Document:

exv10w3

Exhibit 10.3

SECOND AMENDMENT TO

SECOND AMENDED AND RESTATED CREDIT AGREEMENT 

     THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (hereinafter referred to
as the “Amendment”) is made and entered into as of June 17, 2010, but effective upon the date of
satisfaction of all of the conditions set forth in Article III of this Amendment, between
and among, on the one hand, the lenders identified on the signature pages hereof (such lenders,
together with their respective successors and assigns, are referred to hereinafter each
individually as a “Lender” and collectively as the “Lenders”), WELLS FARGO CAPITAL FINANCE, INC., a
California corporation (fka Wells Fargo Foothill, Inc.), as the book runner, arranger and
administrative agent for the Lenders (“Agent”), and, on the other hand, ENERGY CORPORATION OF
AMERICA, a West Virginia corporation (“Borrower”).

RECITALS

     A. Agent, the lenders signatory thereto as the Lenders, and the Borrower entered into that
certain Second Amended and Restated Credit Agreement dated as of September 7, 2007, as amended by
First Amendment to Second Amended and Restated Credit Agreement dated as of August 4, 2008, among
Agent, the lenders signatory thereto as the Lenders, and the Borrower (the “Credit Agreement”).

     B. ECA Marcellus Trust I was formed by Borrower on March 10, 2010, as a Delaware statutory
trust (the “Trust”) for the purpose of owning royalty interests in (1) 14 producing horizontal
natural gas wells producing from the Marcellus Shale formation and located in Greene County,
Pennsylvania and (2) 52 horizontal natural gas development wells to be drilled to the Marcellus
Shale formation within “Area of Mutual Interest” composed of approximately 9,300 acres held by
Borrower in Greene County, Pennsylvania (the “Royalty Interests”).

     C. The Trust intends to publicly offer up to 8,802,500 common units in the Trust (the
“Offering”) and in connection therewith the Trust and the Borrower on April 1, 2010, filed with the
Securities and Exchange Commission a Registration on Form S-1 under the Securities Act of 1933, as
amended (the “Registration Statement”).

     D. Borrower
intends to remit the proceeds from the Offering an amount not less
than $125,000,000.00 (the “Pay Down”) to the Agent for application to the Obligations in accordance with
the terms of a letter agreement among Borrower, Agent and Lenders.

     E. As a result of the Pay Down, the Obligations owing to Bank of America, N.A. (“Bank of
America”) will be paid in full and Bank of America will no longer be a party to the Credit
Agreement nor have any rights or obligations thereunder.

     F. Simultaneously with the Pay Down, Borrower has requested the Agent and the Lenders to
reduce the total Revolver Commitment for the Lenders to $125,000,000.00, and to reduce the total
Term Loan Commitment for the Lenders to $75,000,000.00.

     G. Borrower has requested the Agent and the Lenders to consent to certain transactions to be
undertaken by Borrower and Eastern Marketing Corporation, a West Virginia corporation and a wholly
owned subsidiary of Borrower (the “Subsidiary”) in connection with the consummation of the
transactions contemplated by the Registration Statement including, without limitation, (1) the
conveyance by Borrower and the Subsidiary to the Trust of the Royalty Interests, (2) the creation
by the Subsidiary of certain indebtedness in an aggregate amount of approximately $161,000,000.00
owing to Borrower to be evidenced by a demand note in the principal amount of approximately
$161,000,000.00 executed by the Subsidiary and payable to the order of Borrower, (3) the hedging of
approximately 50% of the estimated

Second Amendment to Second Amended and Restated Credit Agreement  — Page 1

 

 

natural gas production attributable to the Royalty Interests for the period from April 1, 2010
through March 31, 2014 with a combination of floors and swaps, and the conveyance of the floor
contracts by Borrower to the Trust, and the creation of a back-to-back swap agreement between the
Borrower and the Trust, (4) the advancement of up to $1,000,000.00 to the Trust to enable the Trust
to pay its liabilities as they come due, to the extent the Trust has not yet received sufficient
distributions related to the Royalty Interests to pay such liabilities in a timely manner, and (5)
the creation by Borrower of certain liens, which are non-recourse to Borrower, in favor of the
Trust to secure certain drilling obligations of Borrower to the Trust and the payment of royalties
(the “Proposed Transactions”).

     H. Agent and Lenders are willing (1) to execute and deliver to Borrower a written consent, in
form and substance acceptable to Agent and Lenders, consenting to the Proposed Transactions, and
(2) to permanently reduce the Total Commitment to the amounts requested by Borrower subject, among
other things, to Borrower’s execution and delivery of this Amendment.

AGREEMENT

     NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound, hereby agree as follows:

ARTICLE I

Definitions

     Section 1.01. Recitals. The foregoing recitals are hereby incorporated into and made
a part of this Amendment for all purposes.

     Section 1.02. Definitions. Capitalized terms used in this Amendment, to the extent
not otherwise defined herein, shall have the same meaning as in the Credit Agreement, as amended
hereby.

ARTICLE II

Amendments and Other Agreements

     Section 2.01. Amendment to Section 1.1 of the Credit Agreement.

     (a) The terms “Additional Term Loan” and “Additional Term Loan Amount” are deleted from
Section 1.1 of the Credit Agreement in their entirety.

     (b) The term “Applicable Margin” in Section 1.1 of the Credit Agreement is
amended and restated in its entirety to hereafter read as follows:

“‘Applicable Margin’ means, on any day and with respect to any
Obligation, the applicable per annum percentage set forth in the
table shown below, based on the average monthly Revolver Usage for
the immediately preceding month:

	 	 	 	 	 
	Average Monthly	 	Base Rate Loan	 	LIBOR Rate Loan
	Revolver Usage	 	Margin	 	Margin
	0% to 40%
	 	0.75%
	 	2.50%
	40% to 75%
	 	1.00%
	 	2.75%
	75% to 100%
	 	1.25%
	 	3.00%”

Second Amendment to Second Amended and Restated Credit Agreement  — Page 2

 

 

     (c) The term “Applicable Prepayment Premium” in Section 1.1 of the Credit
Agreement is amended and restated in its entirety to hereafter read as follows:

“‘Applicable Prepayment Premium’ means, as of any date of
determination, an amount equal to (a) for the period of time from
and including the date of this Agreement up to and including July
10, 2011, one percent (1.0%) times the Maximum Loan Amount, (b)
during the period of time from and including July 11, 2011, up to,
and including, July 10, 2012, one half of one percent (0.50%) times
the Maximum Loan Amount, and (c) during the period of time from and
including July 11, 2012, up to and including July 10, 2013,
one-quarter of one percent (0.25%) times the Maximum Loan Amount.”

     (d) The term “Bank Product Provider” in Section 1.1 of the Credit Agreement is
amended and restated in its entirety to hereafter read as follows:

“‘Bank Product Provider’ means (a) Wells Fargo or any of its
Affiliates and (b) U.S. Bank National Association with respect to
and only to the extent of Hedging Agreements in connection with rate
swaps, rate caps, rate floors, rate collars and other rate
protection agreements between Borrower and U.S. Bank National
Association for which Agent has received such information in writing
as U.S. Bank National Association has agreed to deliver to Agent or
as otherwise may be reasonably requested by Agent.”

     (e) The term “Current Assets” is added to and made a part of Section 1.1 of the
Credit Agreement and shall read as follows:

“‘Current Assets’ means, for the Borrower and its Subsidiaries as of
the date of calculation, (a) all assets of Borrower and its
Subsidiaries that, in conformity with GAAP, would be included as
assets on a consolidated balance sheet of Borrower and its
Subsidiaries, but excluding any non-cash gains for any Hedging
Agreements resulting from the requirements of FASB 133 as of such
date, plus (b) in the case of Borrower, the amount of Availability
as of such date.”

     (f) The term “Current Liabilities” is added to and made a part of Section 1.1
of the Credit Agreement and shall read as follows:

“‘Current Liabilities’ means, for the Borrower and its Subsidiaries
as of the date of calculation, all liabilities of Borrower and its
Subsidiaries that in accordance with GAAP, would be classified as
current liabilities on a consolidated balance sheet of Borrower and
its Subsidiaries, excluding (a) the current portion of any
Obligation maturities, (b) the current portion of any Deferred
Revenue, (c) the current portion of any Deferred Gains, and (d)
non-cash losses or charges of any Hedging Agreements resulting from
the requirements of FASB 133.”

     (g) The term “Current Ratio” is added to and made a part of Section 1.1 of the
Credit Agreement and shall read as follows:

Second Amendment to Second Amended and Restated Credit Agreement  — Page 3

 

 

“‘Current Ratio’ means, for the Borrower and its Subsidiaries as of
the date of calculation, the ratio of Current Assets to Current
Liabilities of Borrower of its Subsidiaries.”

     (h) The term “Deferred Gains” is added to and made a part of Section 1.1 of the
Credit Agreement and shall read as follows:

“‘Deferred Gains’ means an item that will initially be recorded as a
liability, but is expected to become realized gain over time and/or
through the normal operations of the business. For the Borrower and
its Subsidiaries this includes, but is not limited to, (a) in 2005,
the Company consummated the Black Stone Term Royalty Conveyance for
a term of 20 years. The proceeds, net of certain costs and expenses
and the carrying value of assets sold, were classified as a deferred
gain and are being recognized as production occurs, and (b) the net
proceeds from ECA Marcellus Trust I were classified as a deferred
gain and are being recognized as production occurs over a 20 year
period.”

     (i) The term “Deferred Revenue” is added to and made a part of Section 1.1 of
the Credit Agreement and shall read as follows:

“‘Deferred Revenue’ means an item that will initially be recorded as
a liability, but is expected to become revenue over time and/or
through the normal operations of the business. For the Borrower and
its Subsidiaries this includes, but is not limited to, the deferred
revenue related to the Eastern American Natural Gas Trust.”

     (j) The term “Fee Letter” in Section 1.1 of the Credit Agreement is amended and
restated in its entirety to hereafter read as follows:

“‘Fee Letter’ means that certain fee letter dated of even date with
the Second Amendment, between Borrower and Agent, in form and
substance satisfactory to Agent.”

     (k) The term “First Amendment” is added to and made a part of Section 1.1 of
the Credit Agreement and shall read as follows:

“‘First Amendment’ means First Amendment to Second Amended and
Restated Credit Agreement dated as of August 4, 2008 among Agent,
the lenders signatory thereto as the Lenders, and Borrower.”

     (l) The term “Foothill” in Section 1.1 of the Credit Agreement is amended and
restated in its entirety to hereafter read as follows:

“‘Foothill’ means Wells Fargo Capital Finance, Inc., a California
corporation (fka Wells Fargo Foothill, Inc.).”

     (m) The terms “Initial Term Loan” and “Initial Term Loan Amount” are deleted from
Section 1.1 of the Credit Agreement in their entirety.

Second Amendment to Second Amended and Restated Credit Agreement  — Page 4

 

 

     (n) The term “Maximum Loan Amount” in Section 1.1 of the Credit Agreement is
amended and restated in its entirety to read as follows:

“‘Maximum Loan Amount’ means $200,000,000.00.”

     (o) The term “Maximum Revolver Amount” in Section 1.1 of the Credit Agreement
is amended and restated in its entirety to read as follows:

“‘Maximum Revolver Amount’ means $125,000,000.00 as such amount may
be reduced from time to time in accordance with Section
6.23.”

     (p) The term “Permitted Investments” in Section 1.1 of the Credit Agreement is
amended by adding (h) and shall read as follows:

“(h) the advancement of up to $1,000,000.00 to ECA Marcellus Trust I
to enable the Trust to pay its liabilities as they become due, to
the extent the Trust has not yet received sufficient distributions
related to the Royalty Interests to pay such liabilities in a timely
manner.”

     (q) Subparagraph (d) of the term “Pro Rata Share” in Section 1.1 of the Credit
Agreement is amended and restated in its entirety to hereafter read as follows:

“(d) with respect to all other matters as to a particular Lender
(including the indemnification obligations arising under Section
16.7), the percentage obtained by dividing (i) such Lender’s
Revolver Commitment plus the outstanding principal amount of such
Lender’s portion of the Term Loan, by (ii) the aggregate amount of
Total Revolver Commitments of all Lenders plus the outstanding
principal amount of the Term Loan; provided,
however, that, in the event the Revolver Commitments have
been terminated or reduced to zero, the Pro Rata Share under this
clause shall be the percentage obtained by dividing (A) the
outstanding principal amount of such Lender’s Advances plus such
Lender’s ratable portion of the Risk Participation Liability with
respect to outstanding Letters of Credit plus the outstanding
principal amount of such Lender’s portion of the Term Loan, by (B)
the outstanding principal amount of all Advances plus the aggregate
amount of the Risk Participation Liability with respect to the
outstanding Letters of Credit plus the principal amount of the Term
Loan.”

     (r) The term “Second Amendment” is added to and made a part of Section 1.1 of
the Credit Agreement and shall read as follows:

“‘Second Amendment’ means Second Amendment to Second Amended and
Restated Credit Agreement dated as of June 17, 2010, among Agent,
Lenders, and Borrower.”

     (s) The term “Term Loan” in Section 1.1 of the Credit Agreement is amended and
restated in its entirety to hereafter read as follows:

“‘Term Loan’ means the term loans previously made to the Borrower
pursuant to the Credit Agreement.”

Second Amendment to Second Amended and Restated Credit Agreement  — Page 5

 

 

     (t) The term “Term Loan Amount” in Section 1.1 of the Credit Agreement is
amended and restated in its entirety to hereafter read as follows.

“‘Term Loan Amount’ means $75,000,000.00.”

     Section 2.02. Amendments to Section 2.2 of the Credit Agreement. Section 2.2
of the Credit Agreement is amended and restated in its entirety to hereafter read as follows:

     “2.2 Term Loan. Borrower hereby represents and warrants that Lenders
have made the Term Loan to Borrower for the purposes set forth in Section
6.20 hereof. Borrower represents and warrants that, as of the date of the
Second Amendment becomes effective and after giving effect to the prepayment of
principal to the Lenders with respect to the Obligations required by the Second
Amendment, the unpaid principal amount of the Term Loan is $75,000,000.00 and such
amount is unconditionally owed by Borrower to Lenders without offset, defense or
counterclaim of any kind, nature or description whatsoever. The Term Loan shall be
repaid on the following dates and in the following amounts:

	 	 	 	 	 
	Date	 	Installment Amount	 
	July 10, 2011
	 	$	1,000,000.00	 
	July 10, 2012
	 	$	1,000,000.00	 

The outstanding unpaid principal balance and all accrued and unpaid interest under
the Term Loan shall be due and payable on the earliest of (a) the Maturity Date, (b)
the date of the acceleration of the Term Loan in accordance with the terms hereof,
and (c) the date of termination of this Agreement, whether by its terms, by
prepayment, or by acceleration. All amounts outstanding under the Term Loan shall
constitute Obligations.”

     Section 2.03. Amendment to Section 2.6(a) of the Credit Agreement. Section
2.6(a) of the Credit Agreement is amended and restated in its entirety to hereafter read as
follows:

     “(a) Interest Rates. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit and except for Bank Product
Obligations) that have been charged to the Loan Account pursuant to the terms hereof
shall bear interest on the Daily Balance thereof as follows: Section 2.04. if the
relevant Obligation is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR
Rate plus the Applicable Margin, Section 2.05. if the relevant Obligation is a Base
Rate Loan, at a per annum rate equal to the Base Rate plus the Applicable Margin,
and (iii) otherwise, at a per annum rate equal to the Base Rate plus the Applicable
Rate Margin for Base Rate Loans; provided, however, that the
outstanding principal amount of the Term Loan shall bear interest as follows: (x)
if a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus 2.50%, and
(y) if a Base Rate Loan, at a per annum rate equal to the Base
Rate plus 0.75%.”

Second Amendment to Second Amended and Restated Credit Agreement  — Page 6

 

 

     Section 2.04. Amendment to Section 2.16(b) and (c) of the Credit Agreement.
Section 2.16(b)and Section 2.16(c) of the Credit Agreement are amended and
restated in their entirety to hereafter read as follows:

     “(b) Annual Scheduled Determinations of the Borrowing Base. Promptly
after July 1 of each calendar year (commencing July 1, 2008), and in any event prior
to September 1 of each calendar year, the Borrower shall furnish to Lenders a report
in form and substance satisfactory to Lenders, prepared by an Approved Engineer,
which report shall be dated as of July 1 of such calendar year and shall set forth
the oil and gas reserves attributable to the Borrowing Base Properties, and a
projection of the rate of production and net operating income with respect thereto,
as of such date, together with additional data concerning pricing, hedging,
operating costs, quantities and purchasers of production, and other information and
engineering and geological data as the Agent may reasonably request. Within thirty
(30) days after receipt of such report and information and its review and approval
by Agent, Agent shall make a recommendation of the amount of credit available to
Borrower hereunder (a “Recommended Borrowing Base Determination”). Agent and the
Required Lenders shall approve or reject Agent’s Recommended Borrowing Base
Determination within twenty (20) Business Days of Agent’s notification of the
Recommended Borrowing Base Determination. If Agent and the Required Lenders fail to
approve any such determination of the Borrowing Base made by Agent hereunder in such
twenty (20)-Business Day period, then Agent shall poll all Lenders, and the
Borrowing Base shall be set at the highest amount on which Agent and the Required
Lenders can agree, it being understood that a Lender is deemed to have agreed to any
and all amounts that are lower than the amount actually determined by such Lender to
be the appropriate value of the Borrowing Base. Upon approval or deemed approval by
Agent and the Required Lenders, or all Lenders, as the case may be, of the amount of
credit to be made available to Borrower hereunder, Agent shall, by written notice to
Borrower and Lenders, designate the new Borrowing Base available to Borrower.
Notwithstanding anything contained herein to the contrary, no Lender shall be
obligated to increase its Commitment without its consent.

     “(c) Semi-Annual Scheduled Determination of the Borrowing Base. In
addition, promptly after January 1 of each calendar year (commencing January 1,
2008), and in any event prior to March 1st of each calendar year, the Borrower shall
furnish to Lenders a report in form and substance satisfactory to Lenders, prepared
(i) prior to the occurrence of an Event of Default, by the Borrower’s petroleum
engineers and (ii) after the occurrence of an Event of Default, by an Approved
Engineer, and, in either case, reviewed and approved by Agent, which report shall be
dated as of January 1 of such calendar year and shall set forth the oil and gas
reserves attributable to the Borrowing Base Properties, and a projection of the rate
of production and net operating income with respect thereto, as of such date,
together with additional data concerning pricing, hedging, operating costs,
quantities and purchasers of production, and other information and engineering and
geological data as the Agent may reasonably request. Within thirty (30) days after
receipt of such report and information and its review and approval by Agent, Agent
shall make a recommendation of the amount of credit available to Borrower hereunder
(a “Recommended Borrowing Base Determination”). Agent and the Required Lenders
shall approve or reject Agent’s Recommended Borrowing Base Determination within
twenty (20) Business Days of Agent’s notification of the Recommended Borrowing Base
Determination. If Agent and the Required Lenders fail to approve any such
determination of the Borrowing Base made by Agent hereunder in such twenty
(20)-Business Day period, then Agent shall poll all Lenders, and the

Second Amendment to Second Amended and Restated Credit Agreement  — Page 7

 

 

Borrowing Base shall be set at the highest amount on which Agent and the
Required Lenders can agree, it being understood that a Lender is deemed to have
agreed to any and all amounts that are lower than the amount actually determined by
such Lender to be the appropriate value of the Borrowing Base. Upon approval or
deemed approval by Agent and the Required Lenders, or all Lenders, as the case may
be, of the amount of credit to be made available to Borrower hereunder, Agent shall,
by written notice to Borrower and Lenders, designate the new Borrowing Base
available to Borrower. Notwithstanding anything contained herein to the contrary,
no Lender shall be obligated to increase its Commitment without its consent.

     Section 2.05. Amendment to Section 3.4 of the Credit Agreement. Section 3.4
of the Credit Agreement is amended and restated in its entirety to hereafter read as follows:

     “3.4 Term. This Agreement shall become effective upon the execution
and delivery hereof by Borrower, Agent and Lenders and shall continue in full force
and effect for a term ending on July 10, 2013 (the “Maturity Date”). The foregoing
notwithstanding, the Lender Group, upon the election of the Required Lenders, shall
have the right to terminate its obligations under this Agreement immediately and
without notice upon the occurrence and during the continuation of an Event of
Default.

     Section 2.06. Amendment to Section 7.20(a) of the Credit Agreement. A subparagraph
(iii) is added to and made a part of Section 7.20(a) of the Credit Agreement and shall read
as follows:

     “(iii) Current Ratio. A Current Ratio as of the last day each fiscal
quarter of Borrower commencing with the fiscal quarter ending June 30, 2010, of at
least 1.00 to 1.00.”

     Section 2.07. Amendment to Section 12 of the Credit Agreement. Section 12 of
the Credit Agreement is amended and restated in its entirety to hereafter read as follows:

     “NOTICES. Unless otherwise provided in this Agreement, all notices or demands
by Borrower or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Borrower or Agent, as applicable, may designate to each other in
accordance herewith), or telefacsimile to Borrower in care of Borrower or to Agent,
as the case may be, at its address set forth below:

	 	 	 

	If to Borrower:

	 	Energy Corporation of America
	 

	 	4643 South Ulster Street, Suite 1100
	 

	 	Denver, Colorado 80237
	 

	 	Attn: Michael S. Fletcher
	 

	 	Fax No. 303.694.2763
	 
	with copies to:

	 	Goodwin & Goodwin, LLP
	 

	 	330 Summers Street, Suite 1500
	 

	 	Charleston, West Virginia 25301-1678
	 

	 	Attn: Tammy J. Owen, Esq.
	 

	 	Fax No. 304.344.9692

Second Amendment to Second Amended and Restated Credit Agreement  — Page 8

 

 

	 	 	 

	 
	 	 
	If to Agent:

	 	WELLS FARGO CAPITAL FINANCE, INC.
	 

	 	2450 Colorado Avenue
	 

	 	Suite 3000 West
	 

	 	Santa Monica, California 90404
	 

	 	Attn: Business Finance Division Manager
	 

	 	Fax No. 310.453.7443
	 
	 	 
	with copies to:

	 	Wells Fargo Capital Finance, Inc.
	 

	 	1100 Abernathy Road, Suite 1600
	 

	 	Atlanta, Georgia 30328
	 

	 	Attn: Business Division Manager
	 

	 	Fax No. 770.804.0551
	 
	 	 
	with copies to:

	 	McGuire, Craddock & Strother, P.C.
	 

	 	2501 N. Harwood, Suite 1800
	 

	 	Dallas, Texas 75201
	 

	 	Attn: William A. Lang, Esq.
	 

	 	Fax No. 214.954.6868

Agent and Borrower may change the address at which they are to receive notices hereunder, by notice
in writing in the foregoing manner given to the other party. All notices or demands sent in
accordance with this Section 12, other than notices by Agent in connection with enforcement
rights against the Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit thereof in the mail.
Borrower acknowledges and agrees that notices sent by the Lender Group in connection with the
exercise of enforcement rights against Collateral under the provisions of the Code shall be deemed
sent when deposited in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.

     Section 2.08. Amendment to Section 16.20 of the Credit Agreement. Section
16.20 of the Credit Agreement is amended and restated in its entirety to hereafter read as
follows:

     “16.20 Legal Representation of Agent. In connection with the negotiation,
drafting, and execution of this Agreement and the other Loan Documents, or in connection
with future legal representation relating to loan administration, amendments, modifications,
waivers, or enforcement of remedies, McGuire Craddock & Strother, P.C. (“McGuire Craddock”)
only has represented and only shall represent Foothill in its capacity as Agent and as a
Lender. Each other Lender hereby acknowledges that McGuire Craddock does not represent it
in connection with any such matters.”

     Section 2.09. Amendment to Schedules to the Credit Agreement. Schedules C-1, 5.1(a)
and 5.28 to the Credit Agreement are amended and restated in their entirety to read as set forth as
attached to the Second Amendment.

ARTICLE III

Conditions 

     Conditions Precedent. The effectiveness of this Amendment is subject to the
satisfaction of the following conditions precedent, unless specifically waived by Agent:

Second Amendment to Second Amended and Restated Credit Agreement  — Page 9

 

 

     (a) Agent shall have received this Amendment, duly executed by Borrower and each
Lender;

     (b) Borrower shall have delivered evidence to Agent that all necessary corporate
authorizations and proceedings were taken by Borrower in connection with the transactions
contemplated by this Amendment;

     (c) Borrower shall have delivered evidence to Agent that the Registration Statement has
been declared effective by the United States Securities and Exchange Commission, and the
transactions contemplated thereby shall have been consummated in accordance with the terms
thereof.

     (d) Borrower shall have delivered to Agent, the Fee Letter duly executed by Borrower,
in form and substance satisfactory to Agent;

     (e) The representations and warranties contained herein, in the Credit Agreement, as
amended hereby, and in each other Loan Document shall be true and correct as of the date
hereof, as if made on the date hereof, except to the extent such representations and
warranties relate to an earlier date;

     (f) No Event of Default shall have occurred and be continuing and no Default shall
exist;

     (g) Borrower shall have delivered or caused to be delivered such other documents,
agreements and instruments as Agent may require to effect the terms and provisions of this
Amendment;

     (h) Agent shall have received, in good and immediately available funds, proceeds from
the Offering in an amount of at least $125,000,000.00 which shall be applied by Agent to the
Obligations in accordance with the terms of a letter agreement dated of even date with this
Amendment executed by Agent, Borrower and the Lenders (the “Pay Down Disbursement Letter”);

     (i) Agent shall have received the Pay Down Disbursement Letter, in form and substance
satisfactory to the Agent, duly executed by Borrower, Agent and the Lenders; and

     (j) Agent shall have received evidence satisfactory to Agent that the Obligations owing
to Bank of America have been paid in full and that Bank of America has acknowledged in
writing that its rights and obligations under the Credit Agreement are terminated.

ARTICLE IV

Ratifications, Representations and Warranties

     Section 4.01. Ratifications. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions set forth in the Credit Agreement
and, except as expressly modified and superseded by this Amendment, the terms and provisions of the
Credit Agreement and the other Loan Documents are ratified and confirmed and shall continue in full
force and effect. Borrower agrees that the Credit Agreement, as amended hereby, and the other Loan
Documents shall continue to be legal, valid, binding obligations of Borrower, enforceable against
Borrower in accordance with their respective terms.

Second Amendment to Second Amended and Restated Credit Agreement  — Page 10

 

 

     Section 4.02. Renewal and Extension of Security Interests and Liens. Borrower hereby
renews and affirms the liens and security interests created and granted in the Loan Documents.
Borrower agrees that this Amendment shall in no manner affect or impair the liens and security
interests securing the Obligations, and that such liens and security interests shall not in any
manner be waived, the purposes of this Amendment being to modify the Credit Agreement as herein
provided, and to carry forward all liens and security interests securing same, which are
acknowledged by Borrower to be valid and subsisting.

     Section 4.03. Representations and Warranties. Borrower hereby represents and warrants
to Agent as follows:

     (a) the execution, delivery and performance of this Amendment and any and all other
Loan Documents executed and/or delivered in connection herewith have been authorized by all
requisite corporate action on the part of Borrower and do not and will not conflict with or
violate any provision of any applicable law, the Articles of Incorporation or Bylaws of
Borrower or any agreement, document, judgment, license, order or permit applicable to or
binding upon the Borrower or its Property; no consent, approval, authorization or order of
and no notice to or filing with, any court or governmental authority or third person is
required in connection with the execution, delivery or performance of this Amendment or to
consummate the transactions contemplated hereby;

     (b) the representations and warranties contained in the Credit Agreement, as amended
hereby, and in each of the other Loan Documents are true and correct on and as of the date
hereof as though made on and as of the date hereof, except to the extent such
representations and warranties relate to an earlier date;

     (c) Borrower is in full compliance with all covenants and agreements contained in the
Credit Agreement, as amended hereby, and in each of the other Loan Documents; and

     (d) Except as has otherwise been disclosed to Agent, Borrower has not amended its
Articles of Incorporation or Bylaws or other organizational documents since the date of the
execution of the Credit Agreement.

ARTICLE V

Miscellaneous

     Section 5.01. Survival of Representations and Warranties. All representations and
warranties made in the Credit Agreement and the other Loan Documents, including, without
limitation, this Amendment, shall survive the execution and delivery of this Amendment, and no
investigation by Agent or any closing shall affect the representations and warranties or the right
of Agent to rely upon them.

     Section 5.02. Reference to Credit Agreement. Each of the Loan Documents, including
the Credit Agreement and any and all other agreements, documents or instruments now or hereafter
executed and delivered pursuant to the terms of the Credit Agreement, as amended hereby, are hereby
amended so that any reference in such Loan Documents to the Credit Agreement shall mean a reference
to the Credit Agreement, as amended hereby.

     Section 5.03. Expenses of Agent. As provided in the Credit Agreement, Borrower agrees
to pay on demand all reasonable costs and expenses incurred by Agent in connection with the
preparation, negotiation and execution of this Amendment and any and all amendments, modifications,
and supplements hereto, including, without limitation, the reasonable costs and fees of Agent’s
legal counsel, and all reasonable costs and expenses incurred by Agent in connection with the
enforcement or

Second Amendment to Second Amended and Restated Credit Agreement  — Page 11

 

 

preservation of any rights under the Credit Agreement, as amended hereby, or any other Loan
Document, including, without limitation, the reasonable costs and fees of Agent’s legal counsel.

     Section 5.04. RELEASE. BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE,
COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE
ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS LIABILITY TO REPAY THE OBLIGATIONS OR TO
SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM THE AGENT OR THE LENDERS. BORROWER
HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES THE AGENT AND THE LENDERS, THEIR
PREDECESSORS, AGENTS, ATTORNEYS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS,
DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR
UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL,
AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS
EXECUTED, WHICH THE BORROWER MAY NOW OR HEREAFTER HAVE AGAINST THE AGENT AND THE LENDERS, THEIR
PREDECESSORS, AGENTS, ATTORNEYS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF
WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE,
AND ARISING FROM ANY OF THE OBLIGATIONS, INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR,
CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE
APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE CREDIT AGREEMENT OR OTHER LOAN
DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT.

     Section 5.05. Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder
of this Amendment and the effect thereof shall be confined to the provision so held to be invalid
or unenforceable.

     Section 5.06. APPLICABLE LAW. THIS AMENDMENT SHALL BE DEEMED TO HAVE BEEN MADE AND TO
BE PERFORMABLE IN ATLANTA, GEORGIA, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF GEORGIA.

     Section 5.07. Successors and Assigns. This Amendment is binding upon and shall inure
to the benefit of Agent, the Lenders and the Borrower and their respective successors and assigns,
except the Borrower may not assign or transfer any of its rights or obligations hereunder without
the prior written consent of Agent.

     Section 5.08. Counterparts/Facsimile. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original, but all of which
when taken together shall constitute one and the same instrument. Delivery of an executed
counterpart of this Amendment by facsimile shall be equally as effective as delivery of an original
executed counterpart of this Amendment. Any party delivering an executed counterpart of this
Amendment by facsimile shall also deliver an original executed counterpart of this Amendment but
the failure to do so shall not affect the validity, enforceability and binding effect of this
Amendment.

Second Amendment to Second Amended and Restated Credit Agreement  — Page 12

 

 

     Section 5.09. Effect of Waiver. No consent or waiver, express or implied, by Agent to
or for any breach of or deviation from any covenant or condition of the Credit Agreement shall be
deemed a consent or waiver to or of any other breach of the same or any other covenant, condition
or duty.

     Section 5.10. Headings. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of this Amendment.

     Section 5.11. FINAL AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED HEREBY, REPRESENTS
THE FINAL AGREEMENT AMONG THE PARTIES RELATED TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

[Remainder of Page Intentionally Left Blank]

Second Amendment to Second Amended and Restated Credit Agreement  — Page 13

 

 

     IN WITNESS WHEREOF, the Borrower, Agent and the Lenders have caused this Amendment to be
executed as of the date first written above by their duly authorized officers.

	 	 	 	 	 
	 	BORROWER

ENERGY CORPORATION OF AMERICA

 	 
	 	By:  	/s/ D.C. Supcoe	 
	 	 	Name:  	D.C. Supcoe	 
	 	 	Title:  	Sr. Vice President	 
	 
	 	AGENT AND LENDERS

WELLS FARGO CAPITAL FINANCE, INC.,

as Agent and Lender

 	 
	 	By:  	/s/ Gary Forlenza	 
	 	 	Name:  	Gary Forlenza	 
	 	 	Title:  	VP	 
	 
	 	U.S. BANK NATIONAL ASSOCIATION,

as Lender

 	 
	 	By:  	/s/ Tyler Fauerbach	 
	 	 	Name:  	Tyler Fauerbach	 
	 	 	Title:  	Vice President	 
	 

Second Amendment to Second Amended and Restated Credit Agreement

 

 

SCHEDULE C-1

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Revolver	 	 	Term Loan	 	 	 	 
	Lender	 	Commitment	 	 	Commitment	 	 	Total Commitment	 
	 
	Wells Fargo Capital Finance, Inc.
	 	$	75,000,000	 	 	$	50,000,000	 	 	$	125,000,000	 
	U.S. Bank National Association
	 	$	50,000,000	 	 	$	25,000,000	 	 	$	75,000,000	 
	All Lenders
	 	$	125,000,000	 	 	$	75,000,000	 	 	$	200,000,000	 

Second Amendment to Second Amended and Restated Credit Agreement

 

 

SCHEDULE 5.1(a)

BORROWING BASE PROPERTIES

Second Amendment to Second Amended and Restated Credit Agreement

 

 

SCHEDULE 5.28

HEDGING AGREEMENTS

Second Amendment to Second Amended and Restated Credit Agreementexv10w4

Exhibit 10.4

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 Assignee’s 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 Assignor’s 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,
Assignee’s sole remedy shall be to receive payment on each applicable Quarterly Payment Date, out
of Assignor’s 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

2

 

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 Assignee’s 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).

     “Assignor’s Net Share of Gas” means the share of Subject Gas from each Well that is
attributable to Assignor’s Net Revenue Interest in that Well.

3

 

     “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 Assignor’s 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 Assignor’s 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 Assignee’s proportionate share of sales costs,

4

 

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 Assignor’s 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 Assignor’s Subject

5

 

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 Assignor’s 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;

6

 

     (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 Assignor’s 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 [___].

     “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.

7

 

     “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 Assignor’s 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 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 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) 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 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 Assignor’s 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                     .

     “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-Five Percent (45%) X (Assignor’s 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 Assignor’s 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 Assignor’s
Net Share of Gas for such Computation Period. Assignor shall adjust Assignor’s 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 Assignor’s 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 Period’s 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, Assignor’s 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.

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          (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 Assignor’s 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 Assignor’s 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 Assignor’s 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 Assignee’s Agent and Representative.

          (a) Appointment. Assignee appoints Assignor as Assignee’s 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
Assignee’s 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 Assignee’s 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 Assignee’s 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,

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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 Assignee’s
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 Assignor’s 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 Assignor’s duties as Assignee’s
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 Assignee’s agent and representative
without the prior written consent of Assignee, except that Assignor may resign as Assignee’s 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
Assignee’s 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 Assignee’s agent
and representative) shall deliver or cause to be delivered Assignor’s 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 Assignor’s 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
Assignor’s 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.

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          (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 (30th) day after the end of such Computation Period or, for the last
Computation Period, the thirtieth (30th) 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 Assignor’s 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 (6th)] day after such due date until such amount
is paid.

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          (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 bank’s “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 bank’s 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.

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          (b) Right of Inspection. Assignee or its representative, at Assignee’s 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 Assignor’s 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 Assignee’s 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 Assignee’s 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 Assignor’s 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 Assignee’s request, subject to applicable restrictions on disclosure and
transfer of information, Assignor shall give Assignee and its designated representatives reasonable
access in Assignor’s office during normal business hours to all geological, Well, and production
data in Assignor’s possession or Assignor’s 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.

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     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.

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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 Assignor’s 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 Assignee’s 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.

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          (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 Assignor’s 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.

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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 Assignor’s 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 Party’s 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;

23

 

          (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 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 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 Assignor’s
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 Assignee’s 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 [•] 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 [to come] 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.]

25

 

     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.

	 	 	 	 	 	 	 

	 	 	[ENERGY CORPORATION OF AMERICA]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	[ECA SUBSIDIARY]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 

Prepared by:

                                                            

                                                            

                                                            

                                                            

                                                            

Signature Page to Term Overriding Royalty Interest Conveyance

S-1

 

	 	 	 

	THE STATE OF                     

	 	§
	 

	 	§
	COUNTY OF                     

	 	§

     On this, the                      day of                     , 2010, before me                     , a
 Notary public,
personally appeared                     , who acknowledged himself to be the                      of
                    , a                     , and that he as such                     , being authorized to do so,
executed the foregoing instrument for the purposes therein contained by signing the name of the
                     by himself as                      .

     In witness whereof, I hereunto set my hand and official seal.

			
	 	 	 
	[SEAL]
	 	                                                            

My Commission Expires:                                        

	 	 	 

	THE STATE OF                     

	 	§
	 

	 	§
	COUNTY OF                     

	 	§

     On this, the                      day of                     , 2010, before me                     , a
 Notary public,
personally appeared                     , who acknowledged himself to be the                      of
                    , a                     , and that he as such                     , being authorized to do so,
executed the foregoing instrument for the purposes therein contained by signing the name of the
                     by himself as                     .

     In witness whereof, I hereunto set my hand and official seal.

			
	 	 	 
	[SEAL]
	 	                                                            

My Commission Expires:                                        

Signature Page to Term Overriding Royalty Interest Conveyance

S-2

 

CERTIFICATE OF RESIDENCE

     The                                         , as grantee hereunder, hereby certifies that its precise address is:

	 	 	 	 	 	 	 

	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Attention:	 	 	 	 
	 

	 	 	 	 	 	 

Signature Page to Term Overriding Royalty Interest Conveyance

S-3

 

Exhibit A

(Attached hereto.)

Exhibit A

 

 

Exhibit B

(Attached hereto.)

Exhibit B

 

 

Schedule 15.11

(Attached hereto.)

Schedule 15.11

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