Mortgagor, or to
Mortgagors successors or assigns, or such other persons as may be entitled thereto by law.
- 11 -
Section 4.5
Foreclosure as to Matured Debt
. If a default shall occur and be
continuing, Mortgagee shall have the right to proceed with foreclosure of the liens, privileges or
security interests evidenced hereby without any requirement that the entire secured obligations
have become due, and in such event, any such foreclosure sale may be made subject to the unmatured
part of the secured obligations, in which event such foreclosure sale shall not in any manner
affect the unmatured part of the secured obligations but, as to such unmatured part, this Mortgage
shall remain in full force and effect as though no sale had been made. The proceeds of such sale
shall be applied as provided in
Section 4.4
. Several sales may be made hereunder without
exhausting the right of sale for any unmatured part of the secured obligations.
Section 4.6
Remedies Cumulative
. All remedies herein provided for are cumulative of
each other and of all other remedies existing at law or in equity and are cumulative of any and all
other remedies provided for in the Conveyances, if any, and, in addition to the remedies herein
provided, there shall continue to be available all such other remedies as may now or hereafter
exist at law or in equity for the collection of the secured obligations and the enforcement of the
covenants herein and the foreclosure of the liens or security interests evidenced hereby, and the
resort to any remedy provided for hereunder or under the Conveyances, if any, or provided for by
applicable law shall not prevent the concurrent or subsequent employment of any other appropriate
remedy or remedies.
Section 4.7
Discretion as to Security
. Mortgagee may resort to any security given by
this Mortgage or to any guaranty of the obligations secured hereby, in whole or in part, and in
such portions and in such order as may seem best to Mortgagee in its sole and uncontrolled
discretion, and any such action shall not in any way be considered as a waiver of any of the
rights, benefits, liens or security interests evidenced by this Mortgage.
Section 4.8
Mortgagors Waiver of Certain Rights
. To the full extent Mortgagor may do
so, Mortgagor agrees that Mortgagor will not at any time insist upon, plead, claim or take the
benefit or advantage of any law now or hereafter in force providing for any appraisement,
valuation, stay, extension or redemption, and Mortgagor, for Mortgagor, Mortgagors successors and
assigns, and for any and all persons ever claiming any interest in the Mortgaged Properties, to the
extent permitted by applicable law, hereby waives and releases all rights of appraisement,
valuation, stay of execution, redemption, notice of intention to mature or declare due the whole of
the secured obligations, notice of election to mature or declare due the whole of the secured
obligations and all rights to a marshaling of assets of Mortgagor, including the Mortgaged
Properties, or to a sale in inverse order of alienation in the event of foreclosure of the liens or
security interests hereby created. Mortgagor shall not have or assert any right under any statute
or rule of law pertaining to the marshaling of assets, sale in inverse order of alienation, the
exemption of homestead, the administration of estates of decedents, or other matters whatever to
defeat, reduce or affect the right under the terms of this Mortgage to a sale of the Mortgaged
Properties for the collection of the secured obligations without any prior or different resort for
collection, or the right under the terms of this Mortgage to the payment of the secured obligations
out of the proceeds of sale of the Mortgaged Properties in preference to every other claimant
whatever. If any law referred to in this section and now in force, of which Mortgagor or
Mortgagors successors or assigns or any other persons claiming any interest in the Mortgaged
Properties or the Collateral
- 12 -
might take advantage despite this section, shall hereafter be repealed or cease to be in
force, such law shall not thereafter be deemed to preclude the application of this section.
Section 4.9
No Release of Obligations
. Neither Mortgagor nor any other Person
hereafter obligated for payment of all or any part of the secured obligations shall be relieved of
such secured obligations by reason of (i) the failure of Mortgagee or any other Person so obligated
to foreclose the lien of this Mortgage or to enforce any provision hereunder; or (ii) the release,
regardless of consideration, of the Mortgaged Properties or any portion thereof or interest therein
or the addition of any other property to the Mortgaged Properties. Mortgagee may release,
regardless of consideration, any part of the Mortgaged Properties without, as to the remainder, in
any way impairing, affecting, subordinating or releasing the lien or security interest created in
or evidenced by this Mortgage or its stature as a first and prior lien and security interest in and
to the Mortgaged Properties, and without in any way releasing or diminishing the liability of any
person or entity liable for the repayment or performance of the secured obligations. For payment
of the secured obligations, Mortgagee may resort to any other security therefor held by Mortgagee
in such order and manner as Mortgagee may elect.
Section 4.10
Discontinuance of Proceedings
. In case Mortgagee shall have proceeded to
invoke any right, remedy or recourse permitted hereunder or under the Conveyances and shall
thereafter elect to discontinue or abandon same for any reason, Mortgagee shall have the
unqualified right to do so and, in such an event, Mortgagor and Mortgagee shall be restored to
their former positions with respect to the secured obligations, this Mortgage, the Conveyances, the
Mortgaged Properties and otherwise, and the rights, remedies, recourses and powers of Mortgagee
shall continue as if same had never been invoked.
ARTICLE V.
Miscellaneous
Section 5.1
Effective as a Financing Statement
. This Mortgage, among other things,
covers goods which are or are to become fixtures on the real property described herein and covers
as-extracted collateral related to the real property described herein. This Mortgage shall be
effective as a financing statement (i) filed as a fixture filing with respect to all fixtures
included within the Mortgaged Properties, (ii) covering all as-extracted collateral included within
the Mortgaged Properties (including all oil, gas, other minerals and other substances of value
which may be extracted from the earth at the wellhead or minehead) and (iii) covering all other
Mortgaged Properties. This Mortgage is to be filed for record in the real property records of each
county where any part of the Mortgaged Properties is situated and may also be filed in the offices
of the Bureau of Land Management or any relevant state agency (or any successor agencies). The
mailing address of Mortgagor is the address of Mortgagor set forth at the end of this Mortgage and
the address of Mortgagee from which information concerning the security interests hereunder may be
obtained is the address of Mortgagee set forth at the end of this Mortgage. Nothing contained in
this paragraph shall be construed to limit the scope of this Mortgage nor its effectiveness as a
financing statement covering any type of Mortgaged Properties.
- 13 -
Section 5.2
Reproduction of Mortgage as Financing Statement; Authorization to File
. A
carbon, photographic, facsimile or other reproduction of this Mortgage or of any financing
statement relating to this Mortgage shall be sufficient as a financing statement for any of the
purposes referred to in
Section 5.1
. Without limiting any other provision herein,
Mortgagor hereby authorizes Mortgagee to file, in any filing or recording office, one or more
financing statements describing the Collateral and any renewal or continuation statements thereof.
Section 5.3
Notice to Account Debtors
. In addition to, but without limitation of, the
rights granted in Article IV hereof, Mortgagee may, at any time after a default has a occurred that
is continuing, notify the account debtors or obligors of any accounts, chattel paper, negotiable
instruments or other evidences of obligations included in the Collateral to pay Mortgagee directly.
Section 5.4
Waivers
. Mortgagee may at any time and from time to time in writing waive
compliance by Mortgagor with any covenant herein made by Mortgagor to the extent and in the manner
specified in such writing, or consent to Mortgagors doing any act which hereunder Mortgagor is
prohibited from doing, or to Mortgagors failing to do any act which hereunder Mortgagor is
required to do, to the extent and in the manner specified in such writing, or release any part of
the Mortgaged Properties or any interest therein or any Production Proceeds from the lien and
security interest of this Mortgage. Any party liable, either directly or indirectly, for the
secured obligations or for any covenant herein or in the Conveyances may be released from all or
any part of such obligations without impairing or releasing the liability of any other party. No
such act shall in any way impair any rights or powers hereunder except to the extent specifically
agreed to in such writing.
Section 5.5
No Impairment of Security
. To the extent allowed by applicable law, the
lien, privilege, security interest and other security rights hereunder shall not be impaired by any
indulgence, moratorium or release which may be granted including, but not limited to, any renewal,
extension or modification which may be granted with respect to any secured obligations, or any
surrender, compromise, release, renewal, extension, exchange or substitution which may be granted
in respect of the Mortgaged Properties (including Production Proceeds), or any part thereof or any
interest therein, or any release or indulgence granted to any endorser, guarantor or surety of any
secured obligations.
Section 5.6
Acts Not Constituting Waiver
. Any default may be waived without waiving
any other prior or subsequent default. Any default may be remedied without waiving the default
remedied. Neither failure to exercise, nor delay in exercising, any right, power or remedy upon
any default shall be construed as a waiver of such default or as a waiver of the right to exercise
any such right, power or remedy at a later date. No single or partial exercise of any right, power
or remedy hereunder shall exhaust the same or shall preclude any other or further exercise thereof,
and every such right, power or remedy hereunder may be exercised at any time and from time to time.
No modification or waiver of any provision hereof nor consent to any departure by Mortgagor
therefrom shall in any event be effective unless the same shall be in writing and signed by
Mortgagee and then such waiver or consent shall be effective only in the specific instances, for
the purpose for which given and to the extent therein specified. No notice nor demand on Mortgagor
in any case shall of itself entitle Mortgagor to any other or further notice or demand in similar
or other circumstances. Acceptance of any payment in an amount less than the amount
- 14 -
then due on any secured obligations shall be deemed an acceptance on account only and shall
not in any way excuse the existence of a default hereunder.
Section 5.7
Forbearance or Extension
. No forbearance and no extension of the time for
the payment of the obligations secured hereby, shall operate to release, discharge, modify, change
or affect, in whole or in part, the liability of Mortgagor hereunder for the payment of the
obligations or performance of the obligations secured hereby, or the liability of any other person
hereunder or for the payment of the obligations secured hereby.
Section 5.8
Place of Payment
. All secured obligations which may be owing hereunder at
any time by Mortgagor shall be payable at the place designated in the Conveyances (or if no such
designation is made, at the address of Mortgagee indicated at the end of this Mortgage), or at such
other place as Mortgagee may designate in writing.
Section 5.9
Application of Payments to Certain Obligations
. If any part of the
secured obligations cannot be lawfully secured by this Mortgage or if any part of the Mortgaged
Properties cannot be lawfully subject to the lien, privilege and security interest hereof to the
full extent of such obligations, then all payments made shall be applied on said obligations first
in discharge of that portion thereof which is not secured by this Mortgage.
Section 5.10
Compliance With Usury Laws
. It is the intent of Mortgagor and Mortgagee
to contract in strict compliance with applicable usury law from time to time in effect. In
furtherance thereof, it is stipulated and agreed that none of the terms and provisions contained
herein, or in the Conveyances shall ever be construed to create a contract to pay, for the use,
forbearance or detention of money, interest in excess of the maximum amount of interest permitted
to be collected, charged, taken, reserved or received by applicable law from time to time in
effect.
Section 5.11
Release of Mortgage
. Upon the termination of the Trust, Mortgagee shall
promptly cause satisfaction, discharge and release of this Mortgage to be entered upon the record
at the expense of Mortgagor and shall execute and deliver or cause to be executed and delivered
such instruments of satisfaction, reassignment and/or release as may be appropriate.
Section 5.12
Notice
. All notices, requests, consents, demands and other
communications required or permitted hereunder shall be in writing and shall be deemed sufficiently
given or furnished if delivered by personal delivery, by telefacsimile, by delivery service with
proof of delivery, or by registered or certified United States mail, postage prepaid, at the
addresses specified at the end of this Mortgage (unless changed by similar notice in writing given
by the particular party whose address is to be changed). Any such notice or communication shall be
deemed to have been given (a) in the case of personal delivery or delivery service, as of the date
of first attempted delivery at the address and in the manner provided herein, (b) in the case of
telefacsimile, upon receipt, and (c) in the case of registered or certified United States mail,
three (3) days after deposit in the mail. Notwithstanding the foregoing, any notice given in
connection with a foreclosure of the liens or security interests created hereunder, or otherwise in
connection with the exercise by Mortgagee of its rights hereunder, which is given in a manner
permitted by applicable law shall constitute proper notice; without limitation of the foregoing,
notice given in a
- 15 -
form required or permitted by statute shall (as to the portion of the Mortgaged Properties to
which such statute is applicable) constitute proper notice.
Section 5.13
Invalidity of Certain Provisions
. A determination that any provision of
this Mortgage is unenforceable or invalid shall not affect the enforceability or validity of any
other provision and the determination that the application of any provision of this Mortgage to any
person or circumstance is illegal or unenforceable shall not affect the enforceability or validity
of such provision as it may apply to other persons or circumstances.
Section 5.14
Gender; Titles; Construction
. All references in this Mortgage to
articles, sections, subsections and other subdivisions refer to corresponding articles, sections,
subsections and other subdivisions of this Mortgage unless expressly provided otherwise. Titles
appearing at the beginning of any of such subdivisions are for convenience only and shall not
constitute part of such subdivisions and shall be disregarded in construing the language contained
in such subdivisions. The words
this Mortgage
,
this instrument
,
herein
,
hereof
,
"
hereunder
"' and words of similar import refer to this Mortgage as a whole and not to any
particular subdivision unless expressly so limited. Unless the context otherwise requires:
"
including
and its grammatical variations mean including without limitation;
or
is not
exclusive; words in the singular form shall be construed to include the plural and vice versa;
words in any gender include all other genders; references herein to any instrument or agreement
refer to such instrument or agreement as it may be from time to time amended or supplemented; and
references herein to any Person include such Persons successors and assigns. All references in
this Mortgage to exhibits and schedules refer to exhibits and schedules to this Mortgage unless
expressly provided otherwise, and all such exhibits and schedules are hereby incorporated herein by
reference and made a part hereof for all purposes. This Mortgage has been drafted with the joint
participation of Mortgagor and Mortgagee and shall be construed neither against nor in favor of
either such party but rather in accordance with the fair meaning hereof.
Section 5.15
Recording
. Mortgagor will cause this Mortgage and all amendments and
supplements thereto and substitutions therefor and all financing statements and continuation
statements relating thereto to be recorded, filed, re-recorded and refiled in such manner and in
such places as Mortgagee shall reasonably request and will pay all such recording, filing,
re-recording and refiling taxes, fees and other charges.
Section 5.16
Certain Obligations of Mortgagor
. Without limiting Mortgagors
obligations hereunder, Mortgagors liability hereunder and the obligations secured hereby shall
extend to and include all post petition interest, expenses and other duties and liabilities with
respect to Mortgagors obligations hereunder which would be owed but for the fact that the same may
be unenforceable due to the existence of a bankruptcy, reorganization or similar proceeding.
Section 5.17
Authority of Mortgagee
. All persons shall be entitled to rely on the
releases, waivers, consents, approvals, notifications and other acts of Mortgagee without the
joinder of any party other than Mortgagee in such releases, waivers, consents, approvals,
notifications or other acts.
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Section 5.18
Counterparts
. This Mortgage may be executed in several counterparts, all
of which are identical, except that, to facilitate recordation, certain counterparts hereof may
include only that portion of the applicable Exhibit A to the Conveyances which contains
descriptions of the properties located in (or otherwise subject to the recording or filing
requirements or protections of the recording or filing acts or regulations of) the recording
jurisdiction in which the particular counterpart is to be recorded, and other portions of the
applicable Exhibit A to the Conveyances shall be included in such counterparts by reference only.
All of the counterparts hereof together shall constitute one and the same instrument. An executed
counterpart of this Mortgage containing the full text to the entire Exhibit is recorded in the real
property records of Greene County, Pennsylvania.
Section 5.19
Successors and Assigns
. The terms, provisions, covenants,
representations, indemnifications and conditions hereof shall be binding upon Mortgagor, and the
successors and assigns of Mortgagor, and shall inure to the benefit of Mortgagee and its respective
successors and assigns, and shall constitute covenants running with the Mortgaged Properties. All
references in this Mortgage to Mortgagor or Mortgagee shall be deemed to include all such
successors and assigns.
Section 5.20
FINAL AGREEMENT OF THE PARTIES
. THE WRITTEN TRANSACTION DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Section 5.21
CHOICE OF LAW
. WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW THAT MAY CAUSE THE APPLICATION OF LAWS OF ANY OTHER JURISDICTION, THIS MORTGAGE SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA.
Section 5.22
Exculpation Provisions
.
EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS MORTGAGE; AND AGREES THAT IT IS CHARGED WITH
NOTICE AND KNOWLEDGE OF THE TERMS OF THIS MORTGAGE; THAT IT HAS IN FACT READ THIS MORTGAGE AND IS
FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS
MORTGAGE; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE
NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS MORTGAGE; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY
IN ENTERING INTO THIS MORTGAGE; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS MORTGAGE
RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND
RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND
COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF
THIS MORTGAGE ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE
PROVISION IS NOT CONSPICUOUS.
- 17 -
[Signature Page Follows]
- 18 -
IN WITNESS WHEREOF, this Mortgage is executed by Mortgagor on the date set forth in the
acknowledgement below, to be effective simultaneously with the execution and delivery of the
Conveyances.
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ENERGY CORPORATION OF AMERICA
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By:
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/s/
Donald C. Supcoe
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Name:
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Donald C. Supcoe
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Title:
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Senior Vice President
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The address of Mortgagor is:
Energy Corporation of America
4643 South Ulster Street
Suite 1100
Denver, Colorado 80237
Attention: Michael S. Fletcher
Facsimile No.: (303) 694-2763
With a copy to:
501 56th Street
Charleston, West Virginia 25304
Attention: Donald C. Supcoe
Facsimile No.: (304) 925-3285
With a copy to:
Vinson & Elkins L.L.P.
1001 Fannin Street, Suite 3500
Houston, Texas 77002
Attention: David P. Oelman
Facsimile No. (713) 615-5861
Prepared by:
Vinson & Elkins LLP
1001 Fannin Street
Suite 2500
Houston, TX 77002-6760
Attention: Thomas Herbert
Signature Page to Mortgage
CERTIFICATE OF RESIDENCE
I do hereby certify that the address of Mortgagee is:
The Bank of New York Mellon Trust Company, N.A.
919 Congress Avenue, Suite 500
Austin, Texas 78701
Attn: Michael J. Ulrich
ECA MARCELLUS TRUST I
By: The Bank of New York Mellon Trust Company, N.A.
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By:
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/s/ Michael J. Ulrich
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Name:
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Michael J. Ulrich
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Title:
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Authorized Signatory
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Signature Page to Mortgage
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THE STATE OF COLORADO
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§
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§
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COUNTY OF DENVER
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§
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On
this, the 7
th
day of July, 2010, before me Julie Ann Kitano, a Notary public,
personally appeared Donald C. Supcoe, who acknowledged himself to be the Senior Vice President of
Energy Corporation of America, a West Virginia corporation, and that he as such Senior Vice
President, being authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as Senior Vice President.
In witness whereof, I hereunto set my hand and official seal.
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[SEAL]
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/s/ Julie Ann Kitano
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My Commission Expires: 4-26-2014
Acknowledgment to Signature Page to Mortgage
ANNEX A-1
COPY OF TERM ROYALTY CONVEYANCE (PUD)
Annex A-1 to Mortgage
ANNEX A-2
COPY OF TERM ROYALTY CONVEYANCE (PDP)
Annex A-2 to Mortgage
ANNEX A-3
COPY OF PERPETUAL ROYALTY CONVEYANCE (PUD)
Annex A-3 to Mortgage
ANNEX A-4
COPY OF PERPETUAL ROYALTY CONVEYANCE (PDP)
Annex A-4 to Mortgage
Exhibit 10.12
Execution Version
REGISTRATION RIGHTS AGREEMENT
BY AND BETWEEN
ENERGY CORPORATION OF AMERICA,
JOHN MORK,
JULIE MORK
AND
ECA MARCELLUS TRUST I
DATED AS OF July 7, 2010
This REGISTRATION RIGHTS AGREEMENT (the
Agreement
) is made and entered into as of July
7, 2010, by and among ECA Marcellus Trust I, statutory trust formed under the laws of the State of
Delaware (the
Trust
), and Energy Corporation of America (
ECA
), a West Virginia corporation,
John Mork and Julie Mork (collectively with ECA and John Mork, the
Principal Unitholders
).
RECITALS:
WHEREAS
, in connection with the Initial Public Offering, the Trust has agreed to file a
registration statement or registration statements relating to the sales by the Principal
Unitholders and its Transferees (as defined below) of certain of the Trust Units.
NOW
,
THEREFORE
, in consideration of the premises and the covenants hereinafter contained and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, it is agreed as follows:
SECTION 1.
Definitions
. As used in this Agreement, the following terms shall have the
following meanings:
Affiliate
means with respect to a specified person, any person that directly or indirectly
controls, is controlled by, or is under common control with, the specified person. As used in this
definition, the term control (and the correlative terms controlling, controlled by, and
under common control) shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a person, whether through ownership of
voting securities, by contract or otherwise.
Agreement
has the meaning set forth in the preamble hereof.
Business Day
means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on
which banking institutions in The City of New York are authorized or obligated by law or executive
order to close.
Common Units
has the meaning set forth in the Trust Agreement.
Deferral Notice
has the meaning set forth in Section 3(j) hereof.
Deferral Period
has the meaning set forth in Section 3(j) hereof.
Demand Notice
has the meaning set forth in Section 2(a) hereof.
Demand Registration
has the meaning set forth in Section 2(a) hereof.
Demanding Qualified Holder(s)
shall mean, with respect to any Demand Registration, the
Qualified Holder(s) delivering the relevant Demand Notice.
ECA
has the meaning set forth in the preamble.
Effective Period
means the period commencing on the 180
th
day after the date
hereof and ending on the date that all Registrable Securities have ceased to be Registrable
Securities.
Exchange Act
means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated by the SEC thereunder.
Expenses
has the meaning set forth in Section 6(a) hereof.
Indemnified Party
has the meaning set forth in Section 6(d) hereof.
Indemnifying Party
has the meaning set forth in Section 6(d) hereof.
Initial Public Offering
means the initial public offering of Common Units registered with
the SEC by a registration statement on Form S-1 (Registration No. 333-165833).
Material Event
has the meaning set forth in Section 3(j) hereof.
Notice
has the meaning set forth in Section 2(a) hereof.
person
shall mean any individual, partnership, limited liability company, corporation,
trust, unincorporated association, governmental agency, subdivision, or instrumentality, or other
entity or association.
Principal Unitholders
has the meaning set forth in the preamble.
Prospectus
means the prospectus included in any Registration Statement (including, without
limitation, a prospectus that discloses information previously omitted from a prospectus filed as
part of an effective registration statement in reliance upon Rule 430A, Rule 430B or Rule 430C
promulgated under the Securities Act), as amended or supplemented by any amendment, prospectus
supplement or free writing prospectus (as defined in Rule 405 promulgated under the Securities
Act), including post-effective amendments, and all materials incorporated by reference or
explicitly deemed to be incorporated by reference in such Prospectus.
Qualified Holder
shall mean the Principal Unitholders and any Transferee of a Principal
Unitholder to whom Registrable Securities are permitted to be transferred in accordance with the
terms of this Agreement, and, in each case, who continues to be entitled to the rights of a
Qualified Holder hereunder.
Registrable Securities
means the Trust Units held by the Qualified Holders and any
securities into or for which such Trust Units have been converted or exchanged, and any security
issued with respect thereto upon any dividend, split or similar event until, in the case of any
such security, the earliest of (i) its effective registration under the Securities Act and resale
in accordance with the Registration Statement covering it, (ii) its disposal pursuant to Rule 144
(or any similar provision then in force, but not Rule 144A) under the Securities Act, (iii) its
sale in a private transaction in which the transferors rights under this Agreement are not
assigned to the transferee of the securities, (iv) its being held by the Trust, (v) 10 years after
the Qualified Holder ceases to be an Affiliate of the Trust, or (vi) if such security has been sold
in a private
transaction in which the tranferors rights under this Agreement are assigned to the
transferee and such transferee is not an Affiliate of the Trust, the time that is two years
following the later of (a) if the security is a Subordinated Unit, the conversion of the
Subordinated Unit into a Common Unit and (b) the transfer of such security to such transferee.
Registration Statement
means any registration statement of the Trust, including any Shelf
Registration Statement, that covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits and all materials incorporated by
reference or explicitly deemed to be incorporated by reference in such registration statement.
Required Information
has the meaning set forth in Section 4(a) hereof.
Rule 144
means Rule 144 under the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the SEC.
Rule 144A
means Rule 144A under the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the SEC.
SEC
means the Securities and Exchange Commission.
Securities Act
means the Securities Act of 1933, as amended, and the rules and regulations
promulgated by the SEC thereunder.
Shelf Registration Statement
means a Registration Statement for an offering to be made on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act registering the resale of
Registrable Securities from time to time by Qualified Holders thereof.
Special Counsel
means Vinson & Elkins L.L.P. or such other successor counsel as shall be
specified in writing by the Qualified Holders holding a majority of all Registrable Securities.
Subordinated Units
has the meaning set forth in the Trust Agreement.
Transferee
has the meaning set forth in Section 9(d) hereof.
Trust
has the meaning set forth in the preamble hereof.
Trust Agreement
means that certain Amended and Restated Trust Agreement of the Trust, dated
as of the date hereof.
Trust Units
means Common Units, Subordinated Units, and Common Units issuable upon
conversion of the Subordinated Units pursuant to the terms of the Trust Agreement.
SECTION 2.
Demand Registration Rights
.
(a) Commencing 180 days after the Initial Public Offering, a Qualified Holder shall have the
right by delivering a written notice to the Trust (the
Demand Notice
) to require the Trust to
register, pursuant to the terms of this Agreement under and in accordance with the provisions of
the Securities Act, the number of Registrable Securities requested to be so registered pursuant to
the terms and conditions set forth in this Agreement (a
Demand Registration
). Following receipt
of a Demand Notice for a Demand Registration, the Trust shall use its reasonable best efforts to
file a Registration Statement as promptly as practicable, but not later than 45 days after such
Demand Notice, and shall use its reasonable best efforts to cause such Registration Statement to be
declared effective under the Securities Act as promptly as practicable after the filing thereof.
Each Principal Unitholder shall be entitled to a maximum of one Demand Registration, which, if
such Demand Registration has not been exercised, may be transferred to any of such Principal
Unitholders successors or assigns who becomes a Qualified Holder pursuant to Section 9(d);
provided, however, that no such succession or assignment shall have the effect of increasing the
number of Demand Registrations to be performed by the Trust with respect to the Registrable
Securities held by such Principal Unitholder. Notwithstanding any other provisions of this Section
2, in no event shall more than one Demand Registration occur during any six-month period (measured
from the effective date of the Registration Statement to the date of the next Demand Notice) or
within 120 days after the effective date of a Registration Statement filed by the Trust; provided
that no Demand Registration may be prohibited for such 120-day period more often than once in a
12-month period.
No Demand Registration shall be deemed to have occurred for purposes of this Section 2(a) if
the Registration Statement relating thereto does not become effective or is not maintained
effective for the period required pursuant to this Section 2(a), in which case the Demanding
Qualified Holders shall be entitled to an additional Demand Registration in lieu thereof.
Within ten (10) days after receipt by the Trust of a Demand Notice, the Trust shall give
written notice (the
Notice
) of such Demand Notice to all other Qualified Holders and shall,
subject to the provisions of Section 2(b) hereof, include in such registration all Registrable
Securities held by such Qualified Holders with respect to which the Trust received written requests
for inclusion therein within ten (10) days after such Notice is given by the Trust to such holders.
All requests made pursuant to this Section 2 will specify the amount of Registrable Securities
to be registered and the intended methods of disposition thereof.
The Trust shall be required to maintain the effectiveness of the Registration Statement with
respect to any Demand Registration for a period of ninety (90) days after the effective date
thereof or, in the case of a Shelf Registration Statement, the Effectiveness Period; provided,
however, that such period shall be extended for a period of time equal to the period the holders of
Registrable Securities refrain from selling any securities included in such registration at the
request of (i) an underwriter of the Trust or (ii) the Trust pursuant to this Agreement.
(b) If any of the Registrable Securities registered pursuant to a Demand Registration are to
be sold in a firm commitment underwritten offering, and the managing underwriter or underwriters
advise the holders of such securities in writing that in its view the total amount of securities
proposed to be sold in such offering is such as to adversely affect the success of such offering
(including, without limitation, securities proposed to be included by other holders of securities
entitled to include securities in the Registration Statement pursuant to incidental or piggyback
registration rights), then the amount of securities to be offered (i) for the account of Demanding
Qualified Holders and (ii) for the account of all such other persons (other than the Demanding
Qualified Holders) shall be reduced to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount recommended by such managing underwriter
or underwriters by first reducing, or eliminating if necessary, all securities of the Trust
requested to be included by such other persons and then, if necessary, reducing the Registrable
Securities requested to be included by the Demanding Qualified Holders, pro rata among such
security holders on the basis of the percentage of the Registrable Securities requested to be
included in such Registration Statement by such security holders. In connection with any Demand
Registration to which the provisions of this subsection (b) apply, no securities other than
Registrable Securities shall be covered by such Demand Registration except as provided in
subsection 2(b)(ii) hereof, and such registration shall not reduce the number of available
registrations with respect to the Qualified Holders under this Section 2 in the event that the
Registration Statement excludes more than 25% of the aggregate number of Registrable Securities
that the Demanding Qualified Holders requested be included.
(c) The Trust shall be entitled to postpone (but not more than once in any 12-month period),
for a reasonable period of time not in excess of 90 days, the filing of a Registration Statement if
the Trust delivers to the Demanding Qualified Holders a certificate signed by the Trust certifying
that, in its good faith judgment, it would be detrimental to the Trust and its unitholders for such
Registration Statement to be filed and it is therefore beneficial to defer the filing of such
Registration Statement. If the Trust shall so postpone the filing of a Registration Statement, the
Demanding Qualified Holders shall have the right to withdraw the request for registration by giving
written notice to the Trust within 20 days of the anticipated termination date of the postponement
period, as provided in the certificate delivered thereto, and in the event of such withdrawal, such
request shall not reduce the number of available registrations with respect to the Qualified
Holders under this Section 2.
(d) Whenever the Trust shall effect a Demand Registration pursuant to this Section 2 in
connection with an underwritten offering, no securities other than Registrable Securities shall be
included among the securities covered by such Demand Registration unless (i) the managing
underwriter of such offering shall have advised each holder of Registrable Securities requesting
such registration in writing that it believes that the inclusion of such other securities would not
adversely affect such offering or (ii) the inclusion of such other securities is approved by the
affirmative vote of the holders of at least a majority of the Registrable Securities included in
such Demand Registration by the Demanding Qualified Holders.
SECTION 3.
Registration Procedures
. In connection with the registration obligations
of the Trust under Section 2 hereof, during the Effective Period, the Trust shall:
(a) Prepare and file with the SEC a Registration Statement or Registration Statements,
including if so requested by the Qualified Holders a Shelf Registration Statement, on any
appropriate form under the Securities Act available for the sale of the Registrable Securities by
the holders thereof in accordance with the intended method or methods of distribution thereof, and
use commercially reasonable efforts to cause each such Registration Statement to become effective
and remain effective as provided herein;
provided
that before filing any Registration Statement or
Prospectus or any amendments or supplements thereto with the SEC (but excluding reports filed with
the SEC under the Exchange Act), furnish to the Qualified Holders, the Special Counsel and the
managing underwriter or underwriters, if any, copies of all such documents proposed to be filed at
least three (3) Business Days prior to the filing of such Registration Statement or amendment
thereto or Prospectus or supplement thereto.
(b) Subject to Section 3(j), prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such Registration Statement
continuously effective during the period provided herein with respect to the disposition of all
securities covered by such Registration Statement; cause the related Prospectus to be supplemented
by any required prospectus supplement or free writing prospectus, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act; and
use commercially reasonable efforts to comply with the provisions of the Securities Act applicable
to the Trust with respect to the disposition of all securities covered by such Registration
Statement during the period provided herein with respect to the disposition of all securities
covered by such Registration Statement in accordance with the intended methods of disposition by
the sellers thereof set forth in such Registration Statement as so amended or such Prospectus as so
supplemented.
(c) Subject to Section 3(j), from and after the date a Registration Statement is declared
effective, the Trust shall, as promptly as practicable after the date the Required Information is
delivered pursuant to Section 4 hereof and in accordance with this Section 3(c):
(i) if required by applicable law, file with the SEC a post-effective amendment to the
Registration Statement or prepare and, if required by applicable law, file a supplement to
the related Prospectus or a supplement or amendment to any document incorporated therein by
reference or file any other required document so that the Qualified Holder delivering such
Required Information is named as a selling securityholder in the Registration Statement and
the related Prospectus in such a manner as to permit such Qualified Holder to deliver such
Prospectus to purchasers of the Registrable Securities in accordance with applicable law
and, if the Trust shall file a post-effective amendment to the Registration Statement, use
commercially reasonable efforts to cause such post-effective amendment to be declared
effective under the Securities Act as promptly as is practicable; and
(ii) provide such Qualified Holder copies of any documents filed pursuant to
Section 3(c)(i);
provided
, that, if the Required Information is delivered during a Deferral Period, the Trust shall
so inform the Qualified Holder delivering such Required Information. The Trust shall notify such
Qualified Holder as promptly as practicable after the effectiveness under the Securities Act of any
post-effective amendment filed pursuant to Section 3(c)(i). Notwithstanding anything contained
herein to the contrary, the Trust shall be under no obligation to name any Qualified Holder that
has failed to deliver the Required Information in the manner set forth in Section 4 hereof as a
selling securityholder in any Registration Statement or related Prospectus.
(d) As promptly as practicable give notice to the Qualified Holders, the Special Counsel and
the managing underwriter or underwriters, if any, (i) when any Prospectus, Registration Statement
or post-effective amendment to a Registration Statement has been filed with the SEC and, with
respect to a Registration Statement or any post-effective amendment thereto, when the same has been
declared effective, (ii) of any request, following the effectiveness of any Registration Statement
under the Securities Act, by the SEC or any other federal or state governmental authority for
amendments or supplements to any Registration Statement or related Prospectus, (iii) of the
issuance by the SEC or any other federal or state governmental authority of any stop order
suspending the effectiveness of any Registration Statement or the initiation or threatening of any
proceedings for that purpose, (iv) of the receipt by the Trust of any notification with respect to
the suspension of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such
purpose, (v) of the occurrence of, but not the nature of or details concerning, a Material Event
and (vi) of the determination by the Trust that a post-effective amendment to a Registration
Statement will be filed with the SEC, which notice may, at the discretion of the Trust (or as
required pursuant to Section 3(j)), state that it constitutes a Deferral Notice, in which event the
provisions of Section 3(j) shall apply.
(e) Use commercially reasonable efforts to obtain the withdrawal of any order suspending the
effectiveness of a Registration Statement or the lifting of any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction in
which they have been qualified for sale, in either case as promptly as practicable, and provide
prompt notice to each Qualified Holder of the withdrawal of any such order.
(f) If requested by the managing underwriters, if any, or the Qualified Holders of the
Registrable Securities being sold in connection with an underwritten offering, promptly include in
a prospectus supplement or post-effective amendment such information as the managing underwriters,
if any, and such Qualified Holders may reasonably request in order to permit the intended method of
distribution of such securities and make all required filings of such prospectus supplement or such
post-effective amendment as soon as practicable after the Trust has received such request;
provided, however
, that the Trust shall not be required to take any actions under this Section 3(f)
that are not, in the opinion of counsel for the Trust, in compliance with applicable law.
(g) As promptly as practicable furnish to each Qualified Holder, the Special Counsel and each
managing underwriter, if any, upon request, at least one (1) conformed copy of the Registration
Statement and any amendment thereto, including exhibits and, if requested, all documents
incorporated or deemed to be incorporated therein by reference.
(h) Deliver to each Qualified Holder, the Special Counsel and each managing underwriter, if
any, in connection with any sale of Registrable Securities pursuant to a Registration Statement as
many copies of the Prospectus relating to such Registrable Securities (including each preliminary
Prospectus) and any amendment or supplement thereto as such persons may reasonably request; and the
Trust hereby consents (except during such periods that a Deferral Notice is outstanding and has not
been revoked and subject to Section 3(j)(ii) hereof) to the use of such Prospectus or each
amendment or supplement thereto by each Qualified Holder and the underwriters, if any, in
connection with any offering and sale of the Registrable Securities covered by such Prospectus or
any amendment or supplement thereto in the manner set forth therein.
(i) Prior to any public offering of the Registrable Securities pursuant to a Registration
Statement, use commercially reasonable efforts to register or qualify or cooperate with the
Qualified Holders, the Special Counsel and the underwriters, if any, in connection with the
registration or qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Qualified Holder or underwriter reasonably requests
in writing (which request may be included with the Required Information); prior to any public
offering of the Registrable Securities pursuant to the Registration Statement, use commercially
reasonable efforts to keep each such registration or qualification (or exemption therefrom)
effective during the period provided herein with respect to the disposition of all securities
covered by such Registration Statement in connection with such Qualified Holders offer and sale of
Registrable Securities pursuant to such registration or qualification (or exemption therefrom) and
do any and all other acts or things reasonably necessary or advisable to enable the disposition in
such jurisdictions of such Registrable Securities in the manner set forth in the relevant
Registration Statement and the related Prospectus;
provided
that neither the Trust nor the Trust
will be required to (i) qualify as a foreign entity or as a dealer in securities in any
jurisdiction where it would not otherwise be required to qualify but for this Agreement or
(ii) take any action that would subject it to general service of process or to taxation in any such
jurisdiction where it is not then so subject.
(j) Upon (A) the issuance by the SEC of a stop order suspending the effectiveness of any
Registration Statement or the initiation of proceedings with respect to any Registration Statement
under Section 8(d) or 8(e) of the Securities Act, (B) the occurrence of any event or the existence
of any fact as a result of which (x) any Registration Statement shall contain any untrue statement
of a material fact or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, or (y) any Prospectus shall contain any untrue
statement of a material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading
(each of subclauses (x) and (y) hereof, a
Material Event
), or (C) the occurrence or existence of
any pending corporate development of the Trust that, in the reasonable discretion of the Trust,
makes it appropriate to suspend the availability of any Registration Statement and the related
Prospectus, the Trust shall:
(i) in the case of clause (B) above, subject to clause (ii) below, as promptly as
practicable prepare and file, if necessary pursuant to applicable law, a post-effective
amendment to such Registration Statement or a supplement to the related Prospectus or
any document incorporated therein by reference or file any other required document that
would be incorporated by reference into such Registration Statement and Prospectus so that
such Registration Statement does not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make the statements
therein not misleading, and such Prospectus does not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under which they
were made, not misleading, as thereafter delivered to the purchasers of the Registrable
Securities being sold thereunder, and, in the case of a post-effective amendment to a
Registration Statement, subject to clause (ii) below, use commercially reasonable efforts to
cause it to be declared effective as promptly as practicable; and
(ii) give notice to the Qualified Holders and the Special Counsel, if any, that the
availability of any Registration Statement is suspended (a
Deferral Notice
) and, upon
receipt of any Deferral Notice, each Qualified Holder agrees not to sell any Registrable
Securities pursuant to the Registration Statement until such Qualified Holders receipt of
copies of the supplemented or amended Prospectus provided for in clause (i) above, or until
it is advised in writing by the Trust that the Prospectus may be used, and has received
copies of any additional or supplemental filings that are incorporated or deemed
incorporated by reference in such Prospectus, in which case such Qualified Holder will use
the Prospectus as so supplemented or amended in connection with any offering and sale of
Registrable Securities covered thereby.
The Trust shall use commercially reasonable efforts to ensure that the use of the Prospectus may be
resumed (x) in the case of clause (A) above, as promptly as is practicable, (y) in the case of
clause (B) above, as soon as, in the sole judgment of the Trust, public disclosure of such Material
Event would not be prejudicial to or contrary to the interests of the Trust or, if necessary to
avoid unreasonable burden or expense, as soon as practicable thereafter, and (z) in the case of
clause (C) above, as soon as, in the reasonable discretion of the Trust, such suspension is no
longer appropriate. The Trust shall be entitled to exercise its right under this Section 3(j) to
suspend the availability of any Registration Statement or any Prospectus (the
Deferral Period
)
for use by any Qualified Holder.
(k) If reasonably requested by a Qualified Holder or any underwriter participating in any
disposition of Registrable Securities, if any, in writing in connection with a disposition by such
Qualified Holder of Registrable Securities pursuant to a Registration Statement, make reasonably
available for inspection during normal business hours by a representative for such Qualified
Holder(s) of such Registrable Securities, any broker-dealers, underwriters, attorneys and
accountants retained by such Qualified Holder(s), and any attorneys or other agents retained by a
broker-dealer or underwriter engaged by such Qualified Holder(s), all relevant financial and other
records and pertinent corporate documents and properties of the Trust, and cause the appropriate
officers, directors and employees of the Trust to make reasonably available for inspection during
normal business hours on reasonable notice all relevant information reasonably requested by such
representative for the Qualified Holder(s), or any such broker-dealers, underwriters, attorneys or
accountants in connection with such disposition, in each case as is customary for similar due
diligence examinations;
provided
that (i) the Trust shall not be obligated to make available for
inspection any information that, based on the reasonable advice
of counsel to the Trust, could subject the Trust to the loss of privilege with respect thereto
and (ii) such persons shall first agree in writing with the Trust that any information that is
reasonably designated by the Trust as confidential at the time of delivery of such information
shall be kept confidential by such persons and shall be used solely for the purposes of exercising
rights under this Agreement, unless (a) disclosure of such information is required by court or
administrative order or is necessary to respond to inquiries of regulatory authorities,
(b) disclosure of such information is required by law (including any disclosure requirements
pursuant to federal securities laws in connection with the filing of any Registration Statement or
the use of any Prospectus referred to in this Agreement) or (c) such information becomes generally
available to the public other than as a result of a disclosure or failure to safeguard by any such
person; and
provided further
that the foregoing inspection and information gathering shall, to the
greatest extent possible, be coordinated on behalf of all the Qualified Holders and the other
parties entitled thereto by Special Counsel, if any, or another representative selected by the
Qualified Holders holding a majority of Registrable Securities being registered pursuant to such
Registration Statement. Any person legally compelled or required by administrative or court order
or by a regulatory authority to disclose any such confidential information made available for
inspection shall provide the Trust with prompt prior written notice of such requirement so that the
Trust may seek a protective order or other appropriate remedy.
(l) Use its best efforts to comply with all applicable rules and regulations of the SEC and
make generally available to the Trusts securityholders earnings statements (which need not be
audited) satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) for a 12-month period commencing on the
first day of the first fiscal quarter of the Trust commencing after the effective date of a
Registration Statement, which statements shall be made available no later than the next succeeding
Business Day after such statements are required to be filed with the SEC.
(m) Cooperate with each Qualified Holder and the managing underwriters, if any, to facilitate
the timely preparation and delivery of certificates representing Registrable Securities sold or to
be sold pursuant to a Registration Statement, which certificates shall not bear any restrictive
legends stating that the Registrable Securities evidenced by the certificates are restricted
securities (as defined by Rule 144), and cause such Registrable Securities to be registered in
such names as such Qualified Holder or the managing underwriters, if any, may request in writing at
least two (2) Business Days prior to any sale of such Registrable Securities.
(n) Provide a CUSIP number for all Registrable Securities covered by each Registration
Statement not later than the effective date of such Registration Statement.
(o) Cooperate with and assist each Qualified Holder, the Special Counsel and any underwriters
participating in any disposition of Registrable Securities in any filings required to be made with
the Financial Industry Regulatory Authority in connection with the filing or effectiveness of any
Registration Statement, any post-effective amendment thereto or any offer or sale of Registrable
Securities thereunder.
(p) In the case of a proposed sale pursuant to a Registration Statement involving an
underwritten offering, the Trust shall enter into such customary agreements on behalf of he Trust
(including, if requested, an underwriting agreement in reasonably customary form) and take all
such other action, if any, as Qualified Holders holding a majority of the Registrable
Securities being sold or any managing underwriters reasonably shall request in order to facilitate
any disposition of the Registrable Securities pursuant to such Registration Statement, including,
without limitation, (i) using commercially reasonable efforts to cause its counsel to deliver an
opinion or opinions in reasonably customary form, (ii) using its reasonable best efforts to cause
its officers to execute and deliver all customary documents and certificates on behalf of the Trust
and (iii) using its reasonable best efforts to cause the Trusts independent public accountants to
provide a comfort letter or letters in reasonably customary form.
(q) Use its reasonable best efforts to support the marketing of the Registrable Securities
covered by the Registration Statement taking into account the Trusts business needs.
(r) Upon (i) the filing of any Registration Statement and (ii) the effectiveness of any
Registration Statement, announce the same, in each case by press release to Reuters Economic
Services and Bloomberg Business News.
(s) Use commercially reasonable efforts to cause all such Registrable Securities to be listed
on each securities exchange on which similar securities issued by the Trust are listed or traded.
SECTION 4.
Qualified Holders Obligations
.
(a) Each Qualified Holder agrees that if such Qualified Holder wishes to sell Registrable
Securities pursuant to a Registration Statement and related Prospectus, it will do so only in
accordance with this Section 4 and Section 3(j) hereof. The Trust may require each seller of
Registrable Securities as to which any registration is being effected to furnish to the Trust in
writing such information required in connection with such registration regarding such seller and
the distribution of such Registrable Securities as the Trust may, from time to time, reasonably
request in writing (the
Required Information
) and the Trust may exclude from such registration
the Registrable Securities of any seller who unreasonably fails to furnish such information within
a reasonable time after receiving such request. In addition, following the date that a
Registration Statement is declared effective, each Qualified Holder wishing to sell Registrable
Securities pursuant to a Registration Statement and related Prospectus agrees to deliver, at least
seven (7) Business Days prior to any intended distribution of Registrable Securities under the
Registration Statement, to the Trust any additional Required Information as the Trust may
reasonably request so that the Trust may complete or amend the information required by any
Registration Statement.
(b) Each Qualified Holder agrees, by acquisition of the Registrable Securities, that no
Qualified Holder shall be entitled to sell any of such Registrable Securities pursuant to a
Registration Statement or to receive a Prospectus relating thereto unless such Qualified Holder has
furnished the Trust with the Required Information as required pursuant to this Section 4 and the
information set forth in the next sentence. Each Qualified Holder agrees promptly to furnish to
the Trust all information required to be disclosed in order to make the information previously
furnished to the Trust by such Qualified Holder not misleading and any other information regarding
such Qualified Holder and the distribution of such Registrable Securities as the Trust may from
time to time reasonably request. Any sale of any Registrable Securities by any
Qualified Holder shall constitute a representation and warranty by such Qualified Holder that
the information relating to such Qualified Holder and its plan of distribution is as set forth in
the Prospectus delivered by such Qualified Holder in connection with such disposition, that such
Prospectus does not as of the time of such sale contain any untrue statement of a material fact
relating to or provided by such Qualified Holder or its plan of distribution and that such
Prospectus does not as of the time of such sale omit to state any material fact relating to or
provided by such Qualified Holder or its plan of distribution necessary in order to make the
statements in such Prospectus, in the light of the circumstances under which they were made, not
misleading.
SECTION 5.
Registration Expenses
. The Company shall bear all out-of-pocket fees and
expenses incurred in connection with the performance by the Trust of its obligations under Sections
2 and 3 of this Agreement whether or not any Registration Statement is declared effective. Such
fees and expenses shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (x) with respect to filings required to be made
with the Financial Industry Regulatory Authority and (y) of compliance with federal and state
securities or Blue Sky laws (including, without limitation, reasonable fees and disbursements of
the Special Counsel, if any, in connection with Blue Sky qualifications of the Registrable
Securities under the laws of such jurisdictions as Qualified Holders holding a majority of the
Registrable Securities being sold pursuant to a Registration Statement may designate)),
(ii) printing expenses (including, without limitation, expenses of printing certificates for
Registrable Securities in a form eligible for deposit with The Depository Trust Company),
(iii) duplication expenses relating to copies of any Registration Statement or Prospectus delivered
to any Qualified Holders hereunder, (iv) fees and disbursements of counsel for the Trust and the
Special Counsel, if any, in connection with any Registration Statement, (v) fees of accountants for
consents and cold comfort and (vi) the fees and expenses incurred in connection with the listing by
the Trust of the Registrable Securities on any securities exchange on which similar securities of
the Trust are then listed. However, the Trust shall pay the internal expenses of the Trust
(including, without limitation, all salaries and expenses of officers and employees performing
legal or accounting duties), the expense of any annual audit and the other fees and expenses of the
accountants for the Trust not covered by clause (v) of the preceding sentence, other than any
expense that would not have otherwise been incurred but for the fact of the filing of the
Registration Statement or the timing thereof, the fees and expenses of any person, including
special experts, retained by the Trust and the fees and expenses of any transfer agent for the
Registrable Securities. Notwithstanding the provisions of this Section 5, each seller of
Registrable Securities shall pay its own selling expenses, including any underwriting discount and
commissions, all registration expenses to the extent required by applicable law and, except as
otherwise provided herein, fees and expenses of counsel.
SECTION 6.
Indemnification and Contribution
.
(a)
Indemnification by the Trust
. The Trust shall indemnify and hold harmless ECA, each
Qualified Holder and each person, if any, who controls ECA or any Qualified Holder within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages and liabilities (including, without limitation, any
reasonable legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) (
Expenses
) to which ECA, any Qualified Holder or
any controlling person of ECA or any Qualified Holder may become subject, under or with
respect to the Securities Act, the Exchange Act, any other federal or state securities law or
otherwise, insofar as such Expenses are caused by any untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement at the date and time as of which such
Registration Statement was declared effective by the SEC, any preliminary Prospectus or the
Prospectus, or caused by any omission or alleged omission to state therein a material fact required
to be stated therein or necessary in order to make the statements therein (in the case of a
preliminary Prospectus or Prospectus, in light of the circumstances under which they were made),
not misleading, but in each case only with respect to written information relating to the Trust
furnished by or on behalf of the Trust specifically for inclusion in the documents referred to in
the foregoing indemnity. Subject to Section 6(e) of this Agreement, the Trust shall reimburse ECA,
the Qualified Holders and any controlling persons thereof for any legal or other expenses
reasonably incurred by ECA, the Qualified Holders or any controlling persons thereof in connection
with the investigation or defense of any Expenses with respect to which ECA and the Qualified
Holders or any controlling persons thereof is entitled to indemnity by the Trust under this
Agreement. In connection with any underwritten offering pursuant to Section 8, the Trust will also
agree to indemnify the underwriters, if any, their officers and directors and each person who
controls such underwriters (within the meaning of the Securities Act and the Exchange Act) on terms
and conditions similar to those set forth herein with respect to the indemnification of ECA and the
Qualified Holders, if requested in connection with any Registration Statement, such indemnification
to be set forth in any underwriting agreement to be entered into by the Trust with such
underwriter(s).
(b)
Indemnification by ECA
. The Company shall indemnify and hold harmless each Qualified
Holder (other than ECA), the Trust and The Bank of New York Mellon Trust Company, N.A., as trustee
of the Trust (the
Trustee
) and any agents thereof, individually and as trustee, as the case may
be, and each person, if any, who controls such Qualified Holder, the Trust or the Trustee within
the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any Expenses (excluding, however, any taxes, fees and other charges payable by the Trust
on, based on or measured by any fees, commissions or compensation received by the Trust for its
services under this Agreement) to which such Qualified Holder, the Trust, the Trustee or any agent
thereof or any controlling person of such Qualified Holder, the Trust or the Trustee may become
subject, under or with respect to the Securities Act, the Exchange Act, any other federal or state
securities law or otherwise, insofar as such Expenses are caused by (i) an untrue statement or
alleged untrue statement of a material fact contained in any Registration Statement or an omission
or alleged omission to state a material fact required to be stated in or necessary to make the
statements therein not misleading at the date and time as of which such Registration Statement was
declared effective by the SEC, (ii) an untrue statement or alleged untrue statement of a material
fact contained in any preliminary Prospectus or any Prospectus or an omission or alleged omission
to state a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading as of the date of such preliminary
Prospectus or Prospectus and as of the closing of the sale of Trust Units sold thereunder or (iii)
any untrue statement or alleged untrue statement of a material fact contained in any other filing,
report or other action taken with respect to the Securities Act, the Exchange Act or any other
Federal or state securities law, the listing of the Trust Units on the New York Stock Exchange or
another national securities exchange or any omission or alleged omission to state a material fact
required to be stated therein
or necessary to make the statements therein not misleading;
provided, however
, that ECA shall
not be liable to and shall not indemnify the Qualified Holders (other than ECA), the Trust or any
agents or controlling persons thereof, individually or as trustee, as the case may be, in any such
case under the preceding clauses (i) and (ii) of this Section 6(b) to the extent that any such
Expense arises out of, is based upon or is connected with information relating to (a) the Trust in
its individual capacity or (b) such Qualified Holder, in either case prepared or furnished by the
Trust or such Qualified Holder, as the case may be, expressly for use in any Registration
Statement, any preliminary Prospectus or any Prospectus; and
provided, further
, that ECA shall not
be liable to the Qualified Holders (other than ECA), the Trust or any agents or controlling persons
thereof, individually or as trustee, as the case may be, in any such case under the preceding
clause (iii) of this Section 6(b) to the extent that any such Expense arises out of, is based upon
or is connected with information relating to (a) the Trust in its individual capacity prepared or
furnished by the Trust and the Trust is found liable or (b) such Qualified Holder prepared or
furnished by such Qualified Holder and such Qualified Holder is found liable. Subject to Section
6(e) of this Agreement, ECA shall reimburse the Qualified Holders (other than ECA), the Trust and
the Trustee and any agents or controlling persons thereof for any legal or other expenses
reasonably incurred by the Qualified Holders (other than ECA), the Trust and the Trust or any agent
or controlling persons thereof in connection with the investigation or defense of any Expenses with
respect to which the Qualified Holders (other than ECA), the Trust and the Trustee or any agent or
controlling persons thereof is entitled to indemnity by ECA under this Agreement.
(c)
Indemnification by Certain of the Qualified Holders
. Each Qualified Holder (other than
ECA), severally and not jointly, shall indemnify and hold harmless ECA, the Trust, the Trustee and
any agents thereof, individually and as trustee, and any other Qualified Holder and each person, if
any, who controls ECA, the Trust, the Trustee and any agents thereof, individually and as trustee,
or any other Qualified Holder within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all Expenses to which ECA, the Trust, the
Trustee and any agents thereof, individually and as trustee, any other Qualified Holder or any
controlling person of ECA, the Trust, the Trustee and any agents thereof, individually and as
trustee, or any other Qualified Holder may become subject, under or with respect to the Securities
Act, the Exchange Act, any other federal or state securities law or otherwise, insofar as such
Expenses are caused by any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement at the date and time as of which such Registration
Statement was declared effective by the SEC, any preliminary Prospectus or the Prospectus, or
caused by any omission or alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein (in the case of a preliminary
Prospectus or Prospectus, in light of the circumstances under which they were made), not
misleading, but in each case only with respect to written information relating to such Qualified
Holder (other than ECA) furnished by or on behalf of such Qualified Holder specifically for
inclusion in the documents referred to in the foregoing indemnity. Subject to Section 6(e) of this
Agreement, such Qualified Holder shall reimburse ECA, the Trust, the Trustee and any agents
thereof, individually and as trustee, the other Qualified Holders and any agents or controlling
persons thereof for any legal or other expenses reasonably incurred by ECA, the Trust, the Trustee
and any agents thereof, individually and as trustee, the other Qualified Holders or any agent or
controlling persons thereof in connection with the investigation or defense of any Expenses with
respect to which ECA, the Trust, the Trustee and
any agents thereof, individually and as trustee, and the other Qualified Holders or any agent
or controlling persons thereof is entitled to indemnity by such Qualified Holder under this
Agreement.
(d)
Conduct of Indemnification Proceedings
. In case any proceeding (including any
governmental investigation) shall be instituted involving any person in respect of which indemnity
may be sought pursuant to Section 6(a), 6(b) or 6(c) hereof, such person (the
Indemnified Party
)
shall promptly notify the person against whom such indemnity may be sought (the
Indemnifying
Party
) in writing and the Indemnifying Party, upon request of the Indemnified Party, shall retain
counsel reasonably satisfactory to the Indemnified Party to represent the Indemnified Party and any
others the Indemnifying Party may designate in such proceeding and shall pay the reasonable fees
and disbursements of such counsel related to such proceeding. In any such proceeding, any
Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) the named
parties to any such proceeding (including any impleaded parties) include both the Indemnifying
Party and the Indemnified Party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them, other than solely by
virtue of the rights and obligations of the Indemnifying Party and the Indemnified Party under this
Section 6. It is understood that the Indemnifying Party shall not, in respect of the legal
expenses of any Indemnified Party in connection with any proceeding or related proceedings in the
same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in writing by, in the case of
parties indemnified pursuant to Section 6(a), the Qualified Holders holding a majority of the
Registrable Securities covered by the Registration Statement held by Qualified Holders that are
indemnified parties pursuant to Section 6(a) and, in the case of parties indemnified pursuant to
Section 6(b) or Section 6(c), the Trust. The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written consent, but if settled with such consent
or if there be a final, non-appealable judgment for the plaintiff, the Indemnifying Party agrees to
indemnify the Indemnified Party from and against any Expenses by reason of such settlement or
judgment. No Indemnifying Party shall, without the prior written consent of the Indemnified Party,
effect any settlement of any pending or threatened proceeding in respect of which any Indemnified
Party is or could have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of such Indemnified
Party from all liability on claims that are the subject matter of such proceeding.
(e)
Contribution
. To the extent that the indemnification provided for in Section 6(a),
6(b) or 6(c) is unavailable to an Indemnified Party or insufficient in respect of any Expenses
referred to therein, then each Indemnifying Party under such paragraph, in lieu of indemnifying
such Indemnified Party thereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Expenses (i) in such proportion as is appropriate to reflect
the relative benefits received by the Indemnifying Party or Indemnifying Parties on the one hand
and the Indemnified Party or Indemnified Parties on the other hand or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i) above but also the
relative fault of the Indemnifying Party or Indemnifying Parties on the one hand and of the
Indemnified Party or Indemnified Parties on the other hand in connection with the statements or
omissions that resulted in such Expenses, as well as any other relevant equitable considerations.
The relative fault of ECA and the other Qualified Holders on the one hand and the Trust on the
other hand shall be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state a material fact
required to be stated or necessary in order to make the statements (in the case of a preliminary
Prospectus or Prospectus, in light of the circumstances under which they were made) not misleading,
relates to information supplied by ECA, the other Qualified Holders or by the Trust, and the
parties relative intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Qualified Holders respective obligations to contribute pursuant
to this Section 6 are several in proportion to the respective number of Registrable Securities they
have sold pursuant to a Registration Statement, and not joint.
The parties hereto agree that it would not be just and equitable if contribution pursuant to
this Section 6(e) were determined by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the Expenses referred
to in the immediately preceding paragraph shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
(f) The remedies provided for in this Section 6 are not exclusive and shall not limit any
rights or remedies which may otherwise be available to an Indemnified Party at law or in equity,
hereunder or otherwise.
(g) The indemnity and contribution provisions contained in this Section 6 shall remain
operative and in full force and effect regardless of (i) any termination of this Agreement,
(ii) any investigation made by or on behalf of any Qualified Holder, any person controlling ECA or
any other Qualified Holder or any Affiliate of ECA or any other Qualified Holder or by or on behalf
of the Trust, its officers or directors or any person controlling the Trust and (iii) the sale of
any Registrable Securities by any Qualified Holder.
SECTION 7.
Information Requirements
. The Trust covenants that, if at any time before
the end of the Effective Period the Trust is not subject to the reporting requirements of the
Exchange Act, it will cooperate with any Qualified Holder and take such further reasonable action
as any Qualified Holder may reasonably request in writing (including, without limitation, making
such reasonable representations as any such Qualified Holder may reasonably request), all to the
extent required from time to time to enable such Qualified Holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the exemptions provided by
Rule 144 or Rule 144A under the Securities Act and customarily taken in connection with sales
pursuant to such exemptions. Upon the written request of any Qualified Holder, the Trust shall
deliver to such Qualified Holder a written statement as to whether the Trust has complied with such
filing requirements. Notwithstanding the foregoing, nothing in this
Section 7 shall be deemed to require the Trust to register any of the Trusts securities under
any section of the Exchange Act.
SECTION 8.
Underwritten Registrations
. The Qualified Holders of Registrable
Securities covered by any Registration Statement who desire to do so may sell such Registrable
Securities to an underwriter in an underwritten offering for reoffering to the public. If any of
the Registrable Securities covered by any Registration Statement are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers that will administer
the offering will be selected by the Qualified Holders holding a majority of such Registrable
Securities included in such offering, subject to the consent of the Trust (which shall not be
unreasonably withheld or delayed), and such Qualified Holders shall be responsible for all
underwriting commissions and discounts and any transfer taxes in connection therewith. No person
may participate in any underwritten registration hereunder unless such person (i) agrees to sell
such persons Registrable Securities on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such arrangements and
(ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such underwriting
arrangements.
SECTION 9.
Miscellaneous
.
(a)
Amendments and Waivers
. The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, without the written consent of the Trust, ECA and the
Qualified Holders holding a majority of Registrable Securities. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Qualified Holders whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the rights of other
Qualified Holders may be given by Qualified Holders of at least a majority of the Registrable
Securities being sold by such Qualified Holders pursuant to such Registration Statement;
provided
that the provisions of this sentence may not be amended, modified or supplemented except in
accordance with the provisions of the immediately preceding sentence. Notwithstanding the
foregoing, this Agreement may be amended by written agreement signed by the Trust, without the
consent of the Qualified Holders of Registrable Securities, to cure any ambiguity or to correct or
supplement any provision contained herein that may be defective or inconsistent with any other
provision contained herein, or to make such other provisions in regard to matters or questions
arising under this Agreement that shall not adversely affect the interests of the Qualified Holders
of Registrable Securities. Each Qualified Holder of Registrable Securities outstanding at the time
of any such amendment, modification, supplement, waiver or consent or thereafter shall be bound by
any such amendment, modification, supplement, waiver or consent effected pursuant to this Section
9(a), whether or not any notice, writing or marking indicating such amendment, modification,
supplement, waiver or consent appears on the Registrable Securities or is delivered to such
Qualified Holder.
(b)
Notices
. All notices and other communications provided for or permitted hereunder shall
be made in writing by hand delivery, by facsimile, by courier guaranteeing overnight delivery or by
first-class mail, return receipt requested, and shall be deemed given
(i) when made, if made by hand delivery, (ii) upon confirmation, if made by facsimile,
(iii) one (1) Business Day after being deposited with such courier, if made by overnight courier or
(iv) on the date indicated on the notice of receipt, if made by first-class mail, to the parties as
follows:
(i) if to a Qualified Holder other than ECA, at the most current address given by such
Qualified Holder to the Trust (initially such address being that which is included on the
signature page hereto with respect to such Qualified Holder other than ECA);
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(ii)
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if to the Trust or the Trust, to:
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ECA Marcellus Trust I
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c/o The Bank of New York Mellon Trust Company, N.A.
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Institutional Trust Services
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919 Congress Avenue, Suite 500
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Austin, Texas 78701
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Attention: Mike J. Ulrich
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Fax: (512) 479-2553
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with a copy to:
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Bracewell & Giuliani LLP
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111 Congress Avenue
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Suite 2300
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Austin, Texas 78701
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Attention: Thomas W. Adkins
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Fax: (512) 479-3940
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(iii)
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if to ECA, to:
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4643 South Ulster Street
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Suite 1100
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Denver, Colorado 80237
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Attention: Michael S. Fletcher
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Fax: (303) 694-2763
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with a copy to:
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501 56
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Street
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Charleston, West Virginia 25304
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Attention Donald C. Supcoe
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Fax: (304) 925-3285
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Vinson & Elkins L.L.P.
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1001 Fannin, Suite 2500
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Houston, Texas 77002
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Attention: David P. Oelman
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Fax: (713) 615-5861
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or to such other address as such person may have furnished to the other persons identified in this
Section 9(b) in writing in accordance herewith.
(c)
Approval of Qualified Holders
. Whenever the consent or approval of Qualified Holders of a
specified percentage of Registrable Securities is required hereunder, Registrable Securities held
by Affiliates (as such term is defined in Rule 405 under the Securities Act) of the Trust (other
than ECA or subsequent Qualified Holders if such Qualified Holders are deemed to be such Affiliates
solely by reason of their holdings of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the Qualified Holders of such required
percentage.
(d)
Successors and Transferees
. Any person or group of persons who purchases any Registrable
Securities from ECA or otherwise holds any Registrable Securities as a result of any sale,
liquidation, dividend or distribution by ECA or any of its Affiliates shall be deemed, for purposes
of this Agreement, to be a transferee of ECA, but if and only if such person or group (i) agrees to
be designated as a transferee, (ii) is specifically designated as a transferee in writing by ECA to
the Trust (iii) holds Registrable Securities representing at each one (1) million of the
then-outstanding Registrable Securities and (iv) in the case of a group such group shall
collectively constitute a Transferee for purposes of this Agreement (including without limitation,
for purposes of exercising any Demand Registration right transferred by ECA to such group) (a
Transferee
). This Agreement shall inure to the benefit of and be binding upon such Transferees
and shall inure to the benefit of and be binding upon each such Transferees,
provided
that nothing
herein shall be deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms thereof. If ECA designates any person as a Transferee in
accordance with this Section 9(d), then the Registrable Securities acquired by such Transferee
shall be held subject to all of the terms of this Agreement, and by taking and holding such
Registrable Securities, such person shall be conclusively deemed to have agreed to be bound by and
to perform all of the terms and provisions of this Agreement and such person shall be entitled to
receive the benefits hereof.
(e)
Counterparts
. This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same agreement.
(f)
Headings
. The headings in this Agreement are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof.
(g)
Governing Law
. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE.
(h)
Severability
. If any term, provision, covenant or restriction of this Agreement is held
to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants
and restrictions set forth herein shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, and the parties hereto shall use their reasonable best
efforts to find and employ an alternative means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or restriction, it being
intended that all of the rights and privileges of the parties shall be enforceable to the
fullest extent permitted by law.
(i)
Entire Agreement
. This Agreement is intended by the parties as a final expression of
their agreement and is intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained herein and the
registration rights granted by the Trust with respect to the Registrable Securities. There are no
restrictions, promises, warranties or undertakings, other than those set forth or referred to
herein, with respect to the registration rights granted by the Trust with respect to the
Registrable Securities. This Agreement supersedes all prior agreements and undertakings among the
parties with respect to such registration rights. No party hereto shall have any rights, duties or
obligations other than those specifically set forth in this Agreement.
(j)
Termination
. This Agreement and the obligations of the parties hereunder shall terminate
upon the end of the Effective Period, except for any liabilities or obligations under Section 4, 5
or 6 hereof, each of which shall remain in effect in accordance with its terms.
(k)
Specific Enforcement; Venue
. The parties hereto acknowledge and agree that each would be
irreparably damaged if any of the provisions of this Agreement are not performed by the other in
accordance with their specific terms or are otherwise breached. It is accordingly agreed that each
party shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement
by the other and to enforce this Agreement and the terms and provisions hereof specifically against
the other, in addition to any other remedy to which such aggrieved party may be entitled at law or
in equity. Any action or proceeding seeking to enforce any provision of, or based on any rights
arising out of, this Agreement may be brought against any of the parties in the FEDERAL AND WEST
VIRGINIA STATE COURTS SITTING IN CHARLESTON, KANAWHA COUNTY, WEST VIRGINIA and the FEDERAL AND
TEXAS STATE COURTS SITTING IN AUSTIN, TRAVIS COUNTY, TEXAS and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere in the world.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written
above.
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ECA MARCELLUS TRUST I
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By:
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The Bank of New York Mellon
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Trust Company, N.A., as trustee
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By:
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/s/ Michael J. Ulrich
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Name:
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Michael J. Ulrich
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Title:
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Authorized Signatory
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Signature Page to Registration Rights Agreement
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ENERGY CORPORATION OF AMERICA
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By:
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/s/ John Mork
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Name:
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John Mork
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Title:
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President and Chief Executive Officer
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By:
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/s/ John Mork
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Name:
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John Mork
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Address for Notice:
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4643 South Ulster Street
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Denver, Co 80237
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By:
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/s/ Julie Mork
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Name:
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Julie Mork
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Address for Notice:
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4643 South Ulster Street
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Denver, Co 80237
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Signature Page to Registration Rights Agreement