Document:

exv10w11

Exhibit 10.11

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                     ,
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,                     , 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                     , 2010 (“Term Conveyance”).
Assignor and the Trustee have entered into that certain Perpetual Overriding Royalty Interest
Conveyance (PUD) dated effective as of                     , 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

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     (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.

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     “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.

     “Assignor’s Net Share of Gas” means the share of Subject Gas from each Development
Well that is attributable to Assignor’s 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
Assignor’s drilling obligation was satisfied as of such date and (b) such other documentation as
the Trustee may reasonably request to establish satisfaction of Assignor’s 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 Assignor’s
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).

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     “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
Assignor’s 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:

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               (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 Assignor’s 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 Assignor’s 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) Assignor’s rights to substances other than Gas; (b) Assignor’s rights
to Gas under contracts for the purchase, sale, transportation, storage, processing, or other
handling or disposition of Gas; (c) Assignor’s 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.

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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 Assignor’s 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.

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          (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 Assignor’s 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
Assignor’s 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 Assignor’s 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
Assignor’s satisfaction of Assignor’s 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,

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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 Assignor’s 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 Assignor’s request and at Assignor’s 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 Assignor’s 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;

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          (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 Party’s 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

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 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.]

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     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.

	 	 	 	 	 	 	 

	 	 	ENERGY CORPORATION OF AMERICA	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	THE BANK OF NEW YORK MELLON TRUST COMPANY,
N.A., in its capacity as trustee for the ECA
Marcellus Trust I and
not individually	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 

[Signature Page to Development Agreement]

S-1exv10w12

Exhibit 10.12

 

Swap Agreement

dated as of

June [     ], 2010

between

ENERGY CORPORATION OF AMERICA

and

ECA MARCELLUS TRUST I

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I 
 DEFINITIONS; TERMS GENERALLY

	 
	 	 	 	 
	Section 1.01 Definitions
	 	 	1	 
	Section 1.02 Terms Generally
	 	 	3	 
	 
	 	 	 	 
	ARTICLE II 
PAYMENTS 

	 
	 	 	 	 
	Section 2.01 Payments
	 	 	4	 
	Section 2.02 Netting of Payments
	 	 	5	 
	Section 2.03 General Conditions
	 	 	5	 
	Section 2.04 Certain Notices
	 	 	5	 
	 
	 	 	 	 
	ARTICLE III 
 MISCELLANEOUS 

	 
	 	 	 	 
	Section 3.01 Amendments
	 	 	5	 
	Section 3.02 No Waiver
	 	 	5	 
	Section 3.03 Remedies Cumulative; Non-Exclusive; Etc
	 	 	5	 
	Section 3.04 Successors and Assigns
	 	 	5	 
	Section 3.05 Severability
	 	 	6	 
	Section 3.06 Survival; Revival; Restatement
	 	 	6	 
	Section 3.07 Acknowledgments
	 	 	6	 
	Section 3.08 No Agency Relationship; No Assignment of Trades
	 	 	7	 
	Section 3.09 Governing Law
	 	 	7	 
	Section 3.10 Counterparts
	 	 	7	 
	Section 3.11 ENTIRE AGREEMENT
	 	 	7	 
	Section 3.12 No Third Party Beneficiaries
	 	 	7	 
	Section 3.13 Tax Hedge Designation
	 	 	7	 
	 
	 	 	 	 
	Exhibit A — Confirmations
	 	 	 	 

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Swap Agreement

     This SWAP AGREEMENT, dated as of June [   ], 2010, is between ENERGY CORPORATION OF
AMERICA, a West Virginia corporation (“ECA”), and ECA MARCELLUS TRUST I, a Delaware
statutory trust (the “Trust”).

R E C I T A L S

     WHEREAS, the Trust was created pursuant to that certain Amended and Restated Trust Agreement
by and among ECA, as trustor, Corporation Trust Company, as Delaware trustee, and The Bank of New
York Mellon Trust Company, N.A., as trustee;

     WHEREAS, ECA has entered into commodity derivatives transactions with certain counterparties;

     WHEREAS, the parties hereto desire to allocate among themselves certain of the economic
benefits and costs associated with certain of these transactions;

     NOW, THEREFORE, in consideration of the premises herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

ARTICLE I

DEFINITIONS; TERMS GENERALLY

     Section 1.01 Definitions. As used herein, terms defined above have the meanings given
such terms above and the following terms have the following meanings:

     “Agreement” means this Swap Agreement, as the same may be amended, supplemented or
otherwise modified from time to time.

     “BP Trade Documents” means the ISDA Master Agreement dated as of March 12, 2004
between ECA and BP Energy Company, including the Schedule thereto and each Confirmation entered
into thereunder, in each case as in effect on the date hereof.

     “Business Day” means a day that is not a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to remain closed.

     “Confirmations” means the collective reference to each Confirmation attached hereto as
Exhibit A.

     “Counterparties” means the collective reference to BP Energy Company and Wells Fargo
Foothill, Inc.

     “Defaulting Party” means, with respect to any Trade on any date of determination, any
Person: (a) that is a “Defaulting Party” or an “Affected Party” with respect to such Trade on such
date under the applicable Trade Documents (as such terms are defined therein) or (b) in respect of
which a “Potential Event of Default” or an “Event of Default” has occurred and is

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continuing on such date under the applicable Trade Documents (as such terms are defined
therein).

     “ECA Gross Up Amount” means, in relation to any Scheduled Payments or any Illegality
Termination Payments required to be made by the Counterparties during any Quarterly Period, an
amount equal to the sum of all such Scheduled Payments or Illegality Termination Payments, as the
case may be, that were due and payable by the Counterparties but not paid by the Counterparties to
ECA during such Quarterly Period (a) on account of the exercise of any right of netting or set-off
against (i) obligations owed by ECA or its affiliates to the Counterparties or their affiliates
under agreements or instruments other than the Trade Documents or (ii) any obligation of ECA to pay
an Excluded Amount pursuant to the Trade Documents; or (b) to the extent that any Counterparty (i)
set-off any such Scheduled Payments or Illegality Termination Payments, as the case may be, against
any posted collateral held by ECA (or any obligation of ECA to transfer that posted collateral) or
(ii) withheld payment of any such Scheduled Payments or Illegality Termination Payments, as the
case may be, up to the value of any posted collateral held by ECA.

     “Excluded Amount” means any amount payable by one party to another party pursuant to
any Trade Documents on account of indemnity or reimbursement obligations (including additional
amounts owing in respect of tax gross up obligations), costs, fees, expenses (including, without
limitation, attorneys fees) or default interest.

     “Illegality” has the meaning specified in the applicable Trade Documents; provided
that the term “Illegality” when used herein in reference to any Trade will only be deemed to have
occurred with respect to such Trade if either (a) the Counterparty is an “Affected Party” (as
defined in the applicable Trade Documents) with respect to such Illegality; or (b) both (i) ECA is
an “Affected Party” (as defined in the applicable Trade Documents) with respect to such Illegality
and (ii) the Trust would have been an “Affected Party” (as defined in the applicable Trade
Documents) with respect to such Illegality if it were a party to such Trade.

     “Illegality Termination Payment” means any Termination Payment that becomes due and
payable as the result of the termination of any Trade prior to the stated termination date thereof
based on the occurrence of an Illegality.

     “Period End Date” means March 31, June 30, September 30 and December 31 of each
calendar year.

     “Person” means any natural person, corporation, limited liability company, trust,
joint venture, association, company, partnership, governmental authority or other entity.

     “Quarterly Payment Date” means, with respect to any Quarterly Period, the date that is
thirty days after the last day of such Quarterly Period.

     “Quarterly Period” means each period from but excluding one Period End Date to and
including the next Period End Date.

     “Scheduled Payment” means, with respect to any Trade, the net payment required to be
made by one party thereto to the other party thereto on a “Payment Date” or a “Settlement

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Payment Date” pursuant to the related Confirmation, without giving effect to the existence of
any “Potential Event of Default”, “Event of Default” or the designation of an “Early Termination
Date” (as such terms are defined in the applicable Trade Documents) or any right of setoff,
counterclaim or defense, and excluding, for the avoidance of doubt: (a) any obligation to transfer
cash collateral or other collateral, (b) any Termination Payment and (c) any Excluded Amount.

     “Termination Payment” means, with respect to any Trade or group of Trades: (a) the
net amount which is due and payable by one party thereto to the other party thereto in respect of
the early termination of such Trade or group of Trades, as determined pursuant to the applicable
Trade Documents (including, for the avoidance of doubt, any unpaid amounts), but (b)
without giving effect to any right of set-off and/or right to apply any margin, collateral,
guarantees or other credit support delivered or held in connection with such Trade, and (c)
excluding any Scheduled Payments (other than unpaid amounts) and any Excluded Amounts.

     “Trades” means the collective reference to each transaction evidenced by the
Confirmations.

     “Trade Documents” means the collective reference to the BP Trade Documents and the
Wells Trade Documents.

     “Trust Gross Up Amount” means, in relation to any Scheduled Payments or any Illegality
Termination Payments required to be made by ECA during any Quarterly Period, an amount equal to the
sum of all such Scheduled Payments or Illegality Termination Payments, as the case may be, that
were due and payable by ECA but not paid by ECA to the Counterparties during such Quarterly Period
to the extent that ECA (i) set-off any such Scheduled Payments or Illegality Termination Payments,
as the case may be, against any posted collateral held by the Counterparties (or any obligation of
the Counterparties to transfer that posted collateral) or (ii) withheld payment of any such
Scheduled Payments or Illegality Termination Payments, as the case may be, up to the value of any
posted collateral held by the Counterparties.

     “Wells Trade Documents” means the ISDA Master Agreement dated as of June 30, 2004
between ECA and Wells Fargo Foothill, Inc., including the Schedule thereto and each Confirmation
entered into thereunder, in each case as in effect on the date hereof.

     Section 1.02 Terms Generally. The definitions of terms herein shall apply equally to
the singular and plural forms of the terms defined. The words “include”, “includes” and
“including” shall be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”. Unless the context
requires otherwise: (a) any reference herein to any law shall be construed as referring to such
law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to
time; (b) any reference herein to any Person shall be construed to include such Person’s successors
and assigns (subject to the restrictions contained in this Agreement); (c) the words “herein”,
“hereof” and “hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof and (d) any reference herein
to Sections or Exhibits shall be construed to refer to Sections of, or Exhibits to, this Agreement.

3

 

ARTICLE II

PAYMENTS

     Section 2.01 Payments. On the Quarterly Payment Date for each Quarterly Period,
commencing with the Quarterly Period ending June 30, 2010:

     (a) ECA will pay to the Trust an amount equal to the sum of the following (without
duplication): (i) all Scheduled Payments received by ECA from the Counterparties under all Trades
during such Quarterly Period plus (ii) the ECA Gross Up Amount, if any, related to
Scheduled Payments required to be made by the Counterparties to ECA under all Trades during such
Quarterly Period plus (iii) the amount of any Scheduled Payment required to be made by any
Counterparty to ECA under any Trade during such Quarterly Period that was not received by ECA from
such Counterparty, but only if ECA was a Defaulting Party on the date such Scheduled Payment was
required to be made by such Counterparty;

     (b) the Trust will pay to ECA an amount equal to the sum of the following: (i) all Scheduled
Payments made by ECA to the Counterparties under all Trades during such Quarterly Period
plus (ii) the Trust Gross Up Amount, if any, related to Scheduled Payments required to be
made by ECA to the Counterparties under all Trades during such Quarterly Period, excluding,
in the case of both clauses (i) and (ii) of this subsection (b), any Scheduled Payment made by ECA
to any Counterparty under any Trade with respect to which ECA (x) was a Defaulting Party on the
date such Scheduled Payment was required to be made by ECA and (y) continues to be a
Defaulting Party on the Quarterly Payment Date;

     (c) ECA will pay to the Trust an amount equal to the sum of the following: (i) all Illegality
Termination Payments received by ECA from the Counterparties under all Trades during such Quarterly
Period plus (ii) the ECA Gross Up Amount, if any, related to Illegality Termination
Payments required to be made by the Counterparties to ECA under all Trades during such Quarterly
Period;

     (d) the Trust will pay to ECA an amount equal to the sum of the following: (i) all Illegality
Termination Payments made by ECA to the Counterparties under all Trades during such Quarterly
Period plus (ii) the Trust Gross Up Amount, if any, related to Illegality Termination
Payments required to be made by ECA to the Counterparties under all Trades during such Quarterly
Period;

     (e) if any Trade has been terminated prior to its stated termination date other than as the
result of the occurrence of an Illegality, then notwithstanding the termination of such Trade, ECA
will pay to the Trust an amount equal to the sum of each Scheduled Payment that would have become
due and payable by the relevant Counterparty to ECA during such Quarterly Period if such Trade had
not been so terminated; and

     (f) if any Trade has been terminated prior to its stated termination date other than as the
result of the occurrence of an Illegality, then notwithstanding the termination of such Trade, the
Trust will pay to ECA an amount equal to the sum of each Scheduled Payment that would have become
due and payable by ECA to the relevant Counterparty during such Quarterly Period if such Trade had
not been so terminated.

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     Section 2.02 Netting of Payments. If on any Quarterly Payment Date amounts would
otherwise be payable by each party to the other pursuant to Section 2.01, then, on such date, each
party’s obligation to make payment of any such amount will be automatically satisfied and
discharged and, if the aggregate amount that would otherwise have been payable by one party exceeds
the aggregate amount that would otherwise have been payable by the other party, replaced by an
obligation upon the party by whom the larger aggregate amount would have been payable to pay to the
other party the excess of the larger aggregate amount over the smaller aggregate amount.

     Section 2.03 General Conditions. All payments made hereunder shall be made in
immediately available funds to the account or accounts from time to time specified by the relevant
payee. If any payment hereunder shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day.

     Section 2.04 Certain Notices. ECA shall promptly notify the Trust of the
designation of an “Early Termination Date” pursuant to any Trade Document and the termination of
any Trade, and shall provide the Trust with any documentation or other information related thereto
as the Trust may reasonably request from time to time.

ARTICLE III

MISCELLANEOUS

     Section 3.01 Amendments. Any amendment, modification or waiver in respect of this
Agreement will only be effective if in writing (including a writing evidenced by a facsimile
transmission) and executed by each of the parties hereto.

     Section 3.02 No Waiver. No failure on the part of any party to exercise and no delay
in exercising, and no course of dealing with respect to, any right, power or privilege, or any
abandonment or discontinuance of steps to enforce such right, power or privilege, under this
Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right,
power or privilege under this Agreement preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.

     Section 3.03 Remedies Cumulative; Non-Exclusive; Etc. All rights, powers, privileges,
remedies, and recourses granted in this Agreement or otherwise available at law or equity: (a)
shall be cumulative and concurrent; (b) may be pursued separately, successively, or concurrently;
(c) may be exercised as often as occasion therefor shall arise, it being agreed that the exercise
or failure to exercise or the beginning, or the abandonment, or the delay of any of same, shall in
no event be construed as a waiver or release thereof or of any other right, remedy, or recourse and
(d) are intended to be, and shall be, nonexclusive.

     Section 3.04 Successors and Assigns. The provisions of this Agreement shall be
binding upon each party and its successors and permitted assigns and shall inure, together with all
the rights and remedies hereunder, to the benefit of such party and its respective successors and
assigns; provided that no party may assign, transfer or delegate any of its rights or

5

 

obligations under this Agreement without the prior written consent of the other parties, and
any such purported assignment, transfer or delegation shall be null and void.

     Section 3.05 Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such invalidity, illegality or unenforceability without affecting the validity, legality
and enforceability of the remaining provisions hereof or thereof; and the invalidity of a
particular provision in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

     Section 3.06 Survival; Revival; Restatement. To the extent that any payments made
hereunder are subsequently invalidated, declared to be fraudulent or preferential, set aside or
required to be repaid to a trustee, debtor in possession, receiver or other Person or entity under
any bankruptcy law, common law or equitable cause, then to such extent, the obligations so
satisfied shall be revived and continue as if such payment had not been received and the rights,
powers and remedies under this Agreement shall continue in full force and effect. In such event,
this Agreement shall be automatically reinstated and each party shall take such action as may be
reasonably requested by any other party to effect such reinstatement.

     Section 3.07 Acknowledgments.

     (a) Each party hereby acknowledges that (i) no party has any fiduciary relationship with or
duty to any other party arising out of or in connection with this Agreement; (ii) no joint venture
is created hereby or otherwise exists by virtue of the transactions contemplated hereby among the
parties hereto; (iii) no other party is acting as a fiduciary or financial or investment advisor
for it; (iv) it is not relying upon any representations (whether written or oral) of any other
party; (v) no other party has given to it (directly or indirectly through any other Person) any
advice, counsel, assurance; guarantee, or representation whatsoever as to the expected or projected
success, profitability, return, performance, result, effect, consequence, or benefit (either legal,
regulatory, tax, financial, accounting, or otherwise) of this Agreement; (vi) it has made its own
investment, hedging, and trading decisions based upon its own judgment and upon any advice from
such advisors as it has deemed necessary, and not upon any view expressed by the other party; (vii)
all trading decisions have been the result of arm’s length negotiations between the parties; (viii)
it has a duty to read the Trade Documents and agrees that it is charged with notice and knowledge
of the terms of the Trade Documents; that it has in fact read the Trade Documents and is fully
informed and has full notice and knowledge of the terms, conditions and effects thereof and (ix) it
is entering into this Agreement with a full understanding of all of the risks hereof (economic and
otherwise) and it is capable of assuming and willing to assume (financially and otherwise) those
risks.

     (b) Without limiting the applicability of any other provision of the U.S. Bankruptcy Code as
amended (the “Bankruptcy Code”) (including, without limitation, Sections 362, 546, 556, and
560 thereof and the applicable definitions in Section 101 thereof), the parties intend that the
transactions contemplated by this Agreement will constitute “forward contracts” or “swap
agreements” as defined in Section 101 of the Bankruptcy Code, and that the parties are entitled to
the rights under, and protections afforded by, Sections 362, 546, 556, and 560 of the Bankruptcy
Code.

6

 

     (c) Each party represents to the other party that it is an “eligible contract participant”
within the meaning of the Commodity Exchange Act, Section 1a(12).

     Section 3.08 No Agency Relationship; No Assignment of Trades. Each of the parties
hereto acknowledges and agrees that no agency relationship is created hereby or otherwise exists by
virtue of the transactions contemplated hereby among the parties hereto, it being expressly
understood and agreed that ECA has entered into the Trades and the Trade Documents related thereto
as principal on its own behalf, and ECA is not acting as an agent of the Trust with respect to any
Trade nor is ECA acting in any other capacity on behalf of the Trust, fiduciary or otherwise.
Nothing contained herein shall be interpreted to create or operate as an assignment, transfer or
novation of any Trade, any Trading Document or any interest or obligation therein or thereunder.

     Section 3.09 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.

     Section 3.10 Counterparts. This Agreement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall constitute an original,
but all of which when taken together shall constitute a single contract. In making proof of this
Agreement, it shall not be necessary to produce or account for any counterpart other than one
signed by the party against which enforcement is sought. Delivery of an executed counterpart of a
signature page of this Agreement by facsimile shall be effective as delivery of a manually executed
counterpart of this Agreement.

     Section 3.11 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AS TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES.

     Section 3.12 No Third Party Beneficiaries. This Agreement is solely for the benefit
of the parties hereto and no other Person (including, without limitation, any Counterparty) shall
have any rights, claims, remedies or privileges hereunder against any party hereto for any reason
whatsoever. There are no third party beneficiaries.

     Section 3.13 Tax Hedge Designation. Unless otherwise specifically identified, the
Trust hereby identifies and designates this Agreement and the economic benefits and costs
associated with the underlying commodity derivatives transactions as a hedging transaction for tax
purposes under Section 1221(a)(7) of the Internal Revenue Code of 1986, as amended and Section
1.1221-2 of the Treasury regulations promulgated under the Internal Revenue Code. The transactions
being hedged are the sale of approximately 7,500 MMBtu per day of the natural gas production by ECA
attributable to the Trust from April 1, 2010 through June 30, 2012. The risk being hedged is the
price movement for natural gas production in the market where ECA sells the gas.

7

 

     IN WITNESS WHEREOF, intending to be legally bound, each of the parties hereto has caused this
Agreement to be duly executed as of the date first above written.

	 	 	 	 	 
	 	ENERGY CORPORATION OF AMERICA

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 
	 	ECA MARCELLUS TRUST I

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to Swap Agreement

 

 

EXHIBIT A

CONFIRMATIONS

Exhibit A-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00175-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00175-of-00352.parquet"}]]