EXHIBIT "F"
ATTACHED TO AND MADE A PART OF THAT CERTAIN TERM ROYALTY AGREEMENT DATED MAY 17,
2005 BY AND BETWEEN ENERGY CORPORATION OF AMERICA ET AL., AS SELLERS, AND BLACK
STONE MINERALS COMPANY, L. P. [AND/OR ITS DESIGNEES], AS BUYER
TERM ROYALTY CONVEYANCE
(WEST VIRGINIA)
INTRODUCTION
THIS TERM ROYALTY CONVEYANCE (this "Conveyance") from ENERGY CORPORATION OF
AMERICA, a West Virginia corporation, with offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("ECA"), and EASTERN AMERICAN ENERGY
CORPORATION, a West Virginia corporation, with offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Eastern" or "Assignor"), to Black Stone
Minerals Company, L.P., a Delaware limited partnership, or its permitted
designees ("Assignee") is delivered to be effective as of 7:00 a.m., Eastern
Time, January 1, 2005 (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, the Term
Royalty Interest.
SECTION 1.02 TERM. The term of the Term Royalty Interest (the "Term")
shall begin at the Effective Time and end at 7:00 A.M. on January 1, 2025 (the
"Termination Date"). At the end of the Term, all of the Assignee's interest in
and to the Term Royalty Interest shall automatically terminate and immediately
revert to and revest in Assignor.
SECTION 1.03 HABENDUM CLAUSE. TO HAVE AND TO HOLD the Term 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. ECA and Assignor warrant to the 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 (i) the Producing ▇▇▇▇▇
entitles Assignor to a Net Revenue Interest in each such Producing Well no less
than the Net Revenue Interest for that Producing Well as set forth in
Exhibit A-1, and (ii) as to the Subject Development Lands is sufficient to allow
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it to satisfy the Total Drilling Commitment by the Drilling Obligation
Completion Date in accordance with the Development Agreement.
(b) SOLE REMEDY. In the event of a post-Closing breach of the
foregoing warranty for any Subject Interest (pre-Closing breaches thereof being
remedied pursuant to Section 2(a)(ii) of the Term Royalty Agreement), the
Assignee's sole remedy shall be to receive payment for each applicable month, as
damages, 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) Term Royalty Gas (or the proceeds from the sale thereof) that the
Assignee would have received with respect to a Well in the applicable month if
the warranty had not been breached and (ii) Term Royalty Gas (or the proceeds
from the sale thereof) that the Assignee actually received during that month
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.
(c) RIGHT OF OFFSET. If any Subject Interest owned by Assignor ever
proves to be larger than the Subject Interest reflected in the exhibits to this
Conveyance and if, as a result, the Assignee receives a greater amount of Term
Royalty Gas (or the proceeds from the sale thereof) with respect to that Subject
Interest than the Assignee would otherwise have received if the Subject Interest
had been the size warranted, then such increased amounts, whenever received by
the Assignee, may be treated by Assignor as a credit or offset (without
interest) against any amounts payable to the Assignee under Section 1.04(b).
(d) DISCLAIMER. EXCEPT FOR THE WARRANTIES OF TITLE GIVEN IN SECTION
1.04(a) AND THE REPRESENTATIONS MADE IN ANY AGREEMENT TO WHICH THIS CONVEYANCE
IS SUBJECT, ASSIGNOR MAKES THIS CONVEYANCE AND ASSIGNS THE TERM ROYALTY INTEREST
WITHOUT RECOURSE, COVENANT OR WARRANTY OF TITLE OF ANY KIND, EXPRESS, IMPLIED OR
STATUTORY. EXCEPT AS OTHERWISE PROVIDED HEREIN OR IN ANY AGREEMENT TO WHICH THIS
CONVEYANCE IS SUBJECT, 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 THE 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 THE ASSIGNEE AND
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ASSIGNOR THAT, EXCEPT AS OTHERWISE PROVIDED, THE TERM ROYALTY INTEREST IS HEREBY
ASSIGNED TO THE ASSIGNEE ON AN "AS IS" AND "WHERE IS" BASIS WITH ALL FAULTS, AND
THAT THE ASSIGNEE HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS THE 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 Conveyance is made with full
substitution and subrogation of the Assignee in and to all covenants of warranty
by Third Persons (other than Affiliates of Assignor) heretofore given or made
with respect to the ▇▇▇▇▇ and the Subject Interests or any part thereof or
interest therein.
SECTION 1.05 RELEASE OF EXCESS ACREAGE. After the drilling obligations
in Section 2.01(a) of the Development Agreement have been satisfied, Assignee
shall, on request, execute, acknowledge, and deliver to Assignor a recordable
instrument (reasonably acceptable to Assignor) that (a) releases the Term
Royalty Interest with respect to all Subject Development Lands and (b) assigns
such Subject Development Lands to Assignor, except such portion thereof that
covers and pertains to all Term Royalty Gas in, under and that may be produced
from the Wellbores of any Completed Development Well. In addition, upon the
completion of any Development Well or Completed Development Well, Assignee
shall, on request, execute, acknowledge, and deliver to Assignor a recordable
instrument (reasonably acceptable to Assignor) that (i) releases all of the Term
Royalty Interest with respect to each Development Well that does not constitute
a Completed Development Well, and (ii) each Completed Development Well, except
such portion of each such Completed Development Well that covers and pertains to
all Term Royalty Gas in, under and that may be produced from the Wellbores of
any such Completed Development Well. Any such release and assignment shall be
made subject to the provisions of Section 12.02 below.
ARTICLE II
DEFINITIONS
This Article II defines certain capitalized words, terms, and phrases used
in this Conveyance. Certain other capitalized words, terms, and phrases used in
this Conveyance are defined elsewhere in this Conveyance.
"Additional Lease" is defined in Section 12.01.
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"Adjusted Completed Development Well Value" means, with respect to each
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Completed Development Well, the value obtained by multiplying for each Completed
Development Well drilled or caused to be drilled by Assignor during any Annual
Period one (1) times the Working Interest (stated as a decimal fraction or 1.00,
where Assignor holds a 100% Working Interest), that Assignor is required to bear
in such Completed Development Well. For example, if Assignor holds an
eighty-five percent (85%) Working Interest in a Completed Development Well, the
computation would be:
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1 x .85 = .85
therefore, such Completed Development Well would have a .85 Adjusted Completed
Development Well Value.
"Affiliate" means, for any specified Person, another Person that controls,
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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 Areas" mean the areas depicted on the map set forth on Exhibit B as
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the Yawkey ▇▇▇▇▇▇▇ ▇▇▇ and the PK AMI.
"Annual Period" means the annual period commencing on April 1 each year and
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ending on March 31 of the succeeding year.
"Assignee" means Black Stone Minerals Company, L. P., a Delaware limited
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partnership or its permitted designees.
"Assignor" is defined in the Introduction to this Conveyance and also
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includes all permitted successors and assigns of Assignor.
"Assignor's Net Share of Gas" means the share of Subject Gas from each Well
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that is attributable to Assignor's Net Revenue Interest in that Well.
"Business Day" means any day that is not a Saturday, Sunday, a holiday
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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).
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"Completed Development Well" means the Wellbore of any Development Well
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that is completed pursuant to Section 2.02 of the Development Agreement in the
Big Lime formation or deeper formation(s).
"Conveyance" is defined in the Introduction to this Conveyance.
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"Development Agreement" means that certain Development Agreement between
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Assignor and the Assignee dated as of even date herewith.
"Development Well" means any Gas well drilled, within the meaning of
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Section 2.01(b) of the Development Agreement, after the Effective Time of the
Development Agreement on the Subject Development Lands.
"Drilling Obligation Completion Date" means March 31, 2008.
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"Effective Time" is defined in the Introduction to this Conveyance as
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January 1, 2005.
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"Encumbrance" means any mortgage, lien, security interest, pledge, charge,
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encumbrance, limitation, preferential right to purchase, consent to assignment,
irregularity, burden, or defect.
"Excess Costs" means the excess of Chargeable Costs from a prior month that
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are actually paid or are deemed to have been paid by Assignor during that month
and not included in any such prior month's Chargeable Costs.
"Existing Gas Purchase Contract" means that certain Natural Gas Sales
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Agreement dated March 16, 1993 by and between Mountaineer Gas Services, Inc. and
Mountaineer Gas Company as heretofore and may hereafter be amended, modified or
restated.
"Fair Value" means, with respect to any portion of the Term Royalty
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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
Term Royalty Interest to a party which is not an Affiliate of either the
Assignor or the 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 the Assignee's
proportionate share of sales costs, commissions and brokerage fees, if any,
actually paid.
"Farmout Agreements" means any farmout agreement, participation agreement,
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exploration agreement, development agreement or any similar agreement.
"Force Majeure" is defined in Section 13.02.
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"Gas" means natural gas and all other gaseous hydrocarbons, and all
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non-combustible gas that are contained in the full wellstream.
"Governmental Authority" means the United States of America, any state,
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commonwealth, territory, or possession thereof, and any political subdivision of
any of the foregoing, including courts, departments, commissions, boards,
bureaus, agencies, and other instrumentalities.
"Kentucky Conveyance" means the Term Royalty Conveyance (Kentucky) by and
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between Assignor and Assignee dated as of even date herewith and effective as of
the Effective Time. The Kentucky Conveyance shall be identical in terms to this
Conveyance except where modified as appropriate.
"Legal Requirement" means any law, statute, ordinance, decree, requirement,
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order, judgment, rule, or regulation of, including the terms of any license or
permit issued by, any Governmental Authority.
"Mcf" means thousand cubic feet of Gas and "MMcf" means million cubic feet
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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.
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"Monthly Distribution Amount" is defined in Section 5.01(a).
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"Net Revenue Interest" means, the interest, stated as a decimal fraction,
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in Subject Gas production from a Well that Assignor is entitled to take with
respect to Assignor's Subject Interest in that Well and the associated Subject
Lands, subject only to the Permitted Production Burdens.
"Non-Affiliate" means, for any specified Person, any other Person that is
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not an Affiliate of the specified Person.
"Notice" is defined in Section 14.01.
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"Party," when capitalized, refers to Assignor or Assignee.
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"Parties," when capitalized, refers to Assignor and Assignee.
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"Pennsylvania Conveyance" means the Term Royalty Conveyance (Pennsylvania)
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by and between Assignor and Assignee dated as of even date herewith and
effective as of the Effective Time. The Pennsylvania Conveyance shall be
identical in terms to this Conveyance except where modified as appropriate.
"Permitted Encumbrances" means:
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(a) the Permitted Production Burdens;
(b) the Existing Gas Purchase Contract;
(c) Encumbrances that arise under operating agreements, Farmout
Agreements, leases, assignments, and other instruments and agreements
to secure payments of amounts not yet delinquent and that are of the type
and nature customary in the oil and gas industry, as conducted in the
Appalachian Basin;
(d) Encumbrances that arise as a result of pooling and unitization
agreements, declarations, orders, or Legal Requirements to secure
payment of amounts not yet delinquent;
(e) Encumbrances securing payments to mechanics and materialmen
and Encumbrances securing payment of Taxes or assessments that are, in
either case, not yet delinquent or, if delinquent, are being contested in
good faith in the normal course of business;
(f) 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;
(g) 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
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Interests that are not such as to interfere materially with the operation,
value, or use of the Subject Interests;
(h) covenants, conditions, and other terms subject to which
Assignor acquired the Subject Interests;
(i) rights reserved to or vested in any Governmental Authority to
control or regulate any Subject Interests in any manner, and all applicable
Legal Requirements;
(j) the terms of the instruments creating the Subject Interests
and Subject Lands;
(k) any Prior Reversionary Interests disclosed in writing to
Assignee prior to the execution of the Term Royalty Agreement that
affect the Subject Interests;
(l) other Encumbrances that affect any Subject Interest that do
not, alone or in the aggregate, materially and adversely affect the
operation, value, or use of the Subject Interests; and
(m) mortgages, deeds of trust or other security interests
burdening Assignor's interest in the Subject Interests or any extensions or
renewals thereof and Subject Lands, including, without limitation, the Deed
of Trust; provided however that any such mortgage, deed of trust or
security interest shall not affect and shall be made expressly subject to
the Term Royalty Conveyance;
all to the extent, and for so long as, such Permitted Encumbrances are
(i) 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, or (ii) they do not cause Assignor's Net Revenue Interests in
any Producing Well to be less than the Net Revenue Interest for that
Producing Well as stated in Exhibit A-1.
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"Permitted Production Burdens" means (a) all Production Burdens that
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affected the Subject Interests when they were acquired by Assignor and (b) all
Production Burdens that were created by Assignor, to the extent they do not
cause Assignor's Net Revenue Interest in any (i) Producing Well to be less than
the Net Revenue Interest for that Producing Well reflected in Exhibit A-1, or
(ii) Completed Development Well to be less than 87.5% (proportionately reduced
to Assignor's Working Interest in such Completed Development Well). It is
understood and agreed that with respect to Completed Development ▇▇▇▇▇, the Term
Royalty Interest will be calculated on the basis that Assignor's Working
Interest in the Subject Development Lands is not burdened by Production Burdens
that exceed 12.5%. In the event that Assignor's Working Interest in any of the
Completed Development ▇▇▇▇▇ is subject to Production Burdens in excess of 12.5%,
such excess burdens will be the sole responsibility of Assignor and paid out of
Assignor's fifty percent (50%) interest in the Subject Development Lands
retained by Assignor hereunder.
"Person" means any natural person, corporation, partnership, trust, estate,
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or other entity, organization, or association.
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"Producing Well" means the Wellbore of each Gas well more particularly
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described in Exhibit A-1, subject to the exceptions, exclusions and reservations
set forth on such Exhibit A-1.
"Post Production Cost Charge" is defined in Section 3.02(c).
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"Prime Interest Rate" is defined in Section 5.02(b).
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"Prior Reversionary Interest" means any contract, agreement, Farmout
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Agreement, lease, deed, conveyance or operating agreement disclosed in writing
to Assignee prior to the execution of the Term Royalty 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 any part of the Subject Interests to another Person, 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
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Interests, or Subject Gas, all royalty interests, overriding royalty interests,
production payments, net profits interests, Prior Reversionary Interests and
other similar interests that constitute a burden on, are measured by, or are
payable out of the production of Gas or the proceeds realized from the sale or
other disposition thereof.
"Reasonably Prudent Operator Standard" means the standard of conduct of a
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reasonably prudent oil and gas operator in the Appalachian Basin under the same
or similar circumstances, acting with respect to its own property and
disregarding the existence of the Term Royalty Interest as a burden on such
property.
"Reserved Amounts" means those amounts set aside from Term Royalty Proceeds
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by Assignor in accordance with the provisions of Section 5.04 below.
"Sales Price" means, for any month, the sales price received by Assignor
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per Mcf for Term Royalty Gas determined in accordance with the following
provisions:
(a) "sale" refers to any sale or other disposition of Term
Royalty Gas for value, the value of such Gas that is sold or
otherwise disposed of for valuable consideration being (i) with
respect to any Gas not sold under the Existing Gas Contract, the sales
price that Assignor receives for any such Gas sold pursuant to Section
4.01 for any such Gas, or (ii) with respect to any Gas sold under the
Existing Gas Contract, notwithstanding the provisions of the Existing
Gas Contract, the Sales Price for any Gas sold thereunder shall be
deemed to be, for each month during the term of the Existing Gas
Contract, the ▇▇▇▇▇'▇ Inside FERC Gas Market Report first of the month
posted Columbia Gas Transmission Corporation Appalachia Index price
for Spot Gas Delivered to Pipelines for that month.
(b) amounts of money not paid to Assignor when due by any
purchaser of Term Royalty Gas (for example, Taxes or other
amounts withheld or deducted by any such purchaser) shall not be
included within the Monthly
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Distribution Amount until actually received by, or credited to
the account of, Assignor;
(c) advance payments and prepayments for future deliveries
of Term Royalty Gas shall be included within the Monthly
Distribution Amount, without interest, when received by Assignor; and
(d) if a controversy or, in the reasonable opinion of
Assignor's counsel, a possible controversy exists, whether by
reason of any statute, order, decree, rule, regulation, contract, or
otherwise, between Assignor and any purchaser of Term Royalty Gas or
any other Person, about the correct Sales Price of any Term Royalty
Gas, about deductions from the Sales Price, about Assignor's right to
receive the proceeds of any sale of Term Royalty Gas, or about any
other matter relating thereto, then monies withheld by the purchaser
or deposited by such Purchaser or, after receipt, by Assignor with a
Third Party escrow agent as a result of such controversy, shall not be
included within the Monthly Distribution Amount until received by or
returned to Assignor, as applicable. In addition, to the extent that
Assignor receives interest on such payment, Assignor shall pay to
Assignee its proportionate share of such interest.
"Subject Development Lands" means the lands subject to or covered by the
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oil and gas leases described in Exhibit A-2, subject to the exceptions,
exclusions and reservations set forth on such Exhibit A-2, as such Exhibit may
be modified pursuant to Section 1.05 and Section 12.01.
"Subject Gas" means with respect to each Well, Gas in and under, and that
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may be produced, saved, and sold from all producing horizons from the Wellbore
of such Well, subject to the following:
(a) "Subject Gas" excludes Gas that is:
(i) lost in accordance with the Reasonably
Prudent Operator Standard in the production, gathering,
or marketing of Gas, or that is liquefied and removed from
the gas stream in the normal course of Assignor's operation,
consistent with prior practice, via any method other than
processing as contemplated in Section 4.04;
(ii) subject to the Reasonably Prudent Operator
Standard, used in operations on the Subject Lands,
including drilling and production operations on the Subject
Development Lands);
(iii) retained by a Third Person, or Assignor
(pursuant to Section 3.02(c)), for gathering,
transportation, processing, or marketing services related to
the Subject Gas in lieu of or in addition to cash payment
for such services; or
(iv) in excess of the percentage attributable to
Assignor's Net Share of Gas taken by Assignor to
recover costs, or some multiple of
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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 otherwise disposed of for valuable
consideration.
"Subject Interests" means Assignor's undivided interests in the Subject
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Lands as lessee under Gas leases covering and affecting the Subject Lands, 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 ▇▇▇▇▇ to exploit the Gas. Any oil and gas lease or other similar
instrument that covers Gas produced from the Subject Lands shall be considered a
"Gas lease" hereunder, even if it also covers other substances. "Subject
Interests" includes all extensions and renewals of Gas leases covering and
affecting the Subject Lands acquired within six (6) months after the expiration
or termination of any such lease, and all new Gas leases covering the Subject
Lands (or any portion thereof) obtained by Assignor, or any Affiliate thereof
prior to the termination of the Development Agreement. "Subject Interests" do
not include (a) Assignor's rights to substances other than Gas; (b) Assignor's
rights under contracts for the purchase, sale, transportation, storage,
processing, or other handling or disposition of Gas; (c) Assignor's interests
in, or rights with respect to, pipelines, gathering systems, storage facilities,
processing facilities, or other equipment or facilities, other than the ▇▇▇▇▇;
or (d) subject to Section 1.04(c), any after-acquired, additional, or enlarged
interests in the ▇▇▇▇▇, Subject Lands or Subject Gas, except those reflected in
Exhibit A-1 or Exhibit A-2 or any Additional Lease as provided for in Section
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12.01, or extensions and renewals covered by the preceding sentence. "Subject
Interests" may be owned by Assignor by virtue of grants or reservations in
deeds, Gas leases, or other instruments, or by virtue of operating agreements,
pooling or unitization agreements or orders, or other kinds of instruments,
agreements, or documents, legal or equitable, recorded or unrecorded. The
Subject Interests are subject to the Permitted Encumbrances.
"Subject Lands" means collectively, the Subject Producing Lands and the
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Subject Development Lands.
"Subject Producing Lands" means the lands subject to or covered by the oil
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and gas leases described in Exhibit A-1 for lands related to the Producing
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▇▇▇▇▇, subject to the exceptions, exclusions and reservations set forth on such
Exhibit A-1.
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"Taxes" is defined in Section 3.02(b).
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"Term" is defined in Section 1.02.
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"Term Royalty Agreement" means that certain Term Royalty Agreement between
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Assignor and the Assignee dated as of May 17, 2005.
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"Term Royalty Conveyances" means collectively, this Conveyance, the
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Kentucky Conveyance and the Pennsylvania Conveyance.
"Term Royalty Gas" means, for any month, that percentage of Gas to which
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the Assignee is entitled, calculated in accordance with Section 3.01.
"Term Royalty Interest" means the variable undivided interest in and to the
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Subject Interests, to the extent that the Subject Interests pertain to Gas in,
under and that may be produced from the Wellbores of the ▇▇▇▇▇, sufficient to
cause Assignee to receive a volume of Term Royalty Gas and the revenues
attributable thereto calculated and paid in money in accordance with Section
3.01.
"Term Royalty Proceeds" means for any month, proceeds received by Assignor
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for the account of Assignee, as the Assignee's marketing and payment agent and
representative, from the sale of Term Royalty Gas under this Conveyance less
Chargeable Costs calculated in accordance with Section 3.03.
"Termination Date" is defined in Section 1.02.
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"Third Person" means a Person other than Assignor or Assignee, or their
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respective Affiliates.
"Total Drilling Commitment" means that number of Completed Development
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▇▇▇▇▇ where the cumulative total of all such Adjusted completed Development Well
Value for all Completed Development ▇▇▇▇▇ drilled or cause to be drilled by
Operator equals 180.
"Total Subject Gas" means the total of all Subject Gas from each of the
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applicable Term Royalty Conveyances.
"Transfer" including its syntactical variants, means any assignment, sale,
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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 so
long as any such security interest shall not affect and is made expressly
subject to the Term Royalty Interest.
"Wellbore" means the wellbore of any Well from the surface of the ground to
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the total depth of such Well.
"▇▇▇▇▇" means, collectively, the Wellbores of the Producing ▇▇▇▇▇ and the
-----
Completed Development ▇▇▇▇▇.
"Working Interest" means with respect to any Well, the interest 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.
11
ARTICLE III
CALCULATION OF TERM ROYALTY GAS
SECTION 3.01 CALCULATION. Term Royalty Gas shall be calculated in
accordance with the following formula:
With respect to any Producing Well:
NINETY PERCENT (90%) X (ASSIGNOR'S NET SHARE OF GAS PRODUCED
DURING THAT MONTH).
With respect to any Completed Development Well:
FIFTY PERCENT (50%) X (ASSIGNOR'S NET SHARE OF GAS PRODUCED
DURING THAT MONTH).
It is understood and agreed that with respect to Completed Development ▇▇▇▇▇,
the Term Royalty Interest will be calculated on the basis that Assignor's
Working Interest in the Subject Development Lands is not burdened by Production
Burdens that exceed 12.5%. In the event that Assignor's Working Interest in any
of the Completed Development ▇▇▇▇▇ is subject to Production Burdens in excess of
12.5%, such excess burdens will be the sole responsibility of Assignor and paid
out of Assignor's fifty percent (50%) interest in the Subject Development Lands
retained by Seller hereunder.
SECTION 3.02 CHARGEABLE COSTS.
(a) DEFINITION. Subject to Section 5.04 hereof, for each month,
"Chargeable Costs" means the sum of (i) Taxes, (ii) the Post Production Cost
-----------------
Charge and (iii) any Excess Costs. All other costs, including, without
limitation, those costs associated with or paid or incurred in connection with
the drilling, testing, completing, equipping for production, operating and
plugging and abandoning of the ▇▇▇▇▇ shall be borne solely by Assignor and shall
not be included as Chargeable Costs.
(b) TAXES. "Taxes" means general property, ad valorem,
-----
production, severance, sales, gathering, windfall profit, excise, and other
taxes, except income and franchise taxes, assessed or levied (i) on or in
connection with the Subject Interests, the Term Royalty Interest, this
Conveyance, production of Subject Gas, Assignor's Net Share of Gas, or the Term
Royalty Gas (or the proceeds from the sale thereof), or (ii) against Assignor as
owner of the Subject Interests or Assignee as owner of the Term Royalty
Interest.
(c) POST PRODUCTION COST CHARGE. (i) "Post Production Cost
----------------------
Charge" means those costs incurred by Assignor (including, internal post
production costs and Third Person post production 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 post production costs of Assignor and its Affiliates that
are part of the Post Production Cost Charge shall not exceed the weighted
average post production costs of
12
all Third Parties in the area where the Subject Gas is being produced for
similar services; and further shall not exceed, on a weighted average basis,
such internal costs as are deducted by Assignor from its payments of royalties
to the owners of the royalty interests in the Subject Gas and provided, further,
with respect to marketing costs, only Non-Affiliate marketing 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.
Any costs, fees or expenses that are properly charged or allocated to the Term
Royalty 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. (ii) Notwithstanding the provisions of Section
3.02(c)(i) above, for the period from June 10, 2005 until June 10, 2006,
Assignor's internal post production costs relating to Assignor's facilities in
existence as of June 10, 2005 shall not exceed the amounts being charged by
Assignor as of June 10, 2005, and for the period from June 10, 2006 until June
10, 2010 such Post Production Cost Charge may be increased annually by
multiplying such internal post production costs currently in use by the
percentage increase recommended by the All Urban Consumers (CPI-U) - U. S. City
Average CPI, or a comparable index.
SECTION 3.03 CALCULATION OF TERM ROYALTY PROCEEDS. Term Royalty Proceeds
shall be calculated by multiplying the volume of Term Royalty Gas (on an mcf
basis) for the applicable month by the Sales Price less the Chargeable Costs
associated with such Term Royalty Gas for the applicable month.
ARTICLE IV
MARKETING OF TERM ROYALTY GAS
SECTION 4.01 RIGHTS AND DUTIES REGARDING MARKETING OF TERM ROYALTY GAS.
Assignor shall market or shall cause to be marketed Assignor's Net Share of Gas
(including the Term Royalty Gas) in good faith in accordance with the Reasonably
Prudent Operator Standard and Section 4.02(d). Assignor shall use commercially
reasonable efforts in connection with any sale of Assignor's Net Share of Gas
(including the Term Royalty Gas) to (a) obtain the best available market price
in the area for such Gas and (b) 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 (i) for Assignor to
market such Gas to an Affiliate of Assignor, so long as Assignor receives the
applicable Sales Price therefor, which in any event shall not be less than the
volume weighted average price upon which Assignor pays royalties to the owners
of the royalty interests in the Subject Gas, or (ii) for Assignor or its
Affiliates to receive the Post Production Cost Charge.
SECTION 4.02 ASSIGNEE'S AGENT AND REPRESENTATIVE.
(a) APPOINTMENT. Assignee appoints Assignor as the Assignee's
agent and representative to market and deliver or cause to be marketed and
delivered all Term Royalty 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 month). The appointment of Assignor
as the Assignee's agent and representative for such purpose is also 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 the
Assignee's agent and
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representative, except for cause upon a material breach by Assignor of its
duties to the Assignee under this Conveyance.
(b) DUTIES AND POWERS. As the Assignee's agent and
representative, Assignor shall receive all payments for the sale of the Term
Royalty Gas and account to Assignee, receive and make all communications with
the purchaser of such Gas, and otherwise act and speak for the Assignee in
connection with the sale of the Term Royalty Gas. Third Persons may rely
conclusively on the authority of Assignor to market the Term Royalty Gas, and
with respect to Third Persons, the Assignee shall be conclusively bound by the
acts of Assignor in connection with the sale of Term Royalty 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 the Term Royalty Gas. Third Persons may pay all Term Royalty
Proceeds for the sale of such Gas directly to Assignor, without the necessity of
any joinder by or consent of Assignee or any inquiry into the use or disposition
of such proceeds by Assignor.
(c) PROHIBITED ACTS. Assignor may not act or speak for the
Assignee on any matter, except as otherwise specifically provided in this
Conveyance, the Term Royalty Agreement or the Development Agreement.
(d) STANDARD OF CONDUCT. In exercising its powers and performing
its duties as the Assignee's agent and representative, Assignor shall act in
good faith and in accordance with the Reasonably Prudent Operator Standard,
consistent with Assignor's prior practices. It shall not be a violation of such
standard of conduct for Assignor (i) to sell Assignor's Net Share of Gas or the
Term Royalty Gas to an Affiliate pursuant to any gas purchase agreement or
contract, or (ii) to delegate some or all of Assignor's duties as the Assignee's
agent and representative to its Affiliates so long as in either of such events
such Affiliates perform in good faith and in accordance with the Reasonably
Prudent Operator Standard, with Assignor remaining liable to the Assignee for
the performance of such Affiliates.
(e) TERMINATION OF AUTHORITY. Assignor may not resign as the
Assignee's agent and representative without the prior written consent of the
Assignee, except that Assignor may resign as the Assignee's agent and
representative without such consent with respect to any Subject Interests
Transferred by Assignor in accordance with the terms of this Conveyance. If
such Transfer is in connection with Subject Interests which are burdened by the
Term Royalty Interest, Assignor must cause the purchaser to assume the duties of
the Assignee's agent and representative with respect to such Subject Interests
acquired by that purchaser and to be bound by the provisions of this Article IV.
SECTION 4.03 SALE AND DELIVERY OF SUBJECT GAS. Assignor (while serving
as the Assignee's agent and representative) shall sell or cause to be sold
Assignor's Net Share of Gas (including Term Royalty Gas) and shall deliver or
cause to be delivered Assignor's Net Share of Gas (including Term Royalty Gas)
to the purchasers thereof into the pipelines to which the ▇▇▇▇▇ producing such
Gas are connected.
SECTION 4.04 PROCESSING. Assignor may process Assignor's Net Share of
Gas (including Term Royalty Gas) to remove liquid and liquefiable hydrocarbons
and may commit any of the Subject Interests (including the Term Royalty Interest
attributable thereto) to an
14
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 and consistent with
Assignor's prior practice. Assignee shall be bound by such arrangements, shall
permit Assignor's Net Share of Gas (including the Term Royalty Gas) to be
processed by Assignor or its contractor, but shall have no right to any liquid
or liquefiable hydrocarbons obtained by such processing or to the proceeds from
the sale thereof, except, to the extent Assignor receives any such proceeds from
the sale of any liquid or liquefiable hydrocarbons, Assignor shall pay to
Assignee its proportionate share of such proceeds. Assignee shall not, however,
be personally liable for any costs or risks associated with such processing
operations. Assignee shall not suffer, either directly or indirectly, any Btu
reduction or volume reductions associated with any such internal processing;
provided however, that any Btu reduction or volume reduction resulting from such
processing by a Third Party, if any, shall be passed through on a proportional
basis to Assignee.
ARTICLE V
PAYMENT
SECTION 5.01 OBLIGATION TO PAY.
(a) MONTHLY DISTRIBUTION AMOUNT. On or before the last day of
each month, Assignor shall pay by wire transfer to the Assignee the Term Royalty
Proceeds for which payment has been received by Assignor by the 15th day of such
month, and for which Assignee has not been previously paid, such amount to be
increased by the amount of any damages payable to the Assignee under Section
1.04(b) above (subject to the right of set off in Section 1.04(c) above) and
decreased by any Reserved Amounts as provided for in Section 5.04 below and
further decreased by any quarterly incentive distribution due to Assignor
pursuant to Section 5.05 below ("Monthly Distribution Amount").
-----------------------------
(b) FINAL MONTHLY DISTRIBUTION AMOUNT. On or before the last day
of the final month in which Assignee is due a Monthly Distribution Amount
hereunder, Assignor shall pay to the Assignee, in addition to such final Monthly
Distribution Amount, all unexpended Reserved Amounts, except for such amounts as
may be required to pay any outstanding but unpaid liabilities related to the
Term Royalty Interest as provided for under the terms of this Agreement.
(c) NO SEGREGATED ACCOUNT. All amounts received by Assignor from
the sale of Assignor's Net Share of Gas and the Term Royalty Gas, as applicable,
for any month 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.
(d) DISPUTED PROCEEDS. If Assignor receives any amounts of money
from the sale of Term Royalty Gas that is subject to controversy or, in the
reasonable opinion of counsel for 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 Term
Royalty Proceeds so long as it remains with such escrow agent, but shall be
15
treated as a portion of the Term Royalty Proceeds, along with the accrued
interest, when received by Assignor from such escrow agent and paid over by
Assignor to Assignee.
SECTION 5.02 INTEREST ON PAST DUE PAYMENTS.
(a) OVERPAYMENTS. If Assignor ever pays Assignee more than the
amount of money then due and payable to the Assignee under this Conveyance,
Assignee shall not be obligated to return the overpayment, but Assignor may at
any time thereafter deduct from Term Royalty Proceeds and retain for its own
account an amount equal to the overpayment, plus interest at the Prime Interest
Rate on such amount, commencing on the sixth (6th) day after the date of the
overpayment and ending on the date such amount is recovered by Assignor from
Term Royalty Proceeds; provided however, that in the event of any such
overpayment, Assignor shall promptly provide Assignee with written notice of the
amount of the overpayment and Assignee may, at its election, remit the amount of
the overpayment to Assignor.
(b) REFUNDS. If Assignor is ever legally obligated to pay any
Third Person, including any gas purchaser or Governmental Authority, any refund,
interest, penalty, [Need to discuss] or other amount of money, because any
payment of Term Royalty Proceeds received by Assignor for the account of
Assignee exceeded the amount due or lawful under any applicable contract, Legal
Requirement, or other obligation, Assignor may thereafter deduct from Term
Royalty Proceeds and retain for its own account an amount equal to such payment,
plus interest at the Prime Interest Rate on such amount, from the date of the
sixth (6th) day after such payment to the date such amount is recovered by
Assignor from Term Royalty Proceeds; provided however, that in the event of any
such refund, Assignor shall promptly provide Assignee with written notice of the
amount of the refund and Assignee may, at its election, remit the amount of the
refund to Assignor.
SECTION 5.04 RESERVED AMOUNTS. At any time and from time to time under
this Conveyance, Assignor may set aside from Term Royalty Proceeds ninety
percent (90%) with respect to Subject Producing Lands and fifty percent (50%)
with respect to Subject Development Lands of the amounts determined in good
faith and in accordance with the
16
Reasonably Prudent Operator Standard necessary to pay, when due, known or
anticipated costs or liabilities which may be incurred in future months with
respect to Taxes assessed or levied with respect to a time period in excess of a
month (the "Reserved Amounts"). As Reserved Amounts are expended by Assignor to
----------------
cover applicable Taxes in a month, Chargeable Costs shall be reduced in such
month 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 Term Royalty Proceeds in the month following the month in
which it is determined that Assignor has set aside excess Reserved Amounts.
SECTION 5.05 INCENTIVE PAYMENTS TO ASSIGNOR. In the event the
quarterly aggregate of Monthly Distribution Amounts exceeds the specified
thresholds for each quarter as set forth in the Term Royalty Agreement (the
"Distribution Targets"), Assignor will be entitled to receive a quarterly
incentive distribution equal to thirty percent (30%) of the amount, if any, by
which the quarterly aggregate of the Monthly Distribution Amounts exceeds the
Distribution Target for such quarter. Any such incentive distribution may be
offset against the Monthly Distribution Amount due Assignee for the last month
for the quarter in question.
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 Monthly Distribution Amount.
(b) RIGHT OF INSPECTION. Assignee or its representative, at the
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) MONTHLY STATEMENTS. Together with the Monthly Distribution
Amount, Assignor shall deliver to Assignee a statement showing the computation
of Term Royalty Gas and Term Royalty Proceeds.
(b) CONTENTS OF STATEMENTS. Each Monthly Statement delivered by
Assignor to Assignee pursuant to this Section 6.02 shall state on a Well basis,
(i) the Well identification number, (ii) the product type, (iii) the applicable
production month, (iv) the total volume on an Mcf basis distributed to the Well
and net to the Term Royalty Interest, (v) the applicable Sales Price on an Mcf
basis, (vi) the applicable Btu factor utilized at the pay meter or average
thereof if there are multiple pay meters, (vii) the gross revenue distributed to
the Well and the net Term Royalty Proceeds, (viii) the net severance taxes, and
(ix) the net Post Production Cost Charges and Excess Costs to the extent such
deductions are separately identified in the Assignor's Price Waterhouse
Accounting System ("EGOS") or comparable system which has been installed by
17
Assignor to replace the EGOS accounting system, (x) the Monthly Distribution
Amount. Such statement shall further set forth the detail on an aggregate basis
as to the manner in which any incentive distribution referenced in Section 5.05
is calculated. Notwithstanding the foregoing, Assignee and Assignor may
mutually agree upon subsequent modifications to the Monthly Statement, it being
the intent of the Parties that Assignor provide Assignee with reasonably
adequate information to calculate the Monthly Distribution amount to the extent
available electronically on Assignor's EGOS accounting system or comparable
system which has been installed by Assignor to replace the EGOS accounting
system.
SECTION 6.03 ASSIGNEE'S EXCEPTIONS TO MONTHLY STATEMENTS. All Monthly
Statements rendered to Assignee by Assignor during any calendar year shall
conclusively be presumed to be true and correct after twenty-four (24) months
following the end of any such calendar year, unless within the said 24-month
period Assignee takes written exception thereto and makes claim on Assignor for
an adjustment. No adjustment favorable to Assignor shall be made unless it is
made within the same 24-month period. Any 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. Assignor
and Assignee shall meet to negotiate and resolve any exceptions within fifteen
(15) days of Assignor's receipt of Assignee's Notice thereof. Any items not
agreed to at the end of the 15-day period may, at either party's request, be
resolved by arbitration, with a nationally recognized accounting firm which does
not perform work for either Assignee or Assignor acting as arbitrator to decide
all points of disagreement with respect to such Monthly Statement(s). The
decision of such firm on all such points shall be binding upon the parties. The
costs and expenses of such firm shall be borne by the Party against whom the
decision is rendered, or in the event the decision is rendered favorably in part
to each Party, on a proportional basis.
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 Lands.
(b) DISCLAIMER OF WARRANTIES AND LIABILITY. Assignor makes no
representations or warranties about the accuracy or completeness of any such
data, reports, or studies and shall have no liability to Assignee, the Assignee
or any other Person resulting from such data, studies, or reports.
(c) NO ATTRIBUTION. Assignee shall not attribute to Assignor or
such consulting engineers any reports or studies or the contents thereof in any
securities filings or reports to owners or holders of interests in the Assignee.
(d) CONFIDENTIALITY. All information furnished to the Assignee,
its designated representatives and investors pursuant to this Section 6.04 is
confidential and for the sole benefit of such parties and shall not be disclosed
by Assignee, its designated representatives or its investors to any other
Person, except to the extent that such information (i) is required in any
18
report, statement or testimony submitted to any Governmental Authority having or
claiming to have jurisdiction over Assignee, (ii) is required in response to any
summons or subpoena or in connection with any litigation, (iii) is believed to
be required in order to comply with any applicable Legal Requirement to the
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 THE ASSIGNEE
SECTION 7.01 ASSIGNEE NOT LIABLE. 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 ▇▇▇▇▇, or the Subject Gas, or the plugging and
abandoning of any ▇▇▇▇▇, and Assignor shall hold harmless and indemnify Assignee
from and against any and all such cost, risk, liability or obligation
(including, without limitation, court costs and reasonable attorneys' fees) that
are attributable thereto, including, but not limited to, any liability resulting
from the condition thereof under any federal, state, or local statute,
regulation, rule, ordinance or order relating to the environment or health and
safety). The foregoing sentence does not restrict the right of Assignor to
deduct Chargeable Costs in calculating the volumes of the Term Royalty Gas or
Term Royalty 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 ▇▇▇▇▇ 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 and consistent with Assignor's prior
practice. Such standard shall be interpreted for purposes of this Conveyance to
impose a duty upon Assignor to continuously produce all ▇▇▇▇▇ which are capable
of producing in paying quantities, except (a) where a temporary cessation of
production is necessary in connection with routine maintenance or for safety
reasons, or (b) in the event of the occurrence of an event of Force Majeure, in
which instance the provisions of Article XIII below shall control.
SECTION 8.02 ABANDONMENT OF PROPERTIES. Nothing in this Conveyance,
other than the Reasonably Prudent Operator Standard, 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 good faith and 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
19
abandonment thereof. Any Well abandoned by Assignor hereunder shall be plugged
and abandoned, at Assignor's sole risk and expense, in accordance with all
applicable federal, state and/or local laws, statutes, rules and regulations.
SECTION 8.03 INSURANCE. Assignor may, but is not required by this
Conveyance to, carry insurance on any Subject Interest or Well, or covering any
risk with respect thereto. Assignor shall never be liable to the 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 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 Term 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 right and power (as
between Assignor and the Assignee), exercisable only during the period provided
in Section 9.03, 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. No
pooling or unitizing of the Subject Interests pursuant hereto shall have the
effect of reducing Assignor's Net Revenue Interest in any Producing Well to less
than the Net Revenue Interest for that Producing Well reflected in Exhibit A-1,
and, in the event Assignor's Net Revenue Interest in any Producing Well is
reduced by virtue of any such pooling or unitizing to less than the indicated
interests, such reduction shall be deemed a breach of the warranty provided for
in Section 1.04(a) and Assignee shall be entitled to the remedy provided for in
Section 1.04(b).
(b) EFFECT OF POOLING. Subject to the limitations on reduction of
Net Revenue Interest set forth in Sections 9.01 and 9.02(a) above, 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 Term Royalty Interest, insofar
as it affects such Subject Interest, shall also be pooled and unitized. It
shall not be necessary for the Assignee to agree to, consent to, ratify, confirm
or adopt any exercise of pooling or unitization of any Subject Interest by
Assignor.
SECTION 9.03 APPLICABLE PERIOD. Assignor's powers and rights in
Section 9.02 shall be exercisable only during the period of the life of the last
survivor of the descendants of the signers of the Declaration of Independence
living on the date of execution hereof, plus twenty-
20
one (21) years after the death of such last survivor, or the Term of this
Conveyance, whichever period shall first expire.
ARTICLE X
GOVERNMENT REGULATION
SECTION 10.01 LEGAL REQUIREMENTS. All obligations of Assignor under
this Conveyance are, and shall be, subject to all applicable Legal Requirements
and the instruments, documents, and agreements creating the Subject Interests.
SECTION 10.02 FILINGS. Assignor shall use its reasonable discretion in
making filings for itself and on behalf of the Assignee with any Governmental
Authority having jurisdiction with respect to matters affecting the Subject
Interests, the Subject Lands, the ▇▇▇▇▇ or the Subject Gas.
ARTICLE XI
ASSIGNMENT AND SALE OF SUBJECT INTERESTS
SECTION 11.01 ASSIGNMENT BY ASSIGNOR SUBJECT TO TERM ROYALTY INTEREST.
(a) RIGHT TO SELL. Assignor may not sell any Subject Lands,
Subject Interests and/or ▇▇▇▇▇ prior to the time that Assignor has fulfilled its
drilling obligations under Section 2.01 of the Development Agreement.
Thereafter, subject to the limitations set forth in this Article XI, Assignor
may from time to time Transfer, mortgage, or pledge the ▇▇▇▇▇, the Subject
Interests, or any part thereof or undivided interest therein, subject to the
Term Royalty Interest and this Conveyance. Assignor shall cause the assignee,
purchaser, transferee, or grantee, of any such transaction to take the affected
Subject Interests subject to the Term Royalty Interest and this Conveyance and,
from and after the actual date of any such Transfer, to (i) assume Assignor's
obligations under this Conveyance with respect to such Term Royalty Interest, or
(ii) in the case of a mortgage or pledge, to make any such mortgage or pledge
expressly subject to the Term Royalty Interest.
(b) EFFECT OF SALE. In the event any such assignee, purchaser,
transferee, or grantee, has assumed Assignor's obligations under this Conveyance
with respect to such Term Royalty Interest, 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, Term Royalty Gas
and Term Royalty Proceeds shall thereafter be computed separately with respect
to such Subject Interests, and the assignee, buyer, transferee, or grantee of
such Subject Interests shall thereafter serve as the Assignee's agent and
representative under Article IV with respect to such interests and shall pay all
corresponding Term Royalty Proceeds directly to Assignee.
21
SECTION 11.02 SALE AND RELEASE OF PROPERTIES.
(a) TRANSFER. With Assignee's express prior written consent,
Assignor may from time to time, Transfer the ▇▇▇▇▇, the Subject Interests, or
any part thereof or undivided interest therein, along with the Term Royalty
Interest. In such event, this Conveyance shall no longer apply to such
interests.
(B) MORTGAGE OR PLEDGE. Notwithstanding the restrictions on
Transfer otherwise imposed herein, Assignor may mortgage or pledge any
Development Well that is not a Completed Development Well and its interest in
any Well to a Third Person without Assignee's consent so long as such mortgage
or pledge does not affect and is made expressly subject to the Term Royalty
Conveyance.
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 that Assignor
is required to convey any of the Subject Interests to such Person, Assignor may
provide such conveyance with respect to such Subject Interest.
(b) PAYMENTS. In the event that Assignor receives compensation
pursuant to any Prior Reversionary Interest in connection with any conveyance,
Assignor shall remit to the Assignee an amount equal to the product of (i) such
amount actually received by Assignor with respect to such reconveyance and (ii)
a fraction the numerator of which is (aa) the Fair Value of the Royalty Interest
released and the denominator of which is (bb) the Fair Value of the Subject
Interest that is being released. Assignor shall make such payment to the
Assignee on the last day of the month in which Assignor receives such payment.
(c) RELEASE FOR PRIOR REVERSIONARY INTERESTS. In connection with
any conveyance 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 Term Royalty Interest and
this Conveyance with respect to any such Well or Subject Interests.
SECTION 11.04 EFFECT OF PRIOR REVERSIONARY INTERESTS. From and after
the actual date of any conveyance 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 Term Royalty Interest or this Conveyance
with respect to the Subject Interests Transferred, except for those that
accrued prior to such date.
SECTION 11.05 FARMOUT. Except with Assignee's prior written consent,
which shall not be unreasonably withheld, Assignor may not enter into
Farmout Agreements with Third Persons with respect to the Subject Interests
in the Subject Development Lands prior to Assignor's satisfying the
drilling obligations under Section 2.01 of the Development Agreement, and
then only if such Farmout Agreement does not have the effect of reducing
Assignor's Net Revenue Interest in any Producing Well to less than the Net
Revenue Interest for that Producing Well reflected in Exhibit A-1. In the
event
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Assignor's Net Revenue Interest in any Producing Well is reduced by
virtue of any such Farmout Agreement to less than the indicated interests,
such reduction shall be deemed a breach of the warranty provided for in
Section 1.04(a) and Assignee shall be entitled to the remedy provided for
in Section 1.04(b).
SECTION 11.06 TRANSFER OF SUBJECT DEVELOPMENT LANDS. Assignor will not
Transfer any Producing Well or Subject Producing Lands, or Completed
Development Well or any of the Subject Interests comprising a part of the
Subject Development Lands, pursuant to Sections 11.01 and 11.02 prior to
Assignor satisfying the drilling obligations under Section 2.01 of the
Development Agreement.
SECTION 11.07 CHANGE IN OWNERSHIP.
(b) OBLIGATION TO GIVE NOTICE. No change of ownership or of the
right to receive payment of the Term 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.
(c) NOTICE OF SALE. Notice of Transfer shall consist of a
certified copy of the recorded instrument accomplishing the same.
(d) NOTICE OF OTHER CHANGES OF OWNERSHIP. Notice of change of
ownership or of the right to receive payment accomplished in any other manner
(e.g., by dissolution of the Assignee) shall consist of certified copies of
recorded documents and complete proceedings legally binding and conclusive of
the rights of all Persons.
(e) 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 Term 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 Term Royalty Proceeds
without interest until such documentation is furnished.
(f) EFFECT OF NONCONFORMING NOTICES. The kinds of Notice provided
by this Section 11.0 7(d) shall be exclusive, and no other kind, whether actual
or constructive, shall bind Assignor.
SECTION 11.08 PAYEES. Assignor shall never be obligated to pay the
Monthly Distribution Amount to more than five Persons, and then only in the
percentage proportions designated by Buyer as of the date hereof, and only
on an aggregate basis. If more than five Persons are ever entitled to
receive payment of any part of the Term Royalty Proceeds, Assignor may
suspend payments of all Term Royalty Proceeds until the concurrent owners
or claimants of the Term Royalty Interest or the right to receive payment
of Term Royalty Proceeds appoint no more than five Persons in writing to
receive all payments of Term Royalty Proceeds on their behalf. Assignor may
thereafter conclusively rely upon the authority of those Persons to receive
payments of Term Royalty Proceeds and shall be under no further duty to
inquire into the authority or performance of such Persons.
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SECTION 11.09 RIGHTS OF MORTGAGEE. If Assignee executes a mortgage or
deed of trust covering all or part of the Term 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
11.09 shall not be deemed or construed to impose upon Assignor any
obligation or liability undertaken by the Assignee under such mortgage or
deed of trust or under the obligation secured thereby.
ARTICLE XII
AMI AREAS
SECTION 12.01 ADDITIONAL LEASES. In the event that Assignor acquires
any additional lease ("Additional Lease") other than the Subject Interests in
----------------
the AMI Areas prior to Assignor's satisfaction of Assignor's drilling
requirements in Section 2.01 of the Development Agreement, Assignor and Assignee
shall execute, acknowledge, and deliver an instrument that amends this
Conveyance so that such Additional Lease will be subject to the Term Royalty
Interest and be part of the Subject Interests and Subject Lands hereunder.
SECTION 12.02 NO DRAINAGE. At no time during the Term, shall Assignor
or any of its Affiliates drill, or permit any other person to drill, any Gas
well within one thousand two hundred fifty feet (1,250') of any ▇▇▇▇▇ where such
Gas well would produce oil or gas from the same formations or horizons as any
Well situated within said distance.
ARTICLE XIII
FORCE MAJEURE
SECTION 13.01 NONPERFORMANCE. (a) Except as provided in Section
13.01(b) below, 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 Term Royalty Proceeds to Assignee), to the extent such failure or
delay is caused by Force Majeure.
(b) Notwithstanding the provisions of Section
13.01(a) above, during the period from and after January 1, 2023 through the
remainder of the Term, should Assignor be prevented from complying with any of
its obligations, express or implied, under the terms of this Conveyance, by
reason of Force Majeure or any other reason, then while so prevented, Assignor's
obligation to comply therewith shall be suspended and Assignor shall not be
liable for damages for failure to so comply; provided, however, this Conveyance
shall be extended, only with respect to the Well(s) affected by such Force
Majeure, while and so long as Assignor is prevented by any such cause from
complying with such obligations, and the time while Assignor is so prevented
shall be added to the Term, only with respect to the Well(s) affected by such
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
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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) interruption and/or curtailment of transportation and/or
gathering;
(f) any Legal Requirement or the affected Party's compliance
therewith; or
(g) any other cause, whether similar or dissimilar to the causes
enumerated in (a) through (f) 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 commercially reasonable efforts to
remedy each Force Majeure and resume full performance under this Conveyance as
soon as reasonably practicable, except that the settlement of strikes, lockouts,
or other labor disputes shall be entirely within the discretion of Assignor.
ARTICLE XIV
NOTICE
SECTION 14.01 DEFINITION. "Notice" means any notice, advice, invoice,
------
demand, or other communication required or permitted by this Conveyance.
SECTION 14.02 WRITTEN NOTICE. Except as otherwise provided by this
Conveyance, each Notice shall be in writing.
SECTION 14.03 METHODS OF GIVING NOTICE. Notice may be given by any
reasonable means, including telecopier, hand delivery, overnight courier, and
United States mail.
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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. Insofar as permitted by otherwise
applicable Legal Requirements, this Conveyance shall be construed under and
governed by the laws of the State of West Virginia (excluding choice of law and
conflict of law rules); provided, however, that, with respect to any portion of
the Subject Interests located outside of the State of West Virginia, the laws of
the place in which such Subject Interests are located, shall apply to the
creation of the Term Royalty Interest.
SECTION 15.03 CONSTRUCTION OF CONVEYANCE. In construing this Conveyance,
the following principles shall be followed:
(a) no consideration shall be given to the captions of the
articles, sections, subsections, or clauses, which are inserted for convenience
in locating the provisions of this Conveyance and not as an aid in its
construction;
(b) no consideration shall be given to the fact or presumption
that one Party had a greater or lesser hand in drafting this Conveyance;
(c) the word "includes" and its syntactical variants mean
"includes, but is not limited to" and corresponding syntactical variant
expressions;
(d) a defined term has its defined meaning throughout this
Conveyance, regardless of whether it appears before or after the place in this
Conveyance where it is defined;
(e) the plural shall be deemed to include the singular, and vice
versa; 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
26
Conveyance and any exhibit, attachment, or schedule, the provisions of the main
body of this Conveyance shall prevail.
SECTION 15.04 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 Term Royalty Interest shall not limit Assignee's
right to recover damages with respect to such reduction under the warranty given
by Assignor in Section 1.04(a). In the event the Working Interest in any
Completed Development Well is proportionately reduced by reason of any such
failure or deficiency in title, the Adjusted Completed Development Well Value
for any such Well shall be recalculated using such proportionately reduced
Working Interest; provided however, that in instances where there is not
corresponding downward adjustment to the Net Revenue Interest, no such
adjustment shall be made.
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 Term 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, the 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.
(a) MULTIPLE COUNTERPARTS. Multiple counterparts of the
Conveyance have been recorded in the counties where the Subject Lands are
located. The counterparts are
27
identical except, to facilitate recordation, the counterpart recorded in each
county may contain property descriptions relating only to the Subject Lands
located in that county. A counterpart of the Conveyance containing all property
descriptions of Subject Lands will be filed for record in Kanawha County, West
Virginia.
(b) MULTIPLE COUNTIES. If any Subject Lands are located in more
than one county, the description of such Subject Lands may be included in any
one or more counterparts prepared for recordation in separate counties, but the
inclusion of the same property description in more than one counterpart of this
Conveyance shall not be construed as having effected any cumulative, multiple,
or overlapping interest in the Subject Lands in question.
SECTION 15.10 PRESENT AND ABSOLUTE CONVEYANCE. It is the express
intention of Assignor and Assignee that the conveyance of the Term Royalty
Interest under the terms hereof is, and shall be construed for all purposes as,
a present, fully-vested and absolute conveyance.
SECTION 15.11 OTHER AGREEMENTS. This Term Royalty Conveyance is being
executed pursuant to the terms and conditions of the Term Royalty Agreement and
in connection with the Development Agreement, and in the event of a conflict in
the terms and conditions of this Term Royalty Conveyance and the terms and
conditions of the Term Royalty Agreement , the terms and conditions of this
Conveyance, shall control. In the event of a conflict in the terms and
conditions of this Term Royalty Conveyance and the terms and conditions of the
Development Agreement, the terms and conditions of this Term Royalty Conveyance
shall control.
SECTION 15.12 SECTION 15.12 EXECUTION BY ECA. ECA joins in the
execution of this Conveyance for the sole and limited purpose of joining in the
warranty set forth in Section 1.04(a) but for no other purpose.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, each Party has caused this Conveyance to be executed in
its name and behalf and delivered on the date or dates stated in the
acknowledgment certificates appended to this Conveyance, to be effective as of
the Effective Time.
ATTEST: ENERGY CORPORATION OFAMERICA
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ATTEST: EASTERN AMERICAN ENERGY
CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ATTEST: BLACK STONE MINERALS COMPANY, L. P.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
29
THE STATE OF _____________ S
S
COUNTY OF ______________ S
On this, the ______ day of _________, 2005, before me ____________, a
Notary public, personally appeared ___________________________, as the
__________________ of Energy Corporation of America, a West Virginia
corporation, and executed the foregoing instrument on behalf of said
corporation.
In witness whereof, I hereunto set my hand and official seal.
[SEAL]
----------------------------------------
My Commission Expires:_________________
THE STATE OF _____________ S
S
COUNTY OF ______________ S
On this, the ______ day of _________, 2005, before me ___________________,
a Notary public, personally appeared ____________________, as the
___________________ of Eastern American Energy Corporation, a West Virginia
corporation, and executed the foregoing instrument on behalf of said
corporation.
In witness whereof, I hereunto set my hand and official seal.
[SEAL]
----------------------------------------
My Commission Expires:_________________
30
THE STATE OF _____________ S
S
COUNTY OF ______________ S
On this, the _____ day of _____________, 2005, before me
___________________, a Notary public, personally appeared
________________________, as the _______________________ of Black Stone Minerals
Company, L. P., a Delaware limited partnership, and executed the foregoing
instrument on behalf of said limited partnership.
In witness whereof, I hereunto set my hand and official seal.
[SEAL]
----------------------------------------
My Commission Expires:_________________
Prepared by:
▇▇▇▇▇ ▇. ▇▇▇▇, ESQUIRE
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
P. O. BOX 2107
CHARLESTON, WV 25328-2107
WV STATE BAR NO. 5552
----
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CERTIFICATE OF RESIDENCE
The ___________________, as Assignee hereunder, hereby certifies that its
precise address is:
_________________________
_________________________
_________________________
_________________________
Attention: _____________