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EXHIBIT 10.19
DEVELOPMENT AGREEMENT
INTRODUCTION
THIS
DEVELOPMENT AGREEMENT (this "Development Agreement") from
ENERGY
CORPORATION OF AMERICA, a West Virginia
corporation, with offices at 4643 South
Ulster Street, Suite 100, Denver, Colorado
80237-2867 ("Assignor"), to
________________________, a trust
corporation organized under the laws of the
State of _________, with offices
___________________________________________,
Attention: ________________, as trustee
(the "Trustee"), acting not in its
individual capacity but solely as trustee
of the Appalachian Gas Royalty Trust
(the "Trust") under that certain Amended
and Restated Trust Agreement dated as
of ______________ (the "Trust Agreement")
is delivered to be effective as of
7:00 a.m., Eastern Time, ___________, 2005
(the "Effective Time"). All
capitalized terms not otherwise defined
herein shall have the meanings ascribed
to such terms in Article I below.
Assignor
and the Trustee contemporaneously herewith, have entered into
each of the following conveyances (i) Term
Royalty Conveyance (West Virginia)
dated effective as of the Effective Time
("West Virginia Conveyance"), (ii) Term
Royalty Conveyance (Pennsylvania) dated
effective as of the Effective Time
("Pennsylvania Conveyance") and (iii) Term
Royalty Conveyance (Kentucky) dated
effective as of the Effective Time
("Kentucky Conveyance" and together with the
West Virginia Conveyance and the
Pennsylvania Conveyance collectively the
"Conveyances").
In
connection with the Conveyances Assignor has agreed to
undertake
certain obligations during the term of the
Conveyances with respect to the
Subject Interests and the Development
Wells.
ARTICLE I
DEFINITIONS
This
Article I defines certain capitalized words, terms, and phrases
used
in this Development Agreement. Certain
other capitalized words, terms, and
phrases used in this Development Agreement
are defined elsewhere in this
Development Agreement.
"Adjusted
Development Well Value" With respect to each Development Well,
the value obtained by multiplying for each
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 Development Well.
For example, if Assignor holds an
eighty-five percent (85%) Working Interest in
a Development Well, the computation would
be:
1 x .85 = .85
therefore, such Development Well would have
a .85 Adjusted Development Well
Value.
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"Additional Lease" is defined in Section 2.07.
"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.
"Annual
Drilling Target" that number of Development Wells where (i) the
cumulative total of all the Adjusted
Development Well Values for all Development
Wells drilled by or caused to be drilled by
Assignor during the first Annual
Period equals not less than 45, (ii) the
cumulative total of all the Adjusted
Development Well Values for all Development
Wells drilled during the first two
Annual Periods equals not less than 90,
(iii) the cumulative total of all the
Adjusted Development Well Values for all
Development Wells drilled during the
first three Annual periods equals not less
than 135 and (iv) the cumulative
total of all the Adjusted Development Well
Values for all Development Wells
drilled during the first four Annual
Periods equals not less than the Total
Drilling Target.
"Annual
Period" means the annual period commencing on April 1 each year
and ending on March 31 of the succeeding
year.
"Assignor"
is defined in the Introduction to this Development Agreement
and also includes all permitted successors
and assigns of Assignor.
"Deed of
Trust" is defined in Section 2.10.
"Development Agreement" is defined in the introductory paragraph of
this
Agreement.
"Development Well" means any Gas well drilled, within the meaning
of
Section 2.01(b), after the date of this
Development Agreement that is located on
the Subject Development Lands.
"Drilling
Obligation Completion Date" means _______________, 2009.
"Gas"
means natural gas and all other gaseous hydrocarbons, excluding
condensate, butane, and other liquid and
liquefiable components that are
actually removed from the Gas stream by
separation, processing, or other means.
Any oil and gas lease or other similar
instrument that covers Gas shall be
considered a "Gas lease" hereunder, even if
it also covers other substances.
"Party,"
when capitalized, refers to Assignor or Trustee. "Parties,"
when
capitalized, refers to Assignor and
Trustee.
"Person"
means any natural person, corporation, partnership, trust,
estate, or other entity, organization, or
association.
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"Reasonably Prudent Operator Standard" means the standard of
conduct of a
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 Royalty
Interest as a burden on such property.
"Royalty
Interest" means collectively, the Royalty Interest created
under
each of the Conveyances.
"Subject
Development Lands" means the lands subject to or covered by the
oil and gas leases described in Exhibit A
and included in the AMI Area, subject
to the exceptions, exclusions and
reservations set forth on Exhibit A, as such
exhibit may be modified pursuant to Section
2.07.
"Subject
Gas" means Gas in and under, and that may be produced, saved,
and
sold from, the Development Wells during the
Term.
"Subject
Interests" means Assignor's undivided interests in the Subject
Development Lands, as lessee under Gas
leases, as an owner of the Subject Gas
(or the right to extract such Gas), or
otherwise, by virtue of which undivided
interests Assignor has the right to conduct
exploration, drilling, development,
and Gas production operations on the
Subject Development Lands, or to cause such
operations to be conducted, or to
participate in such operations by paying and
bearing all or any part of the costs,
risks, and liabilities of such operations,
to drill, test, complete, equip, operate,
and produce Development Wells to
exploit the Gas. "Subject Interests"
includes all extensions and renewals of,
and all new 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 Development Wells; or (d) subject to
Section 1.04(c) of each of the
Conveyances, any after-acquired,
additional, or enlarged interests in the
Development Wells, Subject Development
Lands or Subject Gas, except those
reflected in Exhibit A or any Additional
Lease, extensions and renewals covered
by the preceding sentence. "Subject
Interests" may be owned or claimed by
Assignor by virtue of grants or
reservations in deeds, Gas leases, or other
instruments, or by virtue of operating
agreements, pooling or unitization
agreements or orders, or other kinds of
instruments, agreements, or documents,
legal or equitable, recorded or
unrecorded.
"Term"
means that period from the Effective Time through the date that
each of the Conveyances has terminated or
been released in accordance with its
terms.
"Total
Drilling Target" that number of Development Wells where the
cumulative total of all such Adjusted
Development Well Values for all
Development Wells drilled by or caused to
be drilled by Assignor equals 180.
"Transfer", including its syntactical variants, means any
assignment,
sale, transfer, conveyance, or disposition
of any property; provided, Transfer
as used herein does not include
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the granting of a security interest in
Assignor's interest in any property
including, the Subject Interests or the
Subject Development Lands.
"Trust" is
defined in the Introduction to this Agreement.
"Trustee"
is defined in the Introduction to this Agreement and also
includes all successor and substitute
trustees under the Trust Agreement.
"Working
Interest" means with respect to any Development Well, the
interest in and to such Development Well
that is burdened
