Exhibit 10.1
EXECUTION VERSION
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
November 5, 2010
among
PETROLEUM DEVELOPMENT CORPORATION,
as Borrower
CERTAIN SUBSIDIARIES OF BORROWER,
as Guarantors
The Lenders Party Hereto
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
and
J.P. MORGAN SECURITIES LLC,
as Sole Bookrunner and Co-Lead Arranger
and
BNP PARIBAS,
as Syndication Agent and Co-Lead Arranger
$600,000,000 Senior Secured Credit Facility
(J.P.MORGAN LOGO) [c08235p0823501.jpg]

 

 

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TABLE OF CONTENTS

         
Article I Definitions
    1  
Section 1.01. Defined Terms
    1  
Section 1.02. Types of Loans and Borrowings
    28  
Section 1.03. Terms Generally
    28  
Section 1.04. Accounting Terms; GAAP
    28  
Section 1.05. Oil and Gas Definitions
    29  
Section 1.06. Time of Day
    29  
Article II The Credits
    29  
Section 2.01. Commitments
    29  
Section 2.02. Termination and Reduction of the Aggregate Commitment
    29  
Section 2.03. Additional Lenders; Increases in the Aggregate Commitment
    30  
Section 2.04. Loans and Borrowings
    31  
Section 2.05. Requests for Borrowings
    31  
Section 2.06. Letters of Credit
    32  
Section 2.07. Funding of Borrowings
    36  
Section 2.08. Interest Elections
    37  
Section 2.09. Repayment of Loans; Evidence of Debt
    38  
Section 2.10. Optional Prepayment of Loans
    39  
Section 2.11. Mandatory Prepayment of Loans
    39  
Section 2.12. Fees
    41  
Section 2.13. Interest
    42  
Section 2.14. Alternate Rate of Interest
    42  
Section 2.15. Increased Costs
    43  
Section 2.16. Break Funding Payments
    44  
Section 2.17. Taxes
    44  
Section 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs
    46  
Section 2.19. Mitigation Obligations; Replacement of Lenders
    47  
Section 2.20. Defaulting Lenders
    49  

 

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Article III Borrowing Base
    50  
Section 3.01. Reserve Report; Proposed Borrowing Base
    50  
Section 3.02. Scheduled Redeterminations of the Borrowing Base; Procedures and
Standards
    51  
Section 3.03. Special Redeterminations
    52  
Section 3.04. Notice of Redetermination
    52  
Section 3.05. Additional Reductions in Borrowing Base
    52  
Article IV Representations and Warranties
    52  
Section 4.01. Organization; Powers
    52  
Section 4.02. Authorization; Enforceability
    53  
Section 4.03. Governmental Approvals; No Conflicts
    53  
Section 4.04. Financial Condition; No Material Adverse Change
    53  
Section 4.05. Properties
    53  
Section 4.06. Litigation and Environmental Matters
    54  
Section 4.07. Compliance with Laws and Agreements
    54  
Section 4.08. Investment Company Status
    54  
Section 4.09. Taxes
    55  
Section 4.10. ERISA
    55  
Section 4.11. Disclosure
    55  
Section 4.12. Labor Matters
    55  
Section 4.13. Capitalization
    55  
Section 4.14. Margin Stock
    55  
Section 4.15. Oil and Gas Interests
    56  
Section 4.16. Insurance
    57  
Section 4.17. Solvency
    57  
Article V Conditions
    57  
Section 5.01. Effective Date
    57  
Section 5.02. Each Credit Event
    60  
Article VI Affirmative Covenants
    60  
Section 6.01. Financial Statements; Other Information
    60  
Section 6.02. Notices of Material Events
    62  
Section 6.03. Existence; Conduct of Business
    63  
Section 6.04. Payment of Obligations
    63  
Section 6.05. Maintenance of Properties; Insurance
    64  
Section 6.06. Books and Records; Inspection Rights
    64  
Section 6.07. Compliance with Laws
    64  
Section 6.08. Use of Proceeds and Letters of Credit
    64  

 

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Section 6.09. Mortgages and Other Security
    65  
Section 6.10. Title Data
    65  
Section 6.11. Swap Agreements
    66  
Section 6.12. Operation of Oil and Gas Interests
    66  
Section 6.13. Restricted Subsidiaries
    66  
Section 6.14. Pledged Equity Interests
    67  
Article VII Negative Covenants
    67  
Section 7.01. Indebtedness
    67  
Section 7.02. Liens
    69  
Section 7.03. Fundamental Changes
    70  
Section 7.04. Investments, Loans, Advances, Guarantees and Acquisitions
    72  
Section 7.05. Swap Agreements
    74  
Section 7.06. Restricted Payments
    75  
Section 7.07. Transactions with Affiliates
    75  
Section 7.08. Restrictive Agreements
    75  
Section 7.09. Disqualified Stock
    76  
Section 7.10. Amendments to Organizational Documents
    76  
Section 7.11. Financial Covenants
    76  
Section 7.12. Sale and Leaseback Transactions and other Off-Balance Sheet
Liabilities
    77  
Section 7.13. Senior Notes Restrictions
    77  
Section 7.14. Marcellus JV Documents
    77  
Article VIII Guarantee of Obligations
    78  
Section 8.01. Guarantee of Payment
    78  
Section 8.02. Guarantee Absolute
    78  
Section 8.03. Guarantee Irrevocable
    78  
Section 8.04. Reinstatement
    78  
Section 8.05. Subrogation
    79  
Section 8.06. Subordination
    79  
Section 8.07. Payments Generally
    79  
Section 8.08. Setoff
    80  
Section 8.09. Formalities
    80  
Section 8.10. Limitations on Guarantee
    80  
Article IX Events of Default
    80  
Article X The Administrative Agent
    83  

 

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Article XI Miscellaneous
    85  
Section 11.01. Notices
    85  
Section 11.02. Waivers; Amendments
    86  
Section 11.03. Expenses; Indemnity; Damage Waiver
    87  
Section 11.04. Successors and Assigns
    89  
Section 11.05. Survival
    92  
Section 11.06. Counterparts; Integration; Effectiveness
    92  
Section 11.07. Severability
    93  
Section 11.08. Right of Setoff
    93  
Section 11.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS
    93  
Section 11.10. WAIVER OF JURY TRIAL
    94  
Section 11.11. Headings
    94  
Section 11.12. Confidentiality
    94  
Section 11.13. Interest Rate Limitation
    95  
Section 11.14. USA PATRIOT Act
    95  
Section 11.15. Original Credit Agreement
    95  
Section 11.16. Reaffirmation and Grant of Security Interest
    96  
Section 11.17. Reallocation of Commitments and Loans
    96  

 

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EXHIBITS:

     
Exhibit A — Form of Assignment and Assumption
   
Exhibit B — Form of Opinion of Counsel for the Borrower
   
Exhibit C — Form of Counterpart Agreement
   
Exhibit D — Form of Interest Election Request
   
Exhibit E — Form of Note
   
Exhibit F — Form of Lender Certificate
   

SCHEDULES:

     
Schedule 1.01 — Existing Letters of Credit
   
Schedule 2.01 — Applicable Percentages and Commitments
   
Schedule 4.06 — Disclosed Matters
   
Schedule 4.13 — Capitalization
   
Schedule 7.01 — Existing Indebtedness
   
Schedule 7.02 — Existing Liens
   
Schedule 7.04 — Existing Investments
   
Schedule 7.07 — Transactions with Affiliates
   
Schedule 7.08 — Existing Restrictions
   

 

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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of November 5, 2010,
among PETROLEUM DEVELOPMENT CORPORATION, a Nevada corporation, as Borrower,
CERTAIN SUBSIDIARIES OF BORROWER, as Guarantors, the LENDERS party hereto,
JPMORGAN CHASE BANK, N.A., as Administrative Agent and BNP PARIBAS, as
Syndication Agent.
RECITALS
WHEREAS, the Borrower, certain Subsidiaries of the Borrower, certain of the
Lenders and JPMorgan Chase Bank, N.A., as administrative agent, have entered
into that certain Amended and Restated Credit Agreement, dated as of November 4,
2005 (as amended, supplemented or otherwise modified from time to time prior to
the Effective Date, the “Original Credit Agreement”), pursuant to which the
lenders party thereto agreed to provide the Borrower with a revolving credit
facility in the form and upon the terms and conditions set forth therein;
WHEREAS, the Borrower has requested that the Administrative Agent and the
Lenders amend and restate the Original Credit Agreement in its entirety, and the
Administrative Agent and the Lenders have agreed to do so upon the terms and
conditions set forth herein; and
WHEREAS, it is the intent of the parties hereto that this Agreement shall not
constitute a novation of the obligations and liabilities existing under the
Original Credit Agreement or constitute repayment of any such obligations and
liabilities and that this Agreement shall amend and restate the Original Credit
Agreement in its entirety.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto hereby agree that the Original Credit
Agreement is hereby amended and restated in its entirety to read as set forth
herein:
Article I
Definitions
Section 1.01. Defined Terms. As used in this Agreement, the following terms have
the meanings specified below:
“ABR”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.
“Acquisition” means, the acquisition by the Borrower or any Restricted
Subsidiary, whether by purchase, merger (and, in the case of a merger with any
such Person, with such Person being the surviving corporation) or otherwise, of
all or substantially all of the Equity Interest of, or the business, property or
fixed assets of or business line or unit or a division of, any other Person
primarily engaged in the business of producing oil or natural gas or the
acquisition by the Borrower or any Restricted Subsidiary of property or assets
consisting of Oil and Gas Interests.

 

PDC CREDIT AGREEMENT – Page 1

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“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
“Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity as
contractual representative of the Lenders hereunder pursuant to Article X and
not in its individual capacity as a Lender, and any successor agent appointed
pursuant to Article X.
“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.
“Advance Payment Contract” means any contract whereby any Credit Party either
(a) receives or becomes entitled to receive (either directly or indirectly) any
payment (an “Advance Payment”) to be applied toward payment of the purchase
price of Hydrocarbons produced or to be produced from Oil and Gas Interests
owned by any Credit Party and which Advance Payment is, or is to be, paid in
advance of actual delivery of such production to or for the account of the
purchaser regardless of such production, or (b) grants an option or right of
refusal to the purchaser to take delivery of such production in lieu of payment,
and, in either of the foregoing instances, the Advance Payment is, or is to be,
applied as payment in full for such production when sold and delivered or is, or
is to be, applied as payment for a portion only of the purchase price thereof or
of a percentage or share of such production; provided that inclusion of the
standard “take or pay” provision in any gas sales or purchase contract or any
other similar contract shall not, in and of itself, constitute such contract as
an Advance Payment Contract for the purposes hereof.
“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
“Aggregate Commitment” means, at any time, the sum of the Commitments of all of
the Lenders at such time, as such amount may be reduced or increased from time
to time pursuant to Section 2.02 or Section 2.03; provided that such amount
shall not at any time exceed the lesser of (a) the Maximum Facility Amount and
(b) the Borrowing Base then in effect. If at any time the Borrowing Base is
reduced below the Aggregate Commitment, the Aggregate Commitment shall be
reduced automatically to the amount of the Borrowing Base in effect at such
time. As of the Effective Date, the Aggregate Commitment is $350,000,000.
“Aggregate Commitment Usage” means, as of any date and for all purposes, the
quotient, expressed as a percentage, of (a) the Aggregate Credit Exposure as of
such date, divided by (b) the Aggregate Commitment as of such date.
“Aggregate Credit Exposure” means, as of any date of determination, the sum of
the Credit Exposure of all of the Lenders as of such date.

 

PDC CREDIT AGREEMENT – Page 2

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“Agreement” means this Credit Agreement, dated as of November 5, 2010, as it may
be amended, amended and restated, supplemented or otherwise modified from time
to time.
“Allocated Partnership Volumes” means, with respect to each Sponsored
Partnership at any time, the volumes of Crude Oil and Natural Gas under any Swap
Agreement then in effect allocated by Borrower to the Other Attributed
Interests.
“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective
Rate in effect on such day plus one-half of one percent ( 1/2 of 1%) and (c) the
LMIR on such day plus 1.00%. Any change in the Alternate Base Rate due to a
change in the Prime Rate, the Federal Funds Effective Rate or the LMIR shall be
effective from and including the effective date of such change in the Prime
Rate, the Federal Funds Effective Rate or the LMIR, respectively.
“Applicable Percentage” means, with respect to any Lender at any time, the
percentage of the Aggregate Commitment represented by such Lender’s Commitment
at such time; provided that in the case of Section 2.20 only, when a Defaulting
Lender exists, “Applicable Percentage” shall mean the percentage of the
Aggregate Commitment (disregarding any Defaulting Lender’s Commitment)
represented by such Lender’s Commitment. The initial amount of each Lender’s
Applicable Percentage is as set forth on Schedule 2.01. If the Aggregate
Commitment has terminated or expired, the Applicable Percentage of any Lender
shall be determined based upon the Aggregate Commitment most recently in effect,
giving effect to any assignments and to any Lender’s status as a Defaulting
Lender at the time of determination.
“Applicable Rate” means, with respect to any ABR Loan or Eurodollar Loan, or
with respect to the Unused Commitment Fees payable hereunder, as the case may
be, the applicable rate per annum set forth below under the caption “ABR
Spread”, “Eurodollar Spread” or “Unused Commitment Fee Rate”, as the case may
be, based upon the Borrowing Base Usage applicable on such date:

                                              Unused       ABR     Eurodollar  
  Commitment Fee   Borrowing Base Usage:   Spread     Spread     Rate  
Equal to or greater than 90%
    2.000 %     3.000 %     0.500 %
Equal to or greater than 75% and less than 90%
    1.750 %     2.750 %     0.500 %
Equal to or greater than 50% and less than 75%
    1.500 %     2.500 %     0.500 %
Equal to or greater than 25% and less than 50%
    1.250 %     2.250 %     0.500 %
Less than 25%
    1.000 %     2.000 %     0.500 %

Each change in the Applicable Rate shall apply during the period commencing on
the effective date of such change and ending on the date immediately preceding
the effective date of the next change.

 

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“Approved Counterparty” means, at any time and from time to time, (a) any Person
engaged in the business of writing Swap Agreements for commodity, interest rate
or currency risk that is acceptable to the Administrative Agent and has (or the
credit support provider of such Person has), at the time Borrower or any
Restricted Subsidiary enters into a Swap Agreement with such Person, a long term
senior unsecured debt credit rating of BBB+ or better from S&P or Baal or better
from Moody’s and (b) any Lender Counterparty.
“Approved Fund” has the meaning assigned to such term in Section 11.04.
“Approved Petroleum Engineer” means Ryder Scott or any other reputable firm of
independent petroleum engineers selected by the Borrower and reasonably
acceptable to the Administrative Agent and the Required Lenders.
“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee, and accepted by the Administrative Agent, in
the form of Exhibit A or any other form approved by the Administrative Agent.
“Attributed Interests” means any Oil and Gas Interests indirectly owned by any
Credit Party through the ownership of Partnership Interests and attributed to
such Credit Party in proportion to such Credit Party’s ownership of such
Partnership Interests; provided such Partnership Interests are subject to a
first priority security interest in favor of the Administrative Agents, for the
benefit of the Secured Parties, as required under Section 6.14.
“Availability Period” means the period from and including the Effective Date to
but excluding the earlier of the Maturity Date and the date of termination of
the Aggregate Commitment.
“Bankruptcy Event” means, with respect to any Person, such Person becomes the
subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee, administrator, custodian, assignee for the benefit of
creditors or similar Person charged with the reorganization or liquidation of
its business appointed for it, or, in the good faith determination of the
Administrative Agent, has taken any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any such proceeding or appointment,
provided that a Bankruptcy Event shall not result solely by virtue of any
ownership interest, or the acquisition of any ownership interest, in such Person
by a Governmental Authority or instrumentality thereof, provided, further, that
such ownership interest does not result in or provide such Person with immunity
from the jurisdiction of courts within the United States or from the enforcement
of judgments or writs of attachment on its assets or permit such Person (or such
Governmental Authority or instrumentality) to reject, repudiate, disavow or
disaffirm any contracts or agreements made by such Person.
“Board” means the Board of Governors of the Federal Reserve System of the United
States of America.
“Borrower” means Petroleum Development Corporation, a Nevada corporation, and
its successors and permitted assigns.

 

PDC CREDIT AGREEMENT – Page 4

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“Borrowing” means Loans of the same Type, made, converted or continued on the
same date and, in the case of Eurodollar Loans, as to which a single Interest
Period is in effect.
“Borrowing Base” means, at any time an amount equal to the amount determined in
accordance with Section 3.01, as the same may be redetermined, adjusted or
reduced from time to time pursuant to Article III; provided that the Attributed
Interests shall not constitute more than twenty-five percent (25%) of the
Engineered Value included in the Borrowing Base.
“Borrowing Base Deficiency” means, as of any date, the amount, if any, by which
the Aggregate Credit Exposure on such date exceeds the Borrowing Base in effect
on such date; provided, that, for purposes of determining the existence and
amount of any Borrowing Base Deficiency, obligations under any Letter of Credit
will not be deemed to be outstanding to the extent such obligations are secured
by cash in the manner contemplated by Section 2.06(j).
“Borrowing Base Properties” means all Direct Interests and Attributed Interests
of the Borrower and the Restricted Subsidiaries evaluated by the Lenders for
purposes of establishing the Borrowing Base.
“Borrowing Base Usage” means, as of any date and for all purposes, the quotient,
expressed as a percentage, of (i) the Aggregate Credit Exposure as of such date,
divided by (ii) the Borrowing Base as of such date.
“Borrowing Request” means a request by the Borrower for a Borrowing in
accordance with Section 2.05.
“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in Chicago, Illinois or New York, New York are authorized
or required by law to remain closed; provided that, when used in connection with
a Eurodollar Loan or to determine LMIR, the term “Business Day” shall also
exclude any day on which banks are not open for dealings in dollar deposits in
the London interbank market.
“Capital Lease Obligations” of any Person means the obligations of such Person
to pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.
“Cash Collateral Account” means a deposit account with, and in the name of, the
Administrative Agent, for the benefit of the Lenders, established and maintained
for the deposit of cash collateral required under or in connection with this
Agreement and the other Loan Documents.
“Cash Management Obligations” means, with respect to any Credit Party, any
obligations of such Credit Party owed to any Lender (or any Affiliate of any
Lender) in respect of treasury management arrangements, depositary or other cash
management services, including commercial credit card and merchant card
services.

 

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“Change in Law” means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender or the Issuing Bank (or,
for purposes of Section 2.15(b), by any lending office of such Lender or by such
Lender’s or the Issuing Bank’s holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
“Change of Control” means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), of Equity
Interests representing more than 35% of the aggregate ordinary voting power
represented by the issued and outstanding Equity Interests of the Borrower;
(b) occupation of a majority of the seats (other than vacant seats) on the board
of directors of the Borrower by Persons who were neither (i) nominated by the
board of directors of the Borrower nor (ii) appointed by directors so nominated;
(c) the acquisition of direct or indirect Control of the Borrower by any Person
or group; or (d) the occurrence of a “Change of Control” as such term is defined
in the Indenture.
“Charges” has the meaning assigned to such term in Section 11.13.
“Collateral” means all assets, whether now owned or hereafter acquired by any
Borrower or any other Credit Party, in which a Lien is granted or purported to
be granted to any Secured Party as security for any Obligation.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Co-Documentation Agent” mean, so long as each such Person is a Lender, each
Person identified as such on Schedule 2.01.
“Co-Lead Arranger” means each of J.P. Morgan Securities LLC and BNP Paribas, in
its respective capacity as a co-lead arranger.
“Commitment” means, with respect to each Lender, the commitment of such Lender
to make Loans and to acquire participations in Letters of Credit hereunder, in
an aggregate principal amount at any one time outstanding not to exceed the
amount set forth opposite such Lender’s name on Schedule 2.01, or in the
Assignment and Assumption or Lender Certificate pursuant to which such Lender
shall have assumed or agreed to provide its Commitment, as applicable, as such
commitment may be (a) reduced from time to time pursuant to Section 2.02,
(b) increased from time to time as a result of such Lender delivering a Lender
Certificate pursuant to Section 2.03, and (c) reduced or increased from time to
time pursuant to assignments by or to such Lender pursuant to Section 11.04;
provided that any Lender’s Commitment shall not at any time exceed the lesser of
(a) such Lender’s Applicable Percentage of the Maximum Facility Amount and
(b) such Lender’s Applicable Percentage of the Borrowing Base then in effect. If
at any time such Lender’s Applicable Percentage of the Borrowing Base then in
effect is less than its Commitment, such Lender’s Commitment shall be reduced
automatically to the amount of such Lender’s Applicable Percentage of the
Borrowing Base then in effect.

 

PDC CREDIT AGREEMENT – Page 6

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“Consolidated Current Assets” means, as of any date of determination, the total
of (a) the consolidated current assets of the Borrower and the Restricted
Subsidiaries determined in accordance with GAAP as of such date and calculated
on a combined basis, plus, all Unused Commitments as of such date, less (b) any
non-cash assets required to be included in consolidated current assets of the
Borrower and the Restricted Subsidiaries as a result of the application of FASB
Statement 133 as of such date, less (c) non-cash assets consisting of amounts
due from Sponsored Partnerships arising from non-cash obligations excluded from
Consolidated Current Liabilities pursuant to clause (d) of the definition
thereof.
“Consolidated Current Liabilities” means, as of any date of determination, the
total of (a) consolidated current liabilities of the Borrower and the Restricted
Subsidiaries, as determined in accordance with GAAP as of such date and
calculated on a combined basis, less (b) current maturities of the Loans, less
(c) any non-cash obligations required to be included in consolidated current
liabilities of the Borrower and the Restricted Subsidiaries as a result of the
application of FASB Statement 133 as of such date, less (d) non-cash obligations
consisting of amounts due to Sponsored Partnerships arising from non-cash assets
excluded from Consolidated Current Assets pursuant to clause (c) of the
definition thereof.
“Consolidated Current Ratio” means, as of any date of determination, the ratio
of Consolidated Current Assets to Consolidated Current Liabilities as of such
date.
“Consolidated EBITDAX” means, with respect to the Borrower and its Restricted
Subsidiaries for any period, Consolidated Net Income for such period; plus
without duplication and to the extent deducted in the calculation of
Consolidated Net Income for such period, the sum of (a) income or franchise
Taxes paid or accrued; (b) Consolidated Net Interest Expense; (c) amortization,
depletion and depreciation expense; (d) any non-cash losses or charges on any
Swap Agreement resulting from the requirements of FASB Statement 133 for that
period; (e) oil and gas exploration expenses (including all drilling,
completion, geological and geophysical costs) for such period; (f) losses from
Dispositions of assets (other than Hydrocarbons produced in the ordinary course
of business) and other extraordinary or non-recurring losses; and (g) other
non-cash charges (excluding accruals for cash expenses made in the ordinary
course of business); minus, to the extent included in the calculation of
Consolidated Net Income, (h) the sum of (i) any non-cash gains on any Swap
Agreements resulting from the requirements of FASB Statement 133 for that
period; (ii) extraordinary or non-recurring gains (including the Marcellus JV
Withdrawal); (iii) gains from Dispositions of assets (other than Hydrocarbons
produced in the ordinary course of business); and (iv) other non-cash gains;
provided that, with respect to the determination of Borrower’s compliance with
the Consolidated Leverage Ratio set forth in Section 7.11(b) for any period,
Consolidated EBITDAX shall be adjusted to give effect, on a pro forma basis and
consistent with GAAP, to any Acquisitions or Dispositions made during such
period as if such Acquisition or Disposition, as the case may be, was made at
the beginning of such period.
“Consolidated Funded Indebtedness” means, as of any date, without duplication,
Indebtedness of the Borrower and its Restricted Subsidiaries of the type
described in clauses (a), (b), (c), (d), (e), (f), (g) or (h) of the definition
of Indebtedness.
“Consolidated Leverage Ratio” has the meaning assigned to such term in Section
7.11(b).

 

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“Consolidated Net Income” means for any period, the consolidated net income (or
loss) of the Borrower and its Restricted Subsidiaries, as applicable, determined
on a consolidated basis in accordance with GAAP; provided that there shall be
excluded (a) the income (or loss) of any Person accrued prior to the date it
becomes a Restricted Subsidiary of the Borrower, or is merged into or
consolidated with the Borrower or any of its Restricted Subsidiaries, as
applicable, (b) the undistributed earnings of any Restricted Subsidiary of the
Borrower, to the extent that the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary is not at the time permitted by the
terms of any contractual obligation (other than under any Loan Document) or by
any law applicable to such Restricted Subsidiary and (c) the income (or loss) of
any Person in which any other Person (other than the Borrower or any of its
Restricted Subsidiaries) has an Equity Interest, except to the extent of the
amount of dividends or other distributions actually paid in cash to the Borrower
or any of its Restricted Subsidiaries during such period.
“Consolidated Net Interest Expense” means, for any period, the sum of aggregate
interest expense and capitalized interest of the Borrower and the Restricted
Subsidiaries determined on a consolidated basis for such period in accordance
with GAAP.
“Consolidated Subsidiaries” means, for any Person, any subsidiary or other
entity the accounts of which would be consolidated with those of such Person in
its consolidated financial statements in accordance with GAAP.
“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.
“Counterpart Agreement” means a Counterpart Agreement substantially in the form
of Exhibit C delivered by a Guarantor pursuant to Section 6.13.
“Credit Exposure” means, with respect to any Lender at any time, the sum of the
outstanding principal amount of such Lender’s Loans and its LC Exposure at such
time.
“Credit Parties” means collectively, Borrower, and each Guarantor and each
individually, a “Credit Party”.
“Crude Oil” means all crude oil and condensate.
“Default” means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.
“Defaulting Lender” means any Lender that (a) has failed, within two
(2) Business Days of the date required to be funded or paid, to (i) fund any
portion of its Loans, (ii) fund any portion of its participations in Letters of
Credit or (iii) pay over to the Administrative Agent, the Issuing Bank or any
Lender any other amount required to be paid by it hereunder, unless, in the case
of clauses (i) and (iii) above (as to clause (iii) as a result of a good faith
dispute only), such Lender notifies the Administrative Agent in writing that
such failure is the result of such Lender’s good faith determination that a
condition precedent to funding (specifically

 

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identified and including the particular default, if any) has not been satisfied,
(b) has notified the Borrower, the Administrative Agent, the Issuing Bank or any
Lender in writing, or has made a public statement to the effect, that it does
not intend or expect to comply with any of its funding obligations under this
Agreement (unless such writing or public statement indicates that such position
is based on such Lender’s good faith determination that a condition precedent
(specifically identified and including the particular default, if any) to
funding a loan under this Agreement cannot be satisfied) or generally under
other agreements in which it commits to extend credit, (c) has failed, within
three (3) Business Days after request by the Administrative Agent or the Issuing
Bank, acting in good faith, to provide a certification in writing from an
authorized officer of such Lender that it will comply with its obligations to
fund prospective Loans and participations in then outstanding Letters of Credit
under this Agreement, provided that such Lender shall cease to be a Defaulting
Lender pursuant to this clause (c) upon receipt by the Administrative Agent or
the Issuing Bank of such certification in form and substance satisfactory to it
and the Administrative Agent, or (d) has become the subject of a Bankruptcy
Event.
“Direct Interests” means any Oil and Gas Interests directly owned by any Credit
Party.
“Disclosed Matters” means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 4.06.
“Disposition” or “Dispose” means the sale, transfer, license, lease, exchange or
other disposition (including any sale and leaseback transaction) of any property
by any Person, including any sale, assignment, transfer or other disposal, with
or without recourse, of any notes or accounts receivable or any rights and
claims associated therewith.
“Disqualified Stock” means any Equity Interest which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the sole option of the holder thereof, in whole or in part, on or prior to
the Maturity Date.
“Dollars” or “$” refers to lawful money of the United States of America.
“Domestic Subsidiary” means, with respect to any Person, a subsidiary of such
Person that is incorporated or formed under the laws of the United States of
America, any state thereof or the District of Columbia.
“Effective Date” means the date on which the conditions specified in
Section 5.01 are satisfied (or waived in accordance with Section 11.02).
“Eligible Assignee” means any Person that qualifies as an assignee pursuant to
Section 11.04(b)(i); provided that, notwithstanding the foregoing, “Eligible
Assignee” shall not include the Borrower or any of the Borrower’s Affiliates or
Subsidiaries.
“Engineered Value” means, the value attributed to the Borrowing Base Properties
for purposes of the most recent Redetermination of the Borrowing Base pursuant
to Article III (or for purposes of determining the Initial Borrowing Base in the
event no such Redetermination has occurred), based upon the discounted present
value of the estimated net cash flow to be realized from the production of
Hydrocarbons from the Direct Interests and the Attributed Interests as set forth
in the Reserve Report.

 

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“Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, or the
management, release or threatened release of any Hazardous Material.
“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of any Credit Party directly or indirectly resulting
from or based upon (a) violation of any Environmental Law, (b) the generation,
use, handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.
“Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
equity interest.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
“ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with any Credit Party, is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by any Credit Party or any of its ERISA Affiliates of
any liability under Title IV of ERISA with respect to the termination of any
Plan; (e) the receipt by any Credit Party or any ERISA Affiliate from the PBGC
or a plan administrator of any notice relating to an intention to terminate any
Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence
by any Credit Party or any of its ERISA Affiliates of any liability with respect
to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or
(g) the receipt by any Credit Party or any ERISA Affiliate of any notice, or the
receipt by any Multiemployer Plan from any Credit Party or any ERISA Affiliate
of any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA.

 

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“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Adjusted LIBO Rate.
“Event of Default” has the meaning assigned to such term in Article IX.
“Excluded Hedges” means, collectively, Swap Agreements that (a) are basis
differential only swaps for volumes of Natural Gas included under other Swap
Agreements permitted by Section 7.05(a), (b) are a hedge of volumes of Crude Oil
or Natural Gas by means of a price “floor” for which there exists no deferred
obligation to pay the related premium or other purchase price or the only
deferred obligation is to either pay the premium or other purchase price on each
settlement date so long as such settlement date occurs at least monthly, or pay
the financing for such premium or other purchase price, or (c) for purposes of
determining compliance with clauses (A)(ii) and (B)(ii) of Section 7.05(a) only,
are volumes of Crude Oil and Natural Gas included in Allocated Partnership
Volumes.
“Excluded Taxes” means, with respect to the Administrative Agent, any Lender,
the Issuing Bank or any other recipient of any payment to be made by or on
account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.19(b)), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement (or designates a new lending office) or is attributable to
such Foreign Lender’s failure to comply with Section 2.17(e), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 2.17(a).
“Existing Letters of Credit” means the letters of credit issued under the
Original Credit Agreement and set forth on the attached Schedule 1.01.
“Existing Swap Agreements” means any Swap Agreements entered into between any
Credit Party and any Lender Counterparty (including any Lender Counterparty
under and as defined in the Original Credit Agreement) prior to the Effective
Date and in effect on the Effective Date.
“FASB” means Financial Accounting Standards Board.

 

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“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.
“Financial Officer” means the chief financial officer, principal accounting
officer, treasurer or controller of any Credit Party. Any document delivered
hereunder that is signed by a Financial Officer of a Credit Party shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Credit Party and such
Financial Officer shall be conclusively presumed to have acted on behalf of such
Credit Party.
“Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which any Credit Party is located. For purposes
of this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
“GAAP” means generally accepted accounting principles in the United States of
America.
“Gas Balancing Agreement” means any agreement or arrangement whereby the
Borrower or any Restricted Subsidiary, or any other party having an interest in
any Hydrocarbons to be produced from Oil and Gas Interests in which the Borrower
or any Restricted Subsidiary owns an interest, has a right to take more than its
proportionate share of production therefrom.
“Governmental Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity properly exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government.
“Guarantee” of or by any Person (in this definition, the “guarantor”) means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof,
(c) to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.

 

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“Guaranteed Liabilities” has the meaning assigned to such term in Section 8.01.
“Guarantor” means Borrower (with respect to the Obligations of the other Credit
Parties) and each Restricted Subsidiary that is a party hereto or hereafter
executes and delivers to the Administrative Agent and the Lenders, a Counterpart
Agreement pursuant to Section 6.13 or otherwise.
“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.
“Hedge Modification” means the amendment, modification, cancellation,
monetization, sale, transfer, assignment, early termination or other disposition
of any Swap Agreement (including any Existing Swap Agreement) by any Credit
Party or Sponsored Partnership for Crude Oil or Natural Gas.
“Hydrocarbons” means all Crude Oil and Natural Gas produced from or attributable
to the Oil and Gas Interests of the Credit Parties.
“Indebtedness” of any Person means, without duplication, (a) all obligations of
such Person for borrowed money or with respect to deposits or advances of any
kind, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person upon which interest
charges are customarily paid, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (e) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding accounts payable
incurred in the ordinary course of business that are not past due), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person,
(i) all obligations, contingent or otherwise, of such Person as an account party
in respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers’ acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person’s ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
“Indemnified Taxes” means Taxes other than Excluded Taxes.
“Indemnitee” has the meaning assigned to such term in Section 11.03.
“Indenture” means (a) the Original Senior Notes Indenture and (b) any indenture
by and among any Credit Party, as issuer, and a trustee, pursuant to which any
Senior Notes are issued, as the same may be amended, restated, supplemented or
otherwise modified from time to time to the extent permitted under this
Agreement.

 

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“Information” has the meaning assigned to such term in Section 11.12.
“Initial Borrowing Base” has the meaning assigned to such term in Section 3.01.
“Interest Election Request” means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.08.
“Interest Payment Date” means (a) with respect to any ABR Loan, the last day of
each calendar month, and (b) with respect to any Eurodollar Loan, the last day
of the Interest Period applicable to the Borrowing of which such Loan is a part
and, in the case of a Eurodollar Borrowing with an Interest Period of more than
three months’ duration, each day prior to the last day of such Interest Period
that occurs at intervals of three months’ duration after the first day of such
Interest Period.
“Interest Period” means with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect; provided, that (i) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, in the case of a Eurodollar
Borrowing only, such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day and (ii) any Interest Period pertaining to a Eurodollar
Borrowing that commences on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the last calendar
month of such Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period. For purposes hereof, the date of a
Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
“Issuing Bank” means JPMorgan Chase Bank, N.A., in its capacity as the issuer of
Letters of Credit hereunder, and its successors in such capacity as provided in
Section 2.06(i). The Issuing Bank may, in its discretion, arrange for one or
more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which
case the term “Issuing Bank” shall include any such Affiliate with respect to
Letters of Credit issued by such Affiliate.
“LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter
of Credit.
“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of
all outstanding Letters of Credit at such time plus (b) the aggregate amount of
all LC Disbursements that have not yet been reimbursed by or on behalf of the
Borrower at such time. The LC Exposure of any Lender at any time shall be its
Applicable Percentage of the total LC Exposure at such time.
“Lender Certificate” has the meaning assigned to such term in Section 2.03.
“Lender Counterparty” means any Lender or any Affiliate of a Lender counterparty
to a Swap Agreement with any Credit Party.

 

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“Lender Hedging Obligations” means all obligations arising from time to time
under Swap Agreements entered into from time to time between any Credit Party
and a Lender Counterparty (including any such obligations under any Existing
Swap Agreements); provided that if such Lender Counterparty ceases to be a
Lender hereunder or an Affiliate of a Lender hereunder, Lender Hedging
Obligations shall only include such obligations to the extent arising from
transactions entered into at the time such Lender Counterparty was a Lender
hereunder or an Affiliate of a Lender hereunder pursuant to any Swap Agreement
or any Existing Swap Agreement.
“Lenders” means the Persons listed on Schedule 2.01 and any other Person that
shall have become a party hereto pursuant to an Assignment and Assumption or a
Lender Certificate, other than any such Person that ceases to be a party hereto
pursuant to an Assignment and Assumption.
“Letter of Credit” means the Existing Letters of Credit and any letter of credit
issued pursuant to this Agreement.
“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, the rate appearing on Reuters Screen LIBOR01 Page, formerly known as
Page 3750 of the Moneyline Telerate Service (or on any successor or substitute
page of such service, or any successor to or substitute for such service,
providing rate quotations comparable to those currently provided on such page of
such service, as determined by the Administrative Agent from time to time for
purposes of providing quotations of interest rates applicable to dollar deposits
in the London interbank market), at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period, as the rate for
dollar deposits with a maturity comparable to such Interest Period. In the event
that such rate is not available at such time for any reason, then the “LIBO
Rate” with respect to such Eurodollar Borrowing for such Interest Period shall
be the rate at which dollar deposits of $5,000,000 and for a maturity comparable
to such Interest Period are offered by the principal London office of the
Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
“Limited Partnership Interests” means any Equity Interests owned by any Person
(other than any Credit Party) in any Sponsored Partnership.
“LMIR” means, for any day, a rate per annum equal to the rate for one month U.S.
dollar deposits as reported on Reuters Screen LIBOR01 Page, formerly known as
Page 3750 of the Moneyline Telerate Service, as of 11:00 a.m., London time, on
such day, or if such day is not a Business Day, then the immediately preceding
Business Day (or if not so reported, then any successor to or substitute for
such service, providing rate quotations comparable to those currently provided
on such page of such service, as determined by the Administrative Agent from
time to time for purposes of providing quotations of interest rates applicable
to dollar deposits in the London interbank market).

 

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“Loan Documents” means this Agreement, any promissory notes executed in
connection herewith, Security Instruments, the Letters of Credit (and any
applications therefore and reimbursement agreements related thereto), the Fee
Letter and any other agreements executed in connection with this Agreement.
“Loans” means the loans made by the Lenders to the Borrower pursuant to this
Agreement.
“Majority Lenders” means, at any time, Lenders having Credit Exposures and
Unused Commitments representing more than fifty percent (50%) of the sum of the
Aggregate Credit Exposure and all Unused Commitments at such time or, if the
Aggregate Commitment has been terminated, Lenders having Credit Exposures
representing more than fifty percent (50%) of the Aggregate Credit Exposure at
such time.
“Marcellus Joint Venture” means that certain joint venture between Marcellus JV
PDC Partner and Marcellus JV Investor Partner pursuant to which the Borrower
contributed the Marcellus Properties to PDC Mountaineer in accordance with and
as contemplated by the Marcellus JV Contribution Agreement, the Marcellus JV
Services Agreement and the other Marcellus JV Documents.
“Marcellus JV Catch-Up Period” has the meaning given to the term “Catch-Up
Period” in the PDC Mountaineer LLC Agreement.
“Marcellus JV Contribution Agreement” means that certain Contribution Agreement
dated as of October 29, 2009 by and between the Borrower and PDC Mountaineer
relating to the Marcellus Joint Venture, as the same may be amended, restated,
supplemented or otherwise modified from time to time to the extent permitted
hereunder.
“Marcellus JV Documents” means the Marcellus JV Services Agreement, the
Marcellus JV Contribution Agreement, the PDC Mountaineer LLC Agreement and any
other documents, agreements and instruments (including side letter agreements)
governing the Marcellus Joint Venture, in each case, as the same may be amended,
restated, supplemented or otherwise modified from time to time to the extent
permitted hereunder.
“Marcellus JV Investor Partner” means an entity organized under the laws of the
United States, any state thereof or the District of Columbia that is not
affiliated with the Borrower and owns Equity Interests in PDC Mountaineer, as
identified by the Borrower to the Administrative Agent prior to the contribution
of the Marcellus Properties to PDC Mountaineer.
“Marcellus JV PDC Partner” means the Borrower or, if the Borrower shall have
transferred its Equity Interests in PDC Mountaineer to one of its wholly-owned
Restricted Subsidiaries in accordance with the PDC Mountaineer LLC Agreement,
such wholly-owned Restricted Subsidiary.

 

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“Marcellus JV Services Agreement” means that certain Transition, Administrative
and Marketing Services Agreement dated as of October 29, 2009 among the
Borrower, Riley Natural Gas Company, PDC Eastern, PDC Mountaineer, PDC
Mountaineer Operating, LLC and Marcellus JV Investor Partner relating to the
Marcellus Joint Venture, as the same may be amended, restated, supplemented or
otherwise modified from time to time to the extent permitted hereunder.
“Marcellus JV Withdrawal” means any “Special PDC Withdrawal” under and as
defined in the PDC Mountaineer LLC Agreement.
“Marcellus Properties” means the Oil and Gas Interests of the Borrower and PA
PDC, LLC that are located in Pennsylvania or West Virginia and have been
contributed to PDC Mountaineer (whether directly or through the contribution of
the Equity Interests in PA PDC, LLC) pursuant to the Marcellus JV Contribution
Agreement in connection with the Marcellus Joint Venture.
“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, operations, or financial condition, of the Borrower and its Restricted
Subsidiaries taken as a whole, (b) the ability of any Credit Party to perform
any of its obligations under this Agreement and the other Loan Documents or
(c) the rights of or benefits available to the Lenders under this Agreement and
the other Loan Documents.
“Material Domestic Subsidiary” means any Domestic Subsidiary that owns or holds
assets, properties or interests (including Oil and Gas Interests either as
Direct Interests or Attributed Interests) with an aggregate fair market value,
on a consolidated basis, greater than five percent (5%) of the aggregate fair
market value of all of the assets, properties and interests (including Oil and
Gas Interests either as Direct Interests or Attributed Interests) of the
Borrower and its Subsidiaries, on a consolidated basis.
“Material Gas Imbalance” means, with respect to all Gas Balancing Agreements to
which Borrower or any Restricted Subsidiary is a party or by which any Oil and
Gas Interests owned by Borrower or a Restricted Subsidiary is bound, a net
overproduced gas imbalance to Borrower and the Restricted Subsidiaries, taken as
a whole, in excess of $1,000,000.
“Material Indebtedness” means Indebtedness permitted under Section 7.01(e) and
Section 7.01(h) and any other Indebtedness (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of the
Borrower or any one or more of the Restricted Subsidiaries in an aggregate
principal amount exceeding $15,000,000. For purposes of determining Material
Indebtedness, the “principal amount” of the obligations of the Borrower or any
Restricted Subsidiary in respect of any Swap Agreement at any time shall be the
maximum aggregate amount (giving effect to any netting agreements) that the
Borrower or such Restricted Subsidiary would be required to pay if such Swap
Agreement were terminated at such time.

 

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“Material Sales Contract” means, as of any date of determination, any agreement
for the sale of Hydrocarbons from the Borrowing Base Properties to which the
Borrower, any Restricted Subsidiary or any Sponsored Partnership is a party if
the aggregate volume of Hydrocarbons sold pursuant to such agreement during the
twelve months immediately preceding such date equals or exceeds 15% of the
aggregate volume of Hydrocarbons sold by the Borrower, the Restricted
Subsidiaries and the Sponsored Partnerships, on a consolidated basis, from the
Borrowing Base Properties during the twelve months immediately preceding such
date.
“Maturity Date” means November 5, 2015.
“Maximum Facility Amount” means $600,000,000.
“Maximum Liability” has the meaning assigned to such term in Section 8.10.
“Maximum Rate” has the meaning assigned to such term in Section 11.13.
“Moody’s” means Moody’s Investors Service, Inc.
“Mortgaged Properties” means the Direct Interests described in one or more duly
executed, delivered and filed Mortgages evidencing a first and prior Lien in
favor of the Administrative Agent for the benefit of the Secured Parties and
subject only to the Liens permitted pursuant to Section 7.02.
“Mortgages” means all mortgages, deeds of trust, amendments to mortgages,
security agreements, assignments of production, pledge agreements, collateral
mortgages, collateral chattel mortgages, collateral assignments, financing
statements and other documents, instruments and agreements evidencing, creating,
perfecting or otherwise establishing the Liens required by Section 6.09. All
Mortgages shall be in form and substance satisfactory to Administrative Agent in
its sole discretion.
“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3)
of ERISA.
“Natural Gas” means all natural gas, distillate or sulphur, natural gas liquids
and all products recovered in the processing of natural gas (other than
condensate) including, without limitation, natural gasoline, coalbed methane
gas, casinghead gas, iso-butane, normal butane, propane and ethane (including
such methane allowable in commercial ethane).
“Net Cash Proceeds” means, (A) with respect to any Disposition of any Borrowing
Base Properties (including Attributed Interests and any Equity Interests of any
Restricted Subsidiary owning Borrowing Base Properties) by the Borrower or any
Restricted Subsidiary (or Sponsored Partnership with respect to Attributed
Interests), the excess, if any, of (a) the sum of cash and cash equivalents
received in connection with such sale, but only as and when so received, over
(b) the sum of (i) the principal amount of any Indebtedness that is secured by
such asset and that is required to be repaid in connection with the sale thereof
(other than the Loans), (ii) the out-of-pocket expenses incurred by the Borrower
or such Restricted Subsidiary (or Sponsored Partnership with respect to
Attributed Interests) in connection with such sale and (iii) to the extent such
Disposition includes Other Attributed Interests, the amount required to be paid
by Borrower to any Person owning the applicable Limited Partnership Interests as
a result of such Disposition pursuant to the partnership or limited liability
company agreement of the applicable Sponsored Partnership, (B) with

 

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respect to any Permitted Refinancing or issuance of Senior Notes, the cash
proceeds received from such Permitted Refinancing or issuance of Senior Notes,
as the case may be, net of underwriting discounts and commissions and other
reasonable costs and expenses associated therewith, including reasonable legal
fees and expenses, and (C) with respect to any Hedge Modification by the
Borrower or any Restricted Subsidiary, the excess, if any, of (a) the sum of
cash and cash equivalents received in connection with such Hedge Modification
(after giving effect to any netting arrangements), over (b) the sum of (i) the
out-of-pocket expenses incurred by the Borrower or such Restricted Subsidiary in
connection with such Hedge Modification and (ii) to the extent such Hedge
Modification affects Allocated Partnership Volumes, the amount required to be
paid by Borrower to any Person owning the applicable Limited Partnership
Interests as a result of such Hedge Modification pursuant to the partnership or
limited liability company agreement of the applicable Sponsored Partnership.
“New Lender” shall have the meaning assigned to such term in Section 11.17.
“Non-Consenting Lender” has the meaning assigned to such term in
Section 2.19(c).
“Obligations” means (a) all obligations of every nature, contingent or
otherwise, whether now existing or hereafter arising, of any Credit Party from
time to time owed to the Administrative Agent, the Issuing Bank, the Lenders or
any of them under any Loan Document, whether for principal, interest,
reimbursement of amounts drawn under any Letter of Credit, funding
indemnification amounts, fees, expenses, indemnification or otherwise,
(b) Lender Hedging Obligations and (c) Cash Management Obligations.
“Off-Balance Sheet Liability” of a Person means (i) any repurchase obligation or
liability of such Person with respect to accounts or notes receivable sold by
such Person, (ii) any liability under any Sale and Leaseback Transaction which
is not a Capital Lease Obligation, (iii) any liability under any so-called
“synthetic lease” transaction entered into by such Person, (iv) any Material Gas
Imbalance, (v) any Advance Payment Contract, or (vi) any obligation arising with
respect to any other transaction which is the functional equivalent of or takes
the place of borrowing but which does not constitute a liability on the balance
sheets of such Person, but excluding from the foregoing clauses (iii) through
(vi) operating leases and usual and customary oil, gas and mineral leases.
“Oil and Gas Interest(s)” means: (a) direct and indirect interests in and rights
with respect to oil, gas, mineral and related properties and assets of any kind
and nature, direct or indirect, including, without limitation, working, royalty
and overriding royalty interests, mineral interests, leasehold interests,
production payments, operating rights, net profits interests, other non-working
interests, contractual interests, non-operating interests and rights in any
pooled, unitized or communitized acreage by virtue of such interest being a part
thereof; (b) interests in and rights with respect to Hydrocarbons and other
minerals or revenues therefrom and contracts and agreements in connection
therewith and claims and rights thereto (including oil and gas leases, operating
agreements, unitization, communitization and pooling agreements and orders,
division orders, transfer orders, mineral deeds, royalty deeds, oil and gas
sales, exchange and processing contracts and agreements and, in each case,
interests thereunder), and surface interests, fee interests, reversionary
interests, reservations and concessions related to any of the foregoing;
(c) easements, rights-of-way, licenses, permits, leases, and other interests
associated with, appurtenant to, or necessary for the operation of any of the
foregoing; (d) interests

 

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in oil, gas, water, disposal and injection wells, equipment and machinery
(including well equipment and machinery), oil and gas production, gathering,
transmission, compression, treating, processing and storage facilities
(including tanks, tank batteries, pipelines and gathering systems), pumps, water
plants, electric plants, gasoline and gas processing plants, refineries and
other tangible or intangible, movable or immovable, real or personal property
and fixtures located on, associated with, appurtenant to, or necessary for the
operation of any of the foregoing; and (e) all seismic, geological, geophysical
and engineering records, data, information, maps, licenses and interpretations.
“Organizational Documents” means (a) with respect to any corporation, its
certificate or articles of incorporation or organization, as amended, and its
by-laws, as amended, (b) with respect to any limited partnership, its
certificate of limited partnership, as amended, and its partnership agreement,
as amended, (c) with respect to any general partnership, its partnership
agreement, as amended, and (d) with respect to any limited liability company,
its certificate of formation or articles of organization, as amended, and its
limited liability company agreement or operating agreement, as amended.
“Original Credit Agreement” has the meaning assigned to such term in the
recitals to this Agreement.
“Original Loans” means the loans and other extensions of credit outstanding
under the Original Credit Agreement as of the Effective Date.
“Original Senior Notes” means the 12% Senior Notes due 2018 issued by the
Borrower pursuant to and in accordance with the terms of the Indenture.
“Original Senior Notes Indenture” means that certain Indenture dated as of
February 8, 2008, by and between the Borrower, as issuer and The Bank of New
York, as trustee, as amended and supplemented by the First Supplemental
Indenture, dated as of February 8, 2008, and as further amended, restated,
supplemented or otherwise modified from time to time to the extent permitted
under this Agreement.
“Other Attributed Interests” means any Oil and Gas Interests indirectly owned by
any Person (other than any Credit Party) through the ownership of Limited
Partnership Interests and attributed to such Person in proportion to such
Person’s ownership of such Limited Partnership Interests.
“Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement.
“Parent” means, with respect to any Lender, any Person as to which such Lender
is, directly or indirectly, a subsidiary.
“Participant” has the meaning assigned to such term in Section 11.04.

 

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“Partnership Interests” means any Equity Interests owned by any Credit Party in
any Sponsored Partnership.
“Payment Currency” has the meaning assigned to such term in Section 8.07.
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.
“PDC Eastern” means PDC Eastern Operations Company, LLC, a Delaware limited
liability company, and its successors and permitted assigns.
“PDC Mountaineer” means PDC Mountaineer, LLC, a Delaware limited liability
company, and its successors and permitted assigns.
“PDC Mountaineer LLC Agreement” means that certain Limited Liability Company
Agreement of PDC Mountaineer dated as of October 29, 2009, as the same may be
amended, restated, supplemented or otherwise modified from time to time to the
extent permitted hereunder.
“Permitted Encumbrances” means:
(a) Liens imposed by law for Taxes that are not yet due or are being contested
in compliance with Section 6.04;
(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other
like Liens imposed by law, and contractual Liens granted to operators and
non-operators under oil and gas operating agreements, in each case, arising in
the ordinary course of business or incident to the exploration, development,
operation and maintenance of Oil and Gas Interests and securing obligations that
are not overdue by more than 30 days or are being contested in compliance with
Section 6.04;
(c) pledges and deposits made in the ordinary course of business in compliance
with workers’ compensation, unemployment insurance and other social security
laws or regulations;
(d) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business;
(e) judgment liens in respect of judgments that do not constitute an Event of
Default under clause (k) of Article IX;
(f) easements, zoning restrictions, rights-of-way, servitudes, permits, surface
leases, and similar encumbrances on real property imposed by law or arising in
the ordinary course of business that do not secure any monetary obligations and
do not materially detract from the value of the affected property or interfere
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(g) royalties, overriding royalties, reversionary interests and similar burdens
granted by the Borrower or any Restricted Subsidiary (or any Sponsored
Partnership with respect to Attributed Interests) with respect to the Oil and
Gas Interests owned by the Borrower or such Restricted Subsidiary (or such
Sponsored Partnership with respect to Attributed Interests), as the case may be,
if the net cumulative effect of such burdens does not operate to deprive the
Borrower or any Restricted Subsidiary (or any Sponsored Partnership with respect
to Attributed Interests) of any material right in respect of its assets or
properties (except for rights customarily granted with respect to such
interests);
(h) Liens arising from Uniform Commercial Code financing statement filings
regarding operating leases entered into by the Borrower, any Restricted
Subsidiary or any Sponsored Partnership in the ordinary course of business
covering the property under the lease;
(i) unperfected Liens reserved in leases (other than oil and gas leases) or
arising by operation of law for rent or compliance with the lease in the case of
leasehold estates;
(j) defects in or irregularities of title (other than defects or irregularities
of title to Direct Interests or Attributed Interests), if such defects or
irregularities do not deprive the Borrower, any Restricted Subsidiary or any
Sponsored Partnership of any material right in respect of its assets or
properties;
(k)  rights of PDC Mountaineer to acquire Oil and Gas Interests located in the
AMI (as defined in the Marcellus JV Documents) acquired by the Borrower or any
of its Restricted Subsidiaries pursuant to the terms of the Marcellus JV
Documents; and
(l) (i) the obligation of the Borrower to transfer all of the Equity Interests
in PDC Eastern to a third party purchaser pursuant to the PDC Mountaineer LLC
Agreement as in effect on October 29, 2009 and (ii) the right of PDC Mountaineer
to purchase all of the Equity Interests in PDC Eastern pursuant to the PDC
Mountaineer LLC Agreement as in effect on October 29, 2009;
provided that the term “Permitted Encumbrances” shall not include any Lien
securing Indebtedness.
“Permitted Investments” means:
(a) U.S. Government Securities;
(b) investments in commercial paper maturing within 270 days from the date of
acquisition thereof and having, at such date of acquisition, the highest credit
rating obtainable from S&P or from Moody’s;
(c) investments in certificates of deposit, banker’s acceptances and time
deposits maturing within 180 days from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank organized under the laws
of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000;

 

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(d) fully collateralized repurchase agreements with a term of not more than
30 days for securities described in clause (a) above and entered into with a
financial institution satisfying the criteria described in clause (c) above; and
(e) money market funds that (i) comply with the criteria set forth in Securities
and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940,
(ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of
at least $5,000,000,000.
“Permitted Refinancing” means any Indebtedness of any Credit Party, and
Indebtedness constituting Guarantees thereof by any Credit Party, incurred or
issued in exchange for, or the Net Cash Proceeds of which are used solely to
extend, refinance, renew, replace, defease or refund, existing Senior Notes, in
whole or in part, from time to time; provided that (a) the principal amount of
such Permitted Refinancing (or if such Permitted Refinancing is issued at a
discount, the initial issuance price of such Permitted Refinancing) does not
exceed the principal amount of Indebtedness permitted under Section 7.01(h)
(plus the amount of any premiums paid and fees and expenses incurred in
connection therewith), (b) such Permitted Refinancing does not provide for any
scheduled repayment, mandatory redemption or payment of a sinking fund
obligation prior to the date that is six months after the Maturity Date (except
for any offer to redeem such Indebtedness required as a result of asset sales or
the occurrence of a “Change of Control” under and as defined in the Indenture),
(c)  the covenant, default and remedy provisions of such Permitted Refinancing
are not materially more onerous to the Borrower and its Subsidiaries than those
imposed by the existing Senior Notes, (d) the mandatory prepayment, repurchase
and redemption provisions of such Permitted Refinancing are not materially more
onerous to the Borrower and its Subsidiaries than those imposed by the existing
Senior Notes, (e) the non-default cash interest rate on the outstanding
principal balance of such Permitted Refinancing does not exceed the prevailing
market rate then in effect for similarly situated credits at the time such
Permitted Refinancing is incurred, (f) such Permitted Refinancing is unsecured,
(g) no Subsidiary of the Borrower is required to Guarantee such Permitted
Refinancing unless such Subsidiary is (or concurrently with any such Guarantee
becomes) a Guarantor hereunder, and (h) to the extent such Permitted Refinancing
is or is intended to be expressly subordinate to the payment in full of all of
the Obligations, the subordination provisions contained therein are either
(x) at least as favorable to the Secured Parties as the subordination provisions
contained in the existing Senior Notes or (y) reasonably satisfactory to the
Administrative Agent and the Majority Lenders.
“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
“Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which any Credit Party or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
“Prime Rate” means the rate of interest per annum publicly announced from time
to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its
principal office in New York, New York, each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective. THE PRIME RATE IS A REFERENCE RATE AND MAY NOT BE JPMORGAN CHASE
BANK, N.A.’S LOWEST RATE.

 

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“Projections” means the Borrower’s forecasted (a) balance sheets, (b) profit and
loss statements, and (c) cash flow statements, all prepared on a basis
consistent with the historical financial statements described in Section 4.04
and after giving effect to the Transactions, together with appropriate
supporting details and a statement of underlying assumptions, in each case in
form and substance satisfactory to the Lenders and for the period from the
Effective Date through December 31, 2012.
“Redetermination” means any Scheduled Redetermination or Special
Redetermination.
“Redetermination Date” means each date on which the Borrowing Base is
redetermined pursuant to the terms hereof, which shall be (a) with respect to
any Scheduled Redetermination, on or about May 1 and November 1 of each year,
commencing May 1, 2011, (b) with respect to any Special Redetermination
requested by the Borrower pursuant to Section 3.03, the first day of the first
month which is not less than twenty (20) Business Days following the date of a
request by the Borrower for a Special Redetermination and (c) with respect to
any Special Redetermination requested by the Required Lenders, the date notice
of such Redetermination is delivered to the Borrower pursuant to Section 3.04.
“Register” has the meaning assigned to such term in Section 11.04.
“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person’s Affiliates.
“Required Lenders” means, at any time, Lenders having Credit Exposures and
Unused Commitments representing at least sixty-six and two-thirds percent
(66-2/3%) of the sum of the Aggregate Credit Exposure and all Unused Commitments
of all Lenders at such time or, if the Aggregate Commitment has been terminated,
Lenders having Credit Exposures representing at least sixty-six and two-thirds
percent (66-2/3%) of the Aggregate Credit Exposure of all Lenders at such time.
“Reserve Report” means an unsuperseded engineering analysis of the Borrowing
Base Properties, in form and substance reasonably acceptable to the
Administrative Agent, prepared in accordance with customary and prudent
practices in the petroleum engineering industry and setting forth, in reasonable
detail, (i) that portion of the Oil and Gas Interests included in such report
that are Attributed Interests, (ii) the Sponsored Partnership that owns the
underlying Oil and Gas Interests relating to such Attributed Interests and
(iii) the Partnership Interests owned by each Credit Party in such Sponsored
Partnership.
“Responsible Officer” means the chief executive officer, president, vice
president, chief financial officer, principal accounting officer, treasurer or
assistant treasurer of a Credit Party. Any document delivered hereunder that is
signed by a Responsible Officer of a Credit Party shall be conclusively presumed
to have been authorized by all necessary corporate, partnership and/or other
action on the part of such Credit Party and such Responsible Officer shall be
conclusively presumed to have acted on behalf of such Credit Party.

 

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“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in any Credit
Party, or any payment (whether in cash, securities or other property), including
any sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any such Equity
Interests in any Credit Party or any option, warrant or other right to acquire
any such Equity Interests in any Credit Party.
“Restricted Subsidiary” means any Subsidiary that is not an Unrestricted
Subsidiary.
“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw Hill
Corporation.
“Sale and Leaseback Transaction” means any sale or other transfer of any
property by any Person with the intent to lease such property as lessee.
“Scheduled Redetermination” means any redetermination of the Borrowing Base
pursuant to Section 3.02.
“Secured Party” means the Administrative Agent, any Lender, any Lender
Counterparty and any other holder of Obligations including any Cash Management
Obligations and Lender Hedging Obligations.
“Security Agreement” means that certain Pledge and Security Agreement dated as
of the Effective Date, in favor of the Administrative Agent for the benefit of
the Secured Parties, covering, among other things, the rights and interests of
the Credit Parties in all or substantially all of the assets of such Credit
Party, including all of the Equity Interests of each Restricted Subsidiary and
Sponsored Partnership now or hereafter owned by any Credit Party, and otherwise
in form and substance satisfactory to the Administrative Agent.
“Security Instruments” means collectively, all Guarantees of the Obligations
evidenced by the Loan Documents, the Security Agreement and all mortgages,
security agreements, pledge agreements, collateral assignments and other
collateral documents covering the Direct Interests and the Equity Interests of
the Restricted Subsidiaries and other personal property, equipment, oil and gas
inventory and proceeds of the foregoing, all such documents to be in form and
substance reasonably satisfactory to the Administrative Agent.
“Senior Notes” means (a) the Original Senior Notes and (b) any other senior,
senior subordinated or senior convertible notes issued by the Borrower pursuant
to and in accordance with the terms of the Indenture; provided that (a) the
terms of such Senior Notes do not provide for any scheduled repayment, mandatory
redemption or payment of a sinking fund obligation prior to the date that is six
months after the Maturity Date (except for any offer to redeem such Senior Notes
required as a result of asset sales or the occurrence of a “Change of Control”
under and as defined in the Indenture), (b) such Senior Notes are unsecured,
(c) the non-default interest rate on the outstanding principal balance of such
notes does not exceed the prevailing market rate then in effect for similarly
situated credits at the time such notes are issued, (d) no Subsidiary of the
Borrower is required to Guarantee the Indebtedness evidenced by such Senior
Notes unless such Subsidiary is (or concurrently with any such Guarantee
becomes) a Guarantor hereunder, (e) the covenant, default and remedy provisions
of such Senior Notes are not materially more onerous to the Borrower and its
Subsidiaries than those imposed by the Original Senior Notes, (f) the mandatory
prepayment, repurchase and redemption provisions of such Senior Notes are not
materially more onerous to the Borrower and its Subsidiaries than those imposed
by the Original Senior Notes and (g) with respect to any senior subordinated
notes, such notes are expressly subordinate to the payment in full of all of the
Obligations on terms and conditions reasonably satisfactory to the
Administrative Agent and the Majority Lenders.

 

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“Senior Notes Documents” means the Senior Notes, the Indenture and any documents
or instruments contemplated by or executed in connection with any of them, in
each case, as amended, modified, supplemented or restated from time to time to
the extent permitted hereunder.
“Special Redetermination” means any redetermination of the Borrowing Base made
pursuant to Section 3.03.
“Sponsored Partnership” means any partnership or limited liability company
meeting each of the following requirements: (a) a Credit Party is the sole
general partner of such partnership or the sole manager of such limited
liability company, as the case may be, (b) such partnership or limited liability
company is organized pursuant to a partnership or operating agreement reasonably
satisfactory to the Administrative Agent and the Majority Lenders and otherwise
acceptable to the Administrative Agent in its sole discretion, (c) such
partnership or limited liability company is primarily involved in oil and gas
exploration, development, acquisition or production, and owns no other material
assets other than Oil and Gas Interests, (d) such partnership or limited
liability company is not an obligor, as a borrower, a guarantor or otherwise, on
any Indebtedness other than Indebtedness such partnership or limited liability
company is permitted to incur under this Agreement and (e) a Credit Party is the
operator of the Oil and Gas Interests owned by such partnership or limited
liability company. For the avoidance of doubt, PDC Mountaineer is not a
Sponsored Partnership.
“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject for
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.

 

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“Subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership (other than a Sponsored Partnership), more than 50% of the general
partnership interests are, as of such date, owned, controlled or held, or
(b) that is, as of such date, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent. Unless the context otherwise clearly requires, references herein to a
“Subsidiary” refer to a Subsidiary of the Borrower, other than the Sponsored
Partnerships. Notwithstanding the foregoing, it is understood and agreed that,
for so long as the Borrower and its Restricted Subsidiaries own less than 100%
of the Equity Interests in PDC Mountaineer, neither PDC Mountaineer nor any
Subsidiary of PDC Mountaineer shall be a Subsidiary of the Borrower for purposes
of this Agreement and the other Loan Documents.
“Swap Agreement” means any agreement with respect to any swap, forward, future
or derivative transaction or option or similar agreement involving, or settled
by reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Credit Parties shall
be a Swap Agreement.
“Syndication Agent” means, so long as it is a Lender, BNP Paribas, in its
capacity as Syndication Agent.
“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
“Transactions” means (a) the execution, delivery and performance by the Credit
Parties of this Agreement and the other Loan Documents, (b) the borrowing of
Loans, (c) the use of the proceeds thereof, and (d) the issuance of Letters of
Credit hereunder.
“Type”, when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.
“Unrestricted Subsidiary” means (a) any Subsidiary that at the time of
determination shall be designated an Unrestricted Subsidiary by the Board of
Directors of the Borrower in the manner provided below, (b) any Subsidiary of an
Unrestricted Subsidiary and (c) PDC Eastern and any of its Subsidiaries. The
Board of Directors of the Borrower may designate any Subsidiary (including any
newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary or any of its Subsidiaries at the time of such
designation or at any time thereafter (i) is a Material Domestic Subsidiary,
(ii) owns Oil and Gas Interests included in the Borrowing Base Properties,
(iii) is the operator, by contract or otherwise, of any Oil and Gas Interests
included in the Borrowing Base Properties or (iv) guarantees, or is a primary
obligor of, any indebtedness, liabilities, or other obligations under any Senior
Notes (or any Permitted Refinancing thereof).
“Unused Commitment Fee” has the meaning assigned to such term in
Section 2.12(a).

 

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“Unused Commitment” means, with respect to each Lender at any time, such
Lender’s Commitment at such time minus such Lender’s Credit Exposure at such
time.
“U.S. Government Securities” means direct obligations of, or obligations the
principal of and interest on which are unconditionally guaranteed by, the United
States of America (or by any agency or instrumentality thereof to the extent
such obligations are entitled to the full faith and credit of the United States
of America), in each case maturing within one year from the date of acquisition
thereof.
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.
Section 1.02. Types of Loans and Borrowings. For purposes of this Agreement,
Loans may be classified and referred to by Type (e.g., a “Eurodollar Loan” or an
“ABR Loan. Borrowings also may be classified and referred to by Type (e.g., a
“Eurodollar Borrowing” or an “ABR Borrowing”).
Section 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”.
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
“asset” and “property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
Section 1.04. Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Majority Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

 

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Section 1.05. Oil and Gas Definitions. For purposes of this Agreement, the terms
“proved reserves,” “proved developed reserves,” “proved undeveloped reserves,”
“proved developed nonproducing reserves” and “proved developed producing
reserves,” have the meaning given such terms from time to time and at the time
in question by the Society of Petroleum Engineers of the American Institute of
Mining Engineers.
Section 1.06. Time of Day. Unless otherwise specified, all references to times
of day shall be references to Central time (daylight or standard, as
applicable).
Article II
The Credits
Section 2.01. Commitments. Subject to the terms and conditions set forth herein,
each Lender that was a Lender under and as defined in the Original Credit
Agreement agrees to continue the Original Loans and each Lender agrees to make
one or more Loans to the Borrower from time to time on any Business Day during
the Availability Period in an aggregate principal amount that will not result in
(a) such Lender’s Credit Exposure exceeding such Lender’s Commitment or (b) the
Aggregate Credit Exposure exceeding the Aggregate Commitment. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, prepay and reborrow Loans.
Section 2.02. Termination and Reduction of the Aggregate Commitment.
(a) Unless previously terminated, the Aggregate Commitment shall terminate on
the Maturity Date.
(b) The Borrower may at any time terminate, or from time to time reduce, the
Aggregate Commitment; provided that (i) each reduction of the Aggregate
Commitment shall be in an amount that is an integral multiple of $1,000,000 and
not less than $1,000,000 and shall be applied ratably to each Lender’s
Commitment and (ii) the Borrower shall not terminate or reduce the Aggregate
Commitment if, after giving effect to any concurrent prepayment of the Loans in
accordance with Section 2.10 and Section 2.11, the Aggregate Credit Exposure
would exceed the Aggregate Commitment.
(c) The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Aggregate Commitment under paragraph (b) of this Section
at least three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant
to this Section shall be irrevocable; provided that a notice of termination of
the Aggregate Commitment delivered by the Borrower may state that such notice is
conditioned upon the effectiveness of other credit facilities, in which case
such notice may be revoked by the Borrower (by notice to the Administrative
Agent on or prior to the specified effective date) if such condition is not
satisfied. Any termination of the Aggregate Commitment shall be permanent. Each
reduction of the Aggregate Commitment shall be made ratably among the Lenders in
accordance with their respective Commitment.

 

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Section 2.03. Additional Lenders; Increases in the Aggregate Commitment. If
(a) no Default exists as of the date of such increase or would be caused by such
increase, (b) the Borrower shall concurrently pay any additional fees required
as a result of such increase, (c) immediately after giving effect to such
increase, the Aggregate Commitment does not exceed the Borrowing Base then in
effect, and (d) at the time of and immediately after giving effect to such
increase, the Borrower is in pro forma compliance with the financial covenants
set forth in Section 7.11 as of the last day of the most recently ended fiscal
quarter for which the financial statements and compliance certificate required
under Section 6.01 have been delivered to the Administrative Agent and the
Lenders, the Borrower may, at any time and from time to time, with the consent
of the Administrative Agent, increase the Aggregate Commitment to an amount not
to exceed the Maximum Facility Amount by providing written notice of such
increase to the Administrative Agent. Each Lender shall have the right, but not
the obligation, in each such Lender’s sole discretion, to provide a portion of
such increase in the Aggregate Commitment up to the portion of such increase
that such Lender’s existing Commitment bears to the aggregate amount of the
existing Commitments of all Lenders electing to participate in such requested
increase by executing and delivering to the Borrower and the Administrative
Agent a certificate substantially in the form of Exhibit F hereto (a “Lender
Certificate”). In the event that within 10 Business Days of the Administrative
Agent’s receipt of such written notice the existing Lenders fail to provide
increases in their respective Commitments sufficient to satisfy such requested
increase in the Aggregate Commitment, the Borrower may adjust the previously
requested increase to reflect the increased Commitments of existing Lenders or
one or more financial institutions reasonably acceptable to the Administrative
Agent may become a Lender under this Agreement by executing and delivering to
the Borrower and the Administrative Agent a Lender Certificate. Upon receipt by
the Administrative Agent of Lender Certificates representing increases to
existing Lender Commitments and/or Commitments from new Lenders as provided in
this Section 2.03 in an aggregate amount equal to the requested increase (as the
same may have been adjusted), (i) the Aggregate Commitment (including the
Commitment of any Person that becomes a Lender by delivery of such a Lender
Certificate) automatically without further action by the Borrower, the
Administrative Agent or any Lender shall be increased on the effective date set
forth in such Lender Certificates by the amount indicated in such Lender
Certificates, (ii) the Register shall be amended to add the Commitment of each
additional Lender or to reflect the increase in the Commitment of each existing
Lender, and the Applicable Percentages of the Lenders shall be adjusted
accordingly to reflect each additional Lender or the increase in the Commitment
of each existing Lender, (iii) any such additional Lender shall be deemed to be
a party in all respects to this Agreement and any other Loan Documents to which
the Lenders are a party, and (iv) upon the effective date set forth in such
Lender Certificate, any such Lender party to the Lender Certificate shall
purchase and each existing Lender shall assign to such Lender a pro rata portion
of the outstanding Credit Exposure of each of the existing Lenders such that the
Lenders (including any additional Lender, if applicable) shall have the
appropriate portion of the Aggregate Credit Exposure of the Lenders (based in
each case on such Lender’s Applicable Percentage, as revised pursuant to this
Section), and the Borrower shall have paid to the Lenders any amounts due
pursuant to Section 2.16 as a result of such purchase and assignment.

 

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Section 2.04. Loans and Borrowings.
(a) Each Loan shall be made as part of a Borrowing consisting of Loans made by
the Lenders ratably in accordance with their respective Commitments. The failure
of any Lender to make any Loan required to be made by it shall not relieve any
other Lender of its obligations hereunder; provided that the Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender’s
failure to make Loans as required.
(b) Subject to Section 2.14, each Borrowing shall be comprised entirely of ABR
Loans or Eurodollar Loans as the Borrower may request in accordance herewith.
Each Lender at its option may make any Eurodollar Loan by causing any domestic
or foreign branch or Affiliate of such Lender to make such Loan; provided that
any exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar Borrowing,
such Borrowing shall be in an aggregate amount that is an integral multiple of
$500,000 and not less than $500,000. At the time that each ABR Borrowing is
made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $500,000 and not less than $500,000; provided that an ABR Borrowing
may be in an aggregate amount that is equal to the entire unused balance of the
Aggregate Commitment or that is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.06(e). Borrowings of more than one
Type may be outstanding at the same time; provided that there shall not at any
time be more than a total of four (4) Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrower shall
not be entitled to request, or to elect to convert or continue, any Borrowing if
the Interest Period requested with respect thereto would end after the Maturity
Date.
Section 2.05. Requests for Borrowings. To request a Borrowing, the Borrower
shall notify the Administrative Agent of such request by telephone (a) in the
case of a Eurodollar Borrowing, not later than 11:00 a.m., three Business Days
before the date of the proposed Borrowing or (b) in the case of an ABR
Borrowing, not later than 11:00 a.m., on the date of the proposed Borrowing (so
long as such date is a Business Day); provided that any such notice of an ABR
Borrowing to finance the reimbursement of an LC Disbursement as contemplated by
Section 2.06(e) may be given not later than 10:00 a.m., on the date of the
proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable
and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.04:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;

 

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(iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of
the term “Interest Period”; and
(v) the location and number of the Borrower’s account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.07.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month’s duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender’s Loan to be made as part of the requested Borrowing.
Section 2.06. Letters of Credit.
(a) General. Subject to the terms and conditions set forth herein, the Borrower
may request the issuance of Letters of Credit for its own or the account of any
Restricted Subsidiary in a form reasonably acceptable to the Administrative
Agent and the Issuing Bank, at any time and from time to time during the
Availability Period. In the event of any inconsistency between the terms and
conditions of this Agreement and the terms and conditions of any form of letter
of credit application or other agreement submitted by the Borrower to, or
entered into by the Borrower with, the Issuing Bank relating to any Letter of
Credit, the terms and conditions of this Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To
request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower shall hand deliver
or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day), the date on which such Letter of Credit is to expire
(which shall comply with paragraph (c) of this Section), the amount of such
Letter of Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. If requested by the Issuing Bank, the Borrower also shall submit a
letter of credit application on the Issuing Bank’s standard form in connection
with any request for a Letter of Credit. A Letter of Credit shall be issued,
amended, renewed or extended only if (and upon issuance, amendment, renewal or
extension of each Letter of Credit the Borrower shall be deemed to represent and
warrant that), after giving effect to such issuance, amendment, renewal or
extension (i) the LC Exposure shall not exceed $50,000,000 and (ii) the
Aggregate Credit Exposure shall not exceed the Aggregate Commitment.

 

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(c) Expiration Date. Each Letter of Credit (other than any Existing Letter of
Credit) shall expire at or prior to the close of business on the earlier of
(i) the date one year after the date of the issuance of such Letter of Credit
(or, in the case of any renewal or extension thereof, one year after such
renewal or extension) and (ii) the date that is five Business Days prior to the
Maturity Date. Each Existing Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the expiration date of such Existing
Letter of Credit as in effect on the Effective Date (or, in the case of any
renewal or extension thereof, one year after such renewal or extension) and
(ii) the date that is five Business Days prior to the Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof) and without any further action
on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants
to each Lender, and each Lender hereby acquires from the Issuing Bank, a
participation in such Letter of Credit equal to such Lender’s Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of the Issuing Bank, such Lender’s Applicable Percentage of each LC
Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the
date due as provided in paragraph (e) of this Section, or of any reimbursement
payment required to be refunded to the Borrower for any reason. Each Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including any
amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default or reduction or termination of the Aggregate
Commitment, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect
of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by
paying to the Administrative Agent an amount equal to such LC Disbursement not
later than 12:00 noon on the date that such LC Disbursement is made, if the
Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m.
on such date, or, if such notice has not been received by the Borrower prior to
such time on such date, then not later than 12:00 noon on the Business Day
immediately following the day that the Borrower receives such notice; provided
that the Borrower may, subject to the conditions to borrowing set forth herein,
request in accordance with Section 2.05 that such payment be financed with an
ABR Borrowing in an equivalent amount and, to the extent so financed, the
Borrower’s obligation to make such payment shall be discharged and replaced by
the resulting ABR Borrowing. If the Borrower fails to make such payment when
due, the Administrative Agent shall notify each Lender of the applicable LC
Disbursement, the payment then due from the Borrower in respect thereof and such
Lender’s Applicable Percentage thereof. Promptly following receipt of such
notice, each Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrower, in the same manner as
provided in Section 2.07 with respect to Loans made by such Lender (and
Section 2.07 shall apply, mutatis mutandis, to the payment obligations of the
Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank
the amounts so received by it from the Lenders. Promptly following receipt by
the Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the Issuing
Bank or, to the extent that Lenders have made payments pursuant to this
paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing
Bank as their interests may appear. Any payment made by a Lender pursuant to
this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than
the funding of ABR Loans as contemplated above) shall not constitute a Loan and
shall not relieve the Borrower of its obligation to reimburse such LC
Disbursement.

 

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(f) Obligations Absolute. The Borrower’s obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower’s obligations hereunder. Neither
the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to excuse the
Issuing Bank from liability to the Borrower to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable law) suffered by
the Borrower that are caused by the Issuing Bank’s failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or willful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by telecopy) of
such demand for payment and whether the Issuing Bank has made or will make an LC
Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse the
Issuing Bank and the Lenders with respect to any such LC Disbursement.

 

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(h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then,
unless the Borrower shall reimburse such LC Disbursement in full on the date
such LC Disbursement is made, the unpaid amount thereof shall bear interest, for
each day from and including the date such LC Disbursement is made to but
excluding the date that the Borrower reimburses such LC Disbursement, at the
rate per annum then applicable to ABR Loans; provided that, if the Borrower
fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of
this Section, then Section 2.13(c) shall apply. Interest accrued pursuant to
this paragraph shall be for the account of the Issuing Bank, except that
interest accrued on and after the date of payment by any Lender pursuant to
paragraph (e) of this Section to reimburse the Issuing Bank shall be for the
account of such Lender to the extent of such payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at any
time by written agreement among the Borrower, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of the Issuing Bank. At the
time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.12(b). From and after the effective date of any such replacement,
(i) the successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.
(j) Cash Collateralization.
(i) If any Event of Default shall occur and be continuing, on the Business Day
that the Borrower receives notice from the Administrative Agent or the Required
Lenders (or, if the maturity of the Loans has been accelerated, Lenders with LC
Exposure representing greater than sixty-six and two-thirds percent (662/3%) of
the total LC Exposure) demanding the deposit of cash collateral pursuant to this
paragraph, the Borrower shall deposit in the Cash Collateral Account an amount
in cash equal to the total LC Exposure as of such date plus any accrued and
unpaid interest thereon, if any; provided that the obligation to deposit such
cash collateral shall become effective immediately, and such deposit shall
become immediately due and payable, without demand or other notice of any kind,
upon the occurrence of any Event of Default with respect to the Borrower
described in clause (h) or (i) of Article IX.
(ii) All cash collateral provided by the Borrower or any other Credit Party
pursuant to the request of the Administrative Agent in accordance with
Section 2.20(c) shall be deposited in the Cash Collateral Account.

 

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(iii) Deposits in the Cash Collateral Account made pursuant to either the
foregoing paragraph (i) of this Section 2.06(j) or Section 2.20(c) shall be held
by the Administrative Agent as collateral for the payment and performance of the
Obligations under this Agreement and Borrower hereby grants a security interest
in such cash and each deposit account (including the Cash Collateral Account)
into which such cash is deposited to secure the Obligations under this
Agreement. The Administrative Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over the Cash Collateral Account.
Other than any interest earned on the investment of such deposits, which
investments shall be made at the option and sole discretion of the
Administrative Agent but in consultation with the Borrower and at the Borrower’s
risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such
account shall be applied by the Administrative Agent to reimburse the Issuing
Bank for LC Disbursements for which it has not been reimbursed and, to the
extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrower for the LC Exposure at such time or, if the maturity
of the Loans has been accelerated (but subject to the consent of Lenders with LC
Exposure representing sixty-six and two-thirds percent (662/3%) or more of the
total LC Exposure), be applied to satisfy other Obligations under this Agreement
and to the extent any excess remains after payment in full in cash of all
Obligations and the termination of all Commitments, such excess shall be
released to the Borrower.
(v) If the Borrower is required to provide an amount of cash collateral pursuant
to either paragraph (i) of this Section 2.06(j) or Section 2.20(c), the amount
of such cash collateral (to the extent not applied as aforesaid) shall be
returned to the Borrower within one (1) Business Day after (x) in the case of
cash collateral provided pursuant to paragraph (i) above, all Events of Default
have been cured or waived and (y) in the case of cash collateral provided
pursuant to Section 2.20(c), the date on which such cash collateral is no longer
required pursuant to Section 2.20(c).
Section 2.07. Funding of Borrowings.
(a) Each Lender shall make each Loan to be made by it hereunder on the proposed
date thereof by wire transfer of immediately available funds by 12:00 noon to
the account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders. The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in like
funds, to a deposit account of the Borrower designated by the Borrower in the
applicable Borrowing Request; provided that ABR Loans made to finance the
reimbursement of an LC Disbursement as provided in Section 2.06(e) shall be
remitted by the Administrative Agent to the Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from a Lender
prior to the proposed time of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender’s share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Administrative Agent, then the applicable
Lender and the Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to
but excluding the date of payment to the Administrative Agent, at (i) in the
case of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation or (ii) in the case of the Borrower, the interest rate
applicable to ABR Loans. If such Lender pays such amount to the Administrative
Agent, then such amount shall constitute such Lender’s Loan included in such
Borrowing.

 

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Section 2.08. Interest Elections.
(a) Each Borrowing initially shall be of the Type specified in the applicable
Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request. Thereafter, the
Borrower may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest
Periods therefor, all as provided in this Section. The Borrower may elect
different options with respect to different portions of the affected Borrowing,
in which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall notify the
Administrative Agent of such election by telephone by the time that a Borrowing
Request would be required under Section 2.05 if the Borrower were requesting a
Borrowing of the Type resulting from such election to be made on the effective
date of such election. Each such telephonic Interest Election Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Interest Election Request in the form attached
hereto as Exhibit D and signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.04:
(i) the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information to be specified pursuant to clauses (iii) and (iv) below shall
be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period
to be applicable thereto after giving effect to such election, which shall be a
period contemplated by the definition of the term “Interest Period,” unless
otherwise agreed upon by the Borrower and the Administrative Agent.

 

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If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month’s duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender’s portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election Request with
respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Administrative Agent, at the request of
the Majority Lenders, so notifies the Borrower, then, so long as an Event of
Default is continuing (i) no outstanding Borrowing may be converted to or
continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.
Section 2.09. Repayment of Loans; Evidence of Debt.
(a) The Borrower hereby unconditionally promises to pay to the Administrative
Agent for the account of each Lender the then unpaid principal amount of each
Loan on the Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing the indebtedness of the Borrower to such Lender resulting
from each Loan made by such Lender, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall record
(i) the amount of each Loan made hereunder, the Type thereof and the Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) the amount of any sum received by the Administrative Agent hereunder
for the account of the Lenders and each Lender’s share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c)
of this Section shall be prima facie evidence of the existence and amounts of
the obligations recorded therein; provided that the failure of any Lender or the
Administrative Agent to maintain such accounts or any error therein shall not in
any manner affect the obligation of the Borrower to repay the Loans in
accordance with the terms of this Agreement.
(e) Any Lender or Participant may request that Loans made by it be evidenced by
a promissory note. In such event, the Borrower shall prepare, execute and
deliver to such Lender or Participant a promissory note payable to the order of
such Lender or Participant (or, if requested by such Lender or Participant, to
such Lender or Participant and its registered assigns) and in the form attached
hereto as Exhibit E. Thereafter, the Loans evidenced by such promissory note and
interest thereon shall at all times (including after assignment pursuant to
Section 11.04) be represented by one or more promissory notes in such form
payable to the order of the payee named therein (or, if such promissory note is
a registered note, to such payee and its registered assigns).

 

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Section 2.10. Optional Prepayment of Loans.
(a) The Borrower shall have the right at any time and from time to time to
prepay any Borrowing in whole and or in part, subject to prior notice in
accordance with paragraph (b) of this Section.
(b) The Borrower shall notify the Administrative Agent by telephone (confirmed
by telecopy) of any prepayment hereunder (i) in the case of prepayment of a
Eurodollar Borrowing, not later than 11:00 a.m., three Business Days before the
date of prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not
later than 11:00 a.m., one Business Day before the date of prepayment. Each such
notice shall be irrevocable and shall specify the prepayment date and the
principal amount of each Borrowing or portion thereof to be prepaid; provided
that, if a notice of prepayment is given in connection with a conditional notice
of termination or reduction of the Aggregate Commitment as contemplated by
Section 2.02, then such notice of prepayment may be revoked if such notice of
termination or reduction is revoked in accordance with Section 2.02. Promptly
following receipt of any such notice relating to a Borrowing, the Administrative
Agent shall advise the Lenders of the contents thereof. Each partial prepayment
of any Borrowing shall be in an amount that would be permitted in the case of an
advance of a Borrowing of the same Type as provided in Section 2.04. Each
prepayment of a Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.13.
Section 2.11. Mandatory Prepayment of Loans.
(a) Except as otherwise provided in clauses (b) and (d) of this Section 2.11, in
the event a Borrowing Base Deficiency exists, the Borrower shall, within thirty
(30) days after written notice from the Administrative Agent to the Borrower of
such Borrowing Base Deficiency, either (a) by instruments satisfactory in form
and substance to the Administrative Agent, provide the Lenders with additional
security satisfactory to the Lenders in their sole discretion to eliminate such
Borrowing Base Deficiency, or prepay, without premium or penalty, the principal
amount of the Loans in an amount sufficient to eliminate such Borrowing Base
Deficiency (or by a combination of such additional security and such prepayment
eliminate such Borrowing Base Deficiency), or (b) notify the Administrative
Agent that it intends to prepay, without premium or penalty (but subject to any
funding indemnification amounts required by Section 2.16), the principal amount
of such Borrowing Base Deficiency in not more than three (3) equal monthly
installments plus accrued interest thereon and make the first such monthly
payment on the 30th day after the Borrower’s receipt of notice of such Borrowing
Base Deficiency.

 

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(b) If the Borrower or any Restricted Subsidiary (or any Sponsored Partnership
with respect to Attributed Interests) Disposes of any Borrowing Base Properties
(whether pursuant to a Disposition of Equity Interests of a Restricted
Subsidiary permitted pursuant to Section 7.03(a) or otherwise), the Borrower
shall (a) prepay the Borrowings to the extent necessary to eliminate any
Borrowing Base Deficiency that may exist or that may have occurred as a result
of such Disposition within one (1) Business Day of the date it or any Restricted
Subsidiary receives the Net Cash Proceeds from such Disposition and any Net Cash
Proceeds in excess of the amount necessary to eliminate any such Borrowing Base
Deficiency shall be used within three hundred sixty (360) days after such
Disposition to (i) acquire property and assets used or useful in carrying on the
business of the Borrower, any Restricted Subsidiary and such Sponsored
Partnership or to improve or replace any such property or assets, (ii) prepay
the Loans in accordance with the instructions of the Borrower (unless an Event
of Default exists in which event any amounts prepaid shall be applied to the
Loans at the discretion of the Administrative Agent), or (iii) in the case of
any Disposition of Borrowing Base Properties (including Equity Interests of any
Restricted Subsidiary held by any Restricted Subsidiary) by any Restricted
Subsidiary or any Sponsored Partnership, make a dividend or distribution to the
direct holders of its Equity Interests, or (b) in the case of any exchange of
Borrowing Base Properties for other Oil and Gas Interests, take all actions
reasonably necessary to cause such Oil and Gas Interests received in such
exchange to become additional security for the Obligations by instruments
satisfactory in form and substance to the Administrative Agent.
(c) If the Borrower or any Restricted Subsidiary (or any Sponsored Partnership
with respect to Attributed Interests) enters into any Hedge Modification at any
time, the Borrower shall promptly, and in any event within one (1) Business Day
of the date it or any Restricted Subsidiary receives the Net Cash Proceeds from
such Hedge Modification, apply all of the Net Cash Proceeds received from such
Hedge Modification to prepay the Borrowings.
(d) In the event any Borrowing Base Deficiency occurs as a result of a reduction
in the Borrowing Base pursuant to Section 3.05 upon an issuance of Senior Notes,
the Borrower shall prepay the Loans with the Net Cash Proceeds received as a
result of the issuance of such Senior Notes immediately upon receipt of such Net
Cash Proceeds to the extent necessary to eliminate such Borrowing Base
Deficiency after giving effect to such reduction in the Borrowing Base pursuant
to Section 3.05.
(e) In the event the Aggregate Credit Exposure exceeds the Maximum Facility
Amount or the Aggregate Commitment at any time that a Borrowing Base Deficiency
does not exist, the Borrowers shall immediately prepay, subject to any funding
indemnification amounts required by Section 2.16, the principal amount of the
Loans to the extent necessary to eliminate such excess.
(f) Amounts applied to the prepayment of Borrowings pursuant to this Section
shall be first applied ratably to ABR Borrowings then outstanding and, upon
payment in full of all outstanding ABR Borrowings, second, to Eurodollar
Borrowings then outstanding, and if more than one Eurodollar Borrowing is then
outstanding, to each such Eurodollar Borrowing beginning with the Eurodollar
Borrowing with the least number of days remaining in the Interest Period
applicable thereto and ending with the Eurodollar Borrowing with the most number
of days remaining in the Interest Period applicable thereto. Any prepayments
pursuant to this Section shall be accompanied by accrued interest to the extent
required by Section 2.13 and any funding indemnification amounts required by
Section 2.16.

 

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Section 2.12. Fees.
(a) The Borrower agrees to pay to the Administrative Agent, for the account of
each Lender, an unused commitment fee (the “Unused Commitment Fee”) equivalent
to the Applicable Rate times the daily average of the total Unused Commitments.
Such Unused Commitment Fee shall be calculated on the basis of a year consisting
of 360 days. The Unused Commitment Fee shall be payable in arrears on the last
day of March, June, September and December of each year, commencing with the
first such date to occur after the Effective Date, and on the Maturity Date for
any period then ending for which the Unused Commitment Fee shall not have been
theretofore paid. In the event the Aggregate Commitment terminates on any date
other than the last day of March, June, September or December of any year, the
Borrower agrees to pay to the Administrative Agent, for the account of each
Lender, on the date of such termination, the pro rata portion of the Unused
Commitment Fee due for the period from the last day of the immediately preceding
March, June, September or December, as the case may be, to the date such
termination occurs.
(b) The Borrower agrees to pay (i) to the Administrative Agent for the account
of each Lender a participation fee with respect to its participations in Letters
of Credit, which shall accrue at the same Applicable Rate used to determine the
interest rate applicable to Eurodollar Loans on the face amount of each Letter
of Credit during the period from and including the Effective Date to but
excluding the later of the date on which such Lender’s Commitment terminates and
the date on which such Lender ceases to have any LC Exposure, and (ii) to the
Issuing Bank a fronting fee for each Letter of Credit equal to 0.125% per annum
on the face amount of such Letter of Credit during the period from and including
the Effective Date to but excluding the later of the date of termination of the
Aggregate Commitment and the date on which there ceases to be any LC Exposure
(but in no event less than $500 per annum), as well as the Issuing Bank’s
standard fees with respect to the issuance, amendment, renewal or extension of
any Letter of Credit or processing of drawings thereunder. Participation fees
and fronting fees accrued through and including the last day of March, June,
September and December of each year shall be payable on the third Business Day
following such last day, commencing on the first such date to occur after the
Effective Date; provided that all such fees shall be payable on the date on
which the Aggregate Commitment terminates and any such fees accruing after the
date on which the Aggregate Commitment terminates shall be payable on demand.
Any other fees payable to the Issuing Bank pursuant to this paragraph shall be
payable within 10 days after demand. All participation fees and fronting fees
shall be computed on the basis of a year of 360 days and shall be payable for
the actual number of days elapsed (including the first day but excluding the
last day).
(c) The Borrower agrees to pay to the Administrative Agent and J.P. Morgan
Securities LLC, for their respective accounts, the fees set forth in the Fee
Letter payable to the Administrative Agent and J.P. Morgan Securities LLC and
such other fees payable in the amounts and at the times separately agreed upon
between the Borrower, the Administrative Agent and J.P. Morgan Securities LLC.
(d) All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the Administrative Agent (or to the Issuing Bank, in the
case of fees payable to it) for distribution, in the case of Unused Commitment
Fees and participation fees, to the Lenders. Fees paid shall not be refundable
under any circumstances.

 

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Section 2.13. Interest.
(a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate
Base Rate plus the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest at the
Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the
Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or interest on any Loan
or any fee or other amount payable by the Borrower hereunder is not paid when
due, whether at stated maturity, upon acceleration or otherwise, such overdue
amount shall bear interest, after as well as before judgment, at a rate per
annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears on each Interest
Payment Date for such Loan and upon termination of the Aggregate Commitment and
on the Maturity Date; provided that (i) interest accrued pursuant to paragraph
(c) of this Section shall be payable on demand, (ii) in the event of any
repayment or prepayment of any Loan (other than a prepayment of an ABR Loan
prior to the end of the Availability Period at a time when no Borrowing Base
Deficiency exists), accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment and (iii) in the
event of any conversion of any Eurodollar Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year of 360 days,
except that interest computed by reference to the Alternate Base Rate at times
when the Alternate Base Rate is based on the Prime Rate shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and in each case shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate
or LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
Section 2.14. Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be conclusive
absent manifest error) that adequate and reasonable means do not exist for
ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such
Interest Period; or
(b) the Administrative Agent is advised by the Majority Lenders that the
Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (or Lender) of
making or maintaining their Loans (or its Loan) included in such Borrowing for
such Interest Period;

 

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then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
Section 2.15. Increased Costs.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender (except any such reserve requirement reflected in the
Adjusted LIBO Rate) or the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans made by such Lender
or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank,
as the case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender’s or the Issuing Bank’s capital or on the capital of
such Lender’s or the Issuing Bank’s holding company, if any, as a consequence of
this Agreement or the Loans made by, or participations in Letters of Credit held
by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level
below that which such Lender or the Issuing Bank or such Lender’s or the Issuing
Bank’s holding company could have achieved but for such Change in Law (taking
into consideration such Lender’s or the Issuing Bank’s policies and the policies
of such Lender’s or the Issuing Bank’s holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank or such Lender’s or the Issuing
Bank’s holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the amount or
amounts necessary to compensate such Lender or the Issuing Bank or its holding
company, as the case may be, as specified in paragraph (a) or (b) of this
Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the
case may be, the amount shown as due on any such certificate within 10 days
after receipt thereof.

 

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(d) Failure or delay on the part of any Lender or the Issuing Bank to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender’s or the Issuing Bank’s right to demand such compensation; provided that
the Borrower shall not be required to compensate a Lender or the Issuing Bank
pursuant to this Section for any increased costs or reductions incurred more
than 270 days prior to the date that such Lender or the Issuing Bank, as the
case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or the Issuing Bank’s
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.
Section 2.16. Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default),
(b) the conversion of any Eurodollar Loan other than on the last day of the
Interest Period applicable thereto, (c) the failure to borrow, convert, continue
or prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under
Section 2.10(b) and is revoked in accordance therewith), (d) the assignment of
any Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.19, then,
in any such event, the Borrower shall compensate each Lender for the loss, cost
and expense attributable to such event. In the case of a Eurodollar Loan, such
loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the Eurodollar market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
Section 2.17. Taxes.
(a) Any and all payments by or on account of any obligation of the Borrower
hereunder shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent, Lender or Issuing Bank (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.

 

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(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent, each Lender and the
Issuing Bank, within 10 days after written demand therefor, for the full amount
of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such
Lender or the Issuing Bank, as the case may be, on or with respect to any
payment by or on account of any obligation of the Borrower hereunder (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to the Borrower by a Lender or the Issuing Bank,
or by the Administrative Agent on its own behalf or on behalf of a Lender or the
Issuing Bank, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes
by the Borrower to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.
(f) If the Administrative Agent or a Lender determines, in its sole discretion,
that it has received a refund of any Taxes or Other Taxes as to which it has
been indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.17, it shall pay over such refund
to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 2.17 with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Administrative Agent or such Lender and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund); provided, that the Borrower, upon the request of the
Administrative Agent or such Lender, agrees to repay the amount paid over to the
Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Administrative Agent or such Lender in the event
the Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. This Section shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Borrower or any other Person.

 

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Section 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) The Borrower shall make each payment required to be made by it hereunder
(whether of principal, interest, fees or reimbursement of LC Disbursements, or
of amounts payable under Section 2.15, Section 2.16 or Section 2.17, or
otherwise) prior to 12:00 noon on the date when due, in immediately available
funds, without set-off or counterclaim. Any amounts received after such time on
any date may, in the discretion of the Administrative Agent, be deemed to have
been received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the Administrative Agent at
its offices at Mail Code IL1-0010, 10 South Dearborn, Floor 07, Chicago,
Illinois, 60603-2003, except payments to be made directly to the Issuing Bank as
expressly provided herein and except that payments pursuant to Section 2.15,
Section 2.16, Section 2.17 and Section 11.03 shall be made directly to the
Persons entitled thereto. The Administrative Agent shall distribute any such
payments received by it for the account of any other Person to the appropriate
recipient promptly following receipt thereof. If any payment hereunder shall be
due on a day that is not a Business Day, the date for payment shall be extended
to the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension.
All payments hereunder shall be made in Dollars.
(b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties; provided that in the event such funds
are received by and available to the Administrative Agent as a result of the
exercise of any rights and remedies with respect to any collateral under the
Security Instruments, the parties entitled to a ratable share of such funds
pursuant to the foregoing clause (ii) and the determination of each parties’
ratable share shall include, on a pari passu basis, (x) the Lender
Counterparties with respect to Lender Hedging Obligations then due and owing to
each Lender Counterparty by any Credit Party as a result of the early
termination of any transactions under any Swap Agreements (after giving effect
to any netting agreements) and (y) any Lender or any of its Affiliates with
respect to Cash Management Obligations then due and owing to such Lender or any
of its Affiliates by any Credit Party.
(c) If any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Loans or participations in LC Disbursements resulting in such Lender
receiving payment of a greater proportion of the aggregate amount of its Loans
and participations in LC Disbursements and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall provide the Administrative Agent with written notice of such
set-off or counterclaim and thereafter purchase (for cash at face value)
participations in the Loans and

 

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participations in LC Disbursements of other Lenders to the extent necessary so
that the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and participations in LC Disbursements; provided that
(i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be rescinded
and the purchase price restored to the extent of such recovery, without
interest, and (ii) the provisions of this paragraph shall not be construed to
apply to any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans or participations in LC Disbursements to any assignee or participant,
other than to the Borrower or any Subsidiary or Affiliate thereof (as to which
the provisions of this paragraph shall apply). The Borrower consents to the
foregoing and agrees, to the extent it may effectively do so under applicable
law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Administrative Agent for
the account of the Lenders or the Issuing Bank hereunder that the Borrower will
not make such payment, the Administrative Agent may assume that the Borrower has
made such payment on such date in accordance herewith and may, in reliance upon
such assumption, distribute to the Lenders or the Issuing Bank, as the case may
be, the amount due. In such event, if the Borrower has not in fact made such
payment, then each of the Lenders or the Issuing Bank, as the case may be,
severally agrees to repay to the Administrative Agent forthwith on demand the
amount so distributed to such Lender or Issuing Bank with interest thereon, for
each day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.06(d) or Section 2.06(e), Section 2.07(b), Section 2.18(d)
or Section 11.03(c), then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), (i) apply any amounts
thereafter received by the Administrative Agent for the account of such Lender
for the benefit of the Administrative Agent or the Issuing Bank to satisfy such
Lender’s obligations to it under such Sections until all such unsatisfied
obligations are fully paid, and/or (ii) hold any such amounts in a segregated
account as cash collateral for, and application to, any future funding
obligations of such Lender under any such Section, in the case of each of
clauses (i) and (ii) above, in any order as determined by the Administrative
Agent in its discretion.
Section 2.19. Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under Section 2.15, or if the Borrower
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.15 or Section 2.17, as the case may be, in
the future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

 

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(b) If any Lender requests compensation under Section 2.15, or if the Borrower
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 11.04), all its interests, rights and obligations under this Agreement
to an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent (and
if a Commitment is being assigned, the Issuing Bank), which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans and participations in LC
Disbursements, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all
other amounts) and (iii) in the case of any such assignment resulting from a
claim for compensation under Section 2.15 or payments required to be made
pursuant to Section 2.17, such assignment will result in a reduction in such
compensation or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.
(c) If (i) in connection with any proposed amendment, modification, termination,
waiver or consent with respect to any of the provisions of this Agreement or any
other Loan Document that requires approval of all of the Lenders under
Section 11.02, the consent of Required Lenders shall have been obtained but the
consent of one or more of such other Lenders (each a “Non-Consenting Lender”)
whose consent is required has not been obtained or (ii) if any Lender becomes a
Defaulting Lender; then, in each case, the Borrower may, at its sole expense and
effort, upon notice to such Lender and the Administrative Agent, elect to
replace such Non-Consenting Lender or Defaulting Lender, as the case may be, as
a Lender party to this Agreement in accordance with and subject to the
restrictions contained in, and consents required by Section 11.04; provided that
(x) the Borrower shall have received the prior written consent of the
Administrative Agent (and if a Commitment is being assigned, the Issuing Bank),
which consent shall not unreasonably be withheld and (y) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans
and participations in LC Disbursements, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder, from the assignee (to the extent
of such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts). A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply or, in the case of a Defaulting Lender,
such Lender is no longer a Defaulting Lender.

 

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Section 2.20. Defaulting Lenders. Notwithstanding any provision of this
Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the
following provisions shall apply for so long as such Lender is a Defaulting
Lender:
(a) the fees shall cease to accrue on the unfunded portion of the Commitment of
such Defaulting Lender pursuant to Section 2.12(a);
(b) the Commitment and Credit Exposure of such Defaulting Lender shall not be
included in determining whether the Required Lenders or the Majority Lenders
have taken or may take any action hereunder (including any consent to any
amendment, waiver or other modification pursuant to Section 11.02), provided
that (i) any waiver, consent, amendment or modification requiring the consent of
such Lender or each affected Lender shall require the consent of such Defaulting
Lender and (ii) any waiver, consent, amendment or modification requiring the
consent of all Lenders shall require the consent of such Defaulting Lender
(except in respect of any increases in the Borrowing Base or the Maximum
Facility Amount),
(c) if any LC Exposure exists at the time such Lender becomes a Defaulting
Lender then:
(i) all or any part of the LC Exposure of such Defaulting Lender shall be
reallocated among the non-Defaulting Lenders in accordance with their respective
Applicable Percentages but only to the extent (x) the sum of all non-Defaulting
Lenders’ Credit Exposures plus such Defaulting Lender’s LC Exposure does not
exceed the total of all non-Defaulting Lenders’ Commitments and (y) the
conditions set forth in Section 5.02 are satisfied at that time;
(ii) if the reallocation described in clause (i) above cannot, or can only
partially, be effected, the Borrower shall, within one (1) Business Day
following notice by the Administrative Agent, cash collateralize for the benefit
of the Issuing Bank only the Borrower’s obligations corresponding to such
Defaulting Lender’s LC Exposure (after giving effect to any partial reallocation
pursuant to clause (i) above) in accordance with the procedures set forth in
Section 2.06(j) for so long as such LC Exposure is outstanding;
(iii) if the Borrower cash collateralizes any portion of such Defaulting
Lender’s LC Exposure pursuant to clause (ii) above, the Borrower shall not be
required to pay any fees to such Defaulting Lender pursuant to Section 2.12(b)
with respect to such Defaulting Lender’s LC Exposure during the period such
Defaulting Lender’s LC Exposure is cash collateralized;
(iv) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to
clause (i) above, then the fees payable to the Lenders pursuant to
Section 2.12(a) and Section 2.12(b) shall be adjusted in accordance with such
non-Defaulting Lenders’ Applicable Percentages; and
(v) if all or any portion of such Defaulting Lender’s LC Exposure is neither
cash collateralized nor reallocated pursuant to clauses (i) or (ii) above, then,
without prejudice to any rights or remedies of the Issuing Bank or any Lender
hereunder, all letter of credit fees payable under Section 2.12(b) with respect
to such Defaulting Lender’s LC Exposure shall be payable to the Issuing Bank
until and to the extent that such LC Exposure is cash collateralized and/or
reallocated; and

 

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(d) so long as such Lender is a Defaulting Lender, the Issuing Bank shall not be
required to issue, amend, or increase any Letter of Credit, unless it is
satisfied that the related exposure and the Defaulting Lender’s then outstanding
LC Exposure will be 100% covered by the Commitments of the non-Defaulting
Lenders and/or cash collateral will be provided by the Borrower in accordance
with Section 2.20(c), and any participating interests in any newly issued or
increased Letter of Credit shall be allocated among non-Defaulting Lenders in a
manner consistent with Section 2.20(c)(i) (and such Defaulting Lender shall not
participate therein).
If (i) a Bankruptcy Event with respect to a Parent of any Lender shall occur
following the date hereof and for so long as such event shall continue or
(ii) the Issuing Bank has a good faith belief that any Lender has defaulted in
fulfilling its obligations under one or more other agreements in which such
Lender commits to extend credit, the Issuing Bank shall not be required to
issue, amend, or increase any Letter of Credit, unless the Issuing Bank shall
have entered into arrangements with the Borrower or such Lender, satisfactory to
the Issuing Bank to defease any risk to it in respect of such Lender hereunder.
In the event that the Administrative Agent, the Borrower, and the Issuing Bank
each agrees that a Defaulting Lender has adequately remedied all matters that
caused such Lender to be a Defaulting Lender, then the LC Exposure of the
Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment
and on such date such Lender shall purchase at par such of the Loans of the
other Lenders as the Administrative Agent shall determine may be necessary in
order for such Lender to hold such Loans in accordance with its Applicable
Percentage.
Article III
Borrowing Base
Section 3.01. Reserve Report; Proposed Borrowing Base. During the period from
the Effective Date until the first Redetermination after the Effective Date, the
Borrowing Base shall be $350,000,000 (the “Initial Borrowing Base”). As soon as
available and in any event by April 1 and October 1 of each year, beginning
April 1, 2011, the Borrower shall deliver to the Administrative Agent and each
Lender a Reserve Report, prepared as of the immediately preceding December 31
and June 30, respectively, in form and substance reasonably satisfactory to the
Administrative Agent and prepared by an Approved Petroleum Engineer (or, in the
case of the Reserve Report due on October 1 of each year, by petroleum engineers
employed by the Borrower), said Reserve Report to utilize economic and pricing
parameters established from time to time by the Administrative Agent, together
with such other information, reports and data concerning the value of the
Borrowing Base Properties as the Administrative Agent shall deem reasonably
necessary to determine the value of such Borrowing Base Properties.
Simultaneously with the delivery to the Administrative Agent and the Lenders of
each Reserve Report, the Borrower shall submit to the Administrative Agent and
each Lender the Borrower’s requested amount of the Borrowing Base as of the next
Redetermination Date. Promptly after the receipt by the Administrative Agent of
such Reserve Report and the Borrower’s requested amount for the Borrowing Base,
the Administrative Agent shall submit to the Lenders a recommended amount of the
Borrowing Base to become effective for the period commencing on the next
Redetermination Date.

 

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Section 3.02. Scheduled Redeterminations of the Borrowing Base; Procedures and
Standards. Based in part on the Reserve Reports made available to the
Administrative Agent and the Lenders pursuant to Section 3.01, the Lenders shall
redetermine the Borrowing Base on or prior to the next Redetermination Date (or
such date promptly thereafter as reasonably possible based on the engineering
and other information available to the Lenders). Any Borrowing Base which
becomes effective as a result of any Redetermination of the Borrowing Base shall
be subject to the following restrictions: (a) such Borrowing Base shall not
exceed the amount of the Borrowing Base requested by the Borrower, (b) such
Borrowing Base shall not exceed the Maximum Facility Amount, (c) to the extent
such Borrowing Base represents an increase in the Borrowing Base in effect prior
to such Redetermination, such Borrowing Base must be approved by all Lenders,
and (d) to the extent such Borrowing Base represents a decrease in the Borrowing
Base in effect prior to such Redetermination or a reaffirmation of such prior
Borrowing Base, such Borrowing Base must be approved by the Administrative Agent
and Required Lenders. If a redetermined Borrowing Base is not approved by the
Administrative Agent and Required Lenders within twenty (20) days after the
submission to the Lenders by the Administrative Agent of its recommended
Borrowing Base pursuant to Section 3.01, or by all Lenders within such twenty
(20) day period in the case of any increase in the Borrowing Base, the
Administrative Agent shall notify each Lender that the recommended Borrowing
Base has not been approved and request that each Lender submit to the
Administrative Agent within ten (10) days thereafter its proposed Borrowing
Base. Promptly following the 10th day after the Administrative Agent’s request
for each Lender’s proposed Borrowing Base, the Administrative Agent shall
determine the Borrowing Base for such Redetermination by calculating the highest
Borrowing Base then acceptable to the Administrative Agent and a number of
Lenders sufficient to constitute Required Lenders (or all Lenders in the case of
an increase in the Borrowing Base). Each Redetermination shall be made by the
Lenders in their sole discretion, but based on the Administrative Agent’s and
such Lender’s usual and customary procedures for evaluating Oil and Gas Interest
as such exist at the time of such Redetermination, and including adjustments to
reflect the effect of any Swap Agreements of the Borrower and the Restricted
Subsidiaries as such exist at the time of such Redetermination. The Borrower
acknowledges and agrees that each Redetermination shall be based upon the loan
collateral value which each Agent and each Lender in its sole discretion (using
such methodology, assumptions and discount rates as the Administrative Agent and
such Lender customarily uses in assigning collateral value to Oil and Gas
Interests) assigns to the Borrowing Base Properties at the time in question and
based upon such other credit factors consistently applied (including, without
limitation, the assets, liabilities, cash flow, business, properties, prospects,
management and ownership of the Credit Parties) as the Administrative Agent and
such Lender customarily considers in evaluating similar oil and gas credits. It
is expressly understood that the Administrative Agent and Lenders have no
obligation to designate the Borrowing Base at any particular amounts, except in
the exercise of their discretion, whether in relation to the Aggregate
Commitment or otherwise. If the Borrower does not furnish all information,
reports and data required to be delivered by any date specified in this
Article III, unless such failure is not the fault of the Borrower, the
Administrative Agent and Lenders may nonetheless designate the Borrowing Base at
any amounts which the Administrative Agent and Lenders in their reasonable
discretion determine and may redesignate the Borrowing Base from time to time
thereafter until the Administrative Agent and Lenders receive all such
information, reports and data, whereupon the Administrative Agent and Lenders
shall designate a new Borrowing Base, as described above.

 

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Section 3.03. Special Redeterminations. In addition to Scheduled
Redeterminations, the Borrower shall be permitted to request a Special
Redetermination of the Borrowing Base once between each Scheduled
Redetermination and the Required Lenders shall be permitted to request a Special
Redetermination at any time. Any request by Borrower pursuant to this
Section 3.03 shall be submitted to the Administrative Agent and each Lender and
at the time of such request (or within twenty (20) days thereafter in the case
of the Reserve Report) Borrower shall (1) deliver to the Administrative Agent
and each Lender a Reserve Report prepared as of a date prior to the date of such
request that is reasonably acceptable to the Administrative Agent and such other
information which the Administrative Agent shall reasonably request, and
(2) notify the Administrative Agent and each Lender of the Borrowing Base
requested by Borrower in connection with such Special Redetermination. Any
request by Required Lenders pursuant to this Section 3.03 shall be submitted to
the Administrative Agent and the Borrower. Any Special Redetermination shall be
made by the Administrative Agent and Lenders in accordance with the procedures
and standards set forth in Section 3.02; provided that no Reserve Report is
required to be delivered to the Administrative Agent or the Lenders in
connection with any Special Redetermination requested by the Required Lenders
pursuant to this Section 3.03.
Section 3.04. Notice of Redetermination. Promptly following any Redetermination
of the Borrowing Base, the Administrative Agent shall notify the Borrower of the
amount of the redetermined Borrowing Base, which Borrowing Base shall be
effective as of the date specified in such notice, and such Borrowing Base shall
remain in effect for all purposes of this Agreement until the next
Redetermination.
Section 3.05. Additional Reductions in Borrowing Base. Unless otherwise waived
in writing by the Required Lenders, upon the issuance of any Senior Notes by any
Credit Party in accordance with Section 7.01(h) (other than any Permitted
Refinancing that extends, refinances, renews, replaces, defeases or refunds
existing Senior Notes), the Borrowing Base then in effect shall automatically be
reduced by the lesser of (a) $250 for each $1,000 in stated principal amount of
such Senior Notes on the date such Senior Notes are issued and (b) such other
amount, if any, determined by the Required Lenders in their sole discretion
prior to the issuance of such Senior Notes.
Article IV
Representations and Warranties
Each Credit Party represents and warrants to the Lenders that:
Section 4.01. Organization; Powers. Each Credit Party is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority to carry on its business as
now conducted and, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required.

 

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Section 4.02. Authorization; Enforceability. The Transactions are within each
Credit Party’s corporate, limited liability company or partnership powers and
have been duly authorized by all necessary corporate, limited liability company
or partnership and, if required, stockholder action. This Agreement has been
duly executed and delivered by each Credit Party and constitutes a legal, valid
and binding obligation of each Credit Party, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
Section 4.03. Governmental Approvals; No Conflicts. The Transactions (a) do not
require any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority, except such as have been obtained or made
and are in full force and effect or have been made or to be made in connection
with the filing of the Liens to secure the Obligations, (b) will not violate any
applicable law or regulation or the charter, by-laws or other Organizational
Documents of the Borrower, any Restricted Subsidiary or any Sponsored
Partnership or any order of any Governmental Authority, (c) will not violate or
result in a default under any indenture, agreement or other instrument
evidencing Material Indebtedness or a Material Sales Contract binding upon the
Borrower or any Restricted Subsidiary or any of their respective assets, or give
rise to a right thereunder to require any payment to be made by the Borrower or
any Restricted Subsidiary, and (d) will not result in the creation or imposition
of any Lien on any asset of the Borrower, any Restricted Subsidiary or any
Sponsored Partnership not otherwise permitted under Section 7.02.
Section 4.04. Financial Condition; No Material Adverse Change.
(a) The Borrower has heretofore furnished to the Lenders the audited
consolidated balance sheet and related statements of income, stockholders equity
and cash flows of the Borrower and its Consolidated Subsidiaries (i) as of and
for the fiscal year ended December 31, 2009, reported on by
PricewaterhouseCoopers L.L.P., and (ii) as of and for the fiscal quarter ended
June 30, 2010, certified by its Financial Officer. Such financial statements
present fairly, in all material respects, the financial position and results of
operations and cash flows of the Borrower and its Consolidated Subsidiaries as
of such dates and for such periods in accordance with GAAP, subject to year-end
audit adjustments and the absence of footnotes in the case of the statements
referred to in clause (ii) above.
(b) Since December 31, 2009, there has been no material adverse change in the
business, assets, operations or condition, financial or otherwise, of the
Borrower and its Restricted Subsidiaries, taken as a whole.
Section 4.05. Properties.
(a) Except as otherwise provided in Section 4.15 with respect to Oil and Gas
Interests, the Borrower and each Restricted Subsidiary has good title to, or
valid leasehold interests in, all such real and personal property material to
its business, except for (i) minor defects in title that do not, in the
aggregate, interfere with its ability to conduct its business as currently
conducted or to utilize such properties for their intended purposes and (ii)
Liens permitted under Section 7.02.

 

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(b) The Borrower and each Restricted Subsidiary owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Borrower and such
Restricted Subsidiaries, as the case may be, does not infringe upon the rights
of any other Person, except for any such infringements that, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
Section 4.06. Litigation and Environmental Matters.
(a) There are no actions, suits or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of the Borrower,
threatened against or affecting the Borrower, any Restricted Subsidiary or any
Sponsored Partnership, (i) as to which there is a reasonable possibility of an
adverse determination and that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect after taking into account insurance proceeds or other recoveries from
third parties actually received (other than the Disclosed Matters) or (ii) that
involve this Agreement or the Transactions.
(b) Except for the Disclosed Matters and except with respect to any other
matters that, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect after taking into account insurance
proceeds or other recoveries from third parties actually received, neither the
Borrower nor any Restricted Subsidiary nor any Sponsored Partnership, to the
Borrower’s knowledge, (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Since the date of this Agreement, there has been no change in the status of
the Disclosed Matters that, individually or in the aggregate, has resulted in,
or materially increased the likelihood of, a Material Adverse Effect.
Section 4.07. Compliance with Laws and Agreements. The Borrower and each
Restricted Subsidiary is in compliance with all laws, regulations and orders of
any Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
Section 4.08. Investment Company Status. Neither the Borrower nor any Restricted
Subsidiary is an “investment company” as defined in, or subject to regulation
under, the Investment Company Act of 1940.

 

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Section 4.09. Taxes. The Borrower and each Restricted Subsidiary has timely
filed or caused to be filed all Tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid by
it, except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which the Borrower or such Restricted Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
Section 4.10. ERISA. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of FASB Statement 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $1,000,000 the fair
market value of the assets of such Plan, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of FASB Statement 87) did not, as of the date of
the most recent financial statements reflecting such amounts, exceed by more
than $1,000,000 the fair market value of the assets of all such underfunded
Plans.
Section 4.11. Disclosure. The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
Restricted Subsidiary is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of the other reports, financial statements,
certificates or other information furnished by or on behalf of the Borrower or
any Restricted Subsidiary to the Administrative Agent or any Lender in
connection with the negotiation of this Agreement or delivered hereunder (as
modified or supplemented by other information so furnished) when taken as a
whole contains any material misstatement of fact or omits to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading as of the date made or deemed made;
provided that, with respect to projected financial information, the Borrower
represents only that such information was prepared in good faith based on
assumptions believed to be reasonable at the time.
Section 4.12. Labor Matters. There are no strikes, lockouts or slowdowns against
the Borrower or any of its Restricted Subsidiaries pending or, to the knowledge
of the Borrower, threatened that could reasonably be expected to have a Material
Adverse Effect. The hours worked by and payments made to employees of the
Borrower and its Restricted Subsidiaries have not been in violation of the Fair
Labor Standards Act or any other Law dealing with such matters to the extent
that such violation could reasonably be expected to have a Material Adverse
Effect.
Section 4.13. Capitalization. Schedule 4.13 lists as of the Effective Date,
(a) for the Borrower and each Restricted Subsidiary, its full legal name and its
jurisdiction of organization, (b) for each Restricted Subsidiary, the number of
shares of capital stock or other Equity Interests outstanding and the owner(s)
of such shares or Equity Interests and (c) with respect to each Sponsored
Partnership, the Partnership Interests owned by each Credit Party in such
Sponsored Partnership.
Section 4.14. Margin Stock. Neither the Borrower nor any Restricted Subsidiary
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the Federal Reserve Board), and no
part of the proceeds of any Loan will be used to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying
margin stock.

 

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Section 4.15. Oil and Gas Interests. Each Credit Party has good and defensible
title to all proved reserves included in the Direct Interests (for purposes of
this Section 4.15, “proved Direct Interests”) described in the most recent
Reserve Report provided to the Administrative Agent (other than such proved
reserves that have been subsequently disposed of in compliance with this
Agreement), free and clear of all Liens except Liens permitted pursuant to
Section 7.02. Each Sponsored Partnership has good and defensible title to all
proved reserves included in the Attributed Interests (for purposes of this
Section 4.15, “proved Attributed Interests”) described in the most recent
Reserve Report provided to the Administrative Agent (other than such proved
reserves that have been subsequently disposed of in compliance with this
Agreement), free and clear of all Liens except Liens permitted pursuant to
Section 7.02. All such proved Oil and Gas Interests are valid, subsisting, and
in full force and effect in all material respects, and all rentals, royalties,
and other amounts due and payable in respect thereof have been duly paid except
for such rentals, royalties and other amounts that are amounts being contested
in good faith by appropriate proceedings and for which the Borrower or the
applicable Restricted Subsidiary or Sponsored Partnership has set aside on its
books adequate reserves. Without regard to any consent or non-consent provisions
of any joint operating agreement covering any Credit Party’s proved Direct
Interests, or any Sponsored Partnership’s proved Attributed Interests, such
Credit Party’s share and such Sponsored Partnership’s share, as the case may be,
of (a) the costs for each proved Oil and Gas Interest described in the Reserve
Report (other than for such proved Oil and Gas Interests that have been
subsequently disposed of in compliance with this Agreement) is not materially
greater than the decimal fraction set forth in the Reserve Report, before and
after payout, as the case may be, and described therein by the respective
designations “working interests,” “WI,” “gross working interest,” “GWI,” or
similar terms (except in such cases where there is a corresponding increase in
the net revenue interest), and (b) production from, allocated to, or attributed
to each such proved Oil and Gas Interest is not materially less than the decimal
fraction set forth in the Reserve Report, before and after payout, as the case
may be, and described therein by the designations “net revenue interest,” “NRI,”
or similar terms. The wells drilled in respect of proved producing Oil and Gas
Interests described in the Reserve Report (other than wells drilled in respect
of such proved producing Oil and Gas Interests that have been subsequently
disposed of in compliance with this Agreement) (1) are capable of, and are
presently, either producing Hydrocarbons in commercially profitable quantities
or in the process of being worked over or enhanced, and the Credit Party or
Sponsored Partnership that owns such proved producing Oil and Gas Interests is
currently receiving payments for its share of production, with no funds in
respect of any thereof being presently held in suspense, other than any such
funds being held in suspense pending delivery of appropriate division orders,
and (2) have been drilled, bottomed, completed, and operated in compliance with
all applicable laws, in the case of clauses (1) and (2), except where any
failure to satisfy clause (1) or to comply with clause (2) would not have a
Material Adverse Effect, and no such well which is currently producing
Hydrocarbons is subject to any material penalty in production by reason of such
well having produced in excess of its allowable production.

 

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Section 4.16. Insurance. The certificate signed by a Responsible Officer that
attests to the existence of, and summarizes, the property and casualty insurance
program maintained by the Credit Parties that has been furnished by the Borrower
to the Administrative Agent and the Lenders as of the Effective Date, is
complete and accurate in all material respects as of the Effective Date and
demonstrates the Borrower’s and the Restricted Subsidiaries’ compliance with
Section 6.05.
Section 4.17. Solvency.
(a) Immediately after the consummation of the Transactions and immediately
following the making of the initial Borrowing, if any, made on the Effective
Date and after giving effect to the application of the proceeds thereof, (1) the
fair value of the assets of the Credit Parties on a consolidated basis, at a
fair valuation, will exceed the debts and liabilities, subordinated, contingent
or otherwise, of the Credit Parties on a consolidated basis; (2) the present
fair saleable value of the real and personal property of the Credit Parties on a
consolidated basis will be greater than the amount that will be required to pay
the probable liability of the Credit Parties on a consolidated basis on their
debts and other liabilities, subordinated, contingent or otherwise, as such
debts and other liabilities become absolute and matured; (3) the Credit Parties
on a consolidated basis will be able to pay their debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (4) the Credit Parties on a consolidated basis will
not have unreasonably small capital with which to conduct the businesses in
which they are engaged as such businesses are now conducted and are proposed to
be conducted after the date hereof.
(b) The Credit Parties do not intend to, and do not believe that they will,
incur debts beyond their ability to pay such debts as they mature, taking into
account the timing of and amounts of cash to be received by it and the timing of
the amounts of cash to be payable on or in respect of its Indebtedness.
Article V
Conditions
Section 5.01. Effective Date. The obligations of the Lenders and Lender
Counterparties to continue the Original Loans and the Existing Swap Agreements
and the obligations of the Lenders to make Loans and of the Issuing Bank to
permit the Existing Letters of Credit to remain outstanding and to issue Letters
of Credit hereunder shall not become effective until the date on which each of
the following conditions is satisfied (or waived in accordance with Section
11.02):
(a) The Administrative Agent (or its counsel) shall have received from each
party hereto either (i) a counterpart of this Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Administrative Agent (which
may include telecopy or electronic transmission of a signed signature page of
this Agreement) that such party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a favorable written opinion
(addressed to the Administrative Agent and the Lenders and dated the Effective
Date) of (i) Andrews & Kurth LLP, counsel for the Credit Parties, substantially
in the form of Exhibit B and (ii) local counsel for the Credit Parties in West
Virginia and Nevada, in form and substance satisfactory to the Administrative
Agent, and, in each case, covering such other matters relating to the Credit
Parties, this Agreement or the Transactions as the Majority Lenders shall
reasonably request. The Credit Parties hereby request such counsels to deliver
such opinions.

 

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(c) The Administrative Agent shall have received such documents and certificates
as the Administrative Agent or its counsel may reasonably request relating to
the organization, existence and good standing of each Credit Party, the
authorization of the Transactions and any other legal matters relating to the
Credit Parties, this Agreement or the Transactions, all in form and substance
satisfactory to the Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a certificate, dated the
Effective Date and signed by a Responsible Officer of the Borrower, confirming
that the Credit Parties have (i) complied with the conditions set forth in
paragraphs (a), (b), and (c) of Section 5.02, (ii) complied with the covenants
set forth in Section 6.05 (and demonstrating such compliance by the attachment
of an insurance summary and insurance certificates evidencing the coverage
described in such summary), (iii) complied with the requirements of Section 6.09
and Section 6.10, and (iv) complied with the conditions set forth in paragraphs
(k) and (l) of this Section 5.01.
(e) The Administrative Agent, the Lenders and J.P. Morgan Securities LLC shall
have received all fees and other amounts due and payable on or prior to the
Effective Date, and, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder, including all fees, expenses and disbursements of counsel for the
Administrative Agent to the extent invoiced on or prior to the Effective Date,
together with such additional amounts as shall constitute such counsel’s
reasonable estimate of expenses and disbursements to be incurred by such counsel
in connection with the recording and filing of Mortgages (and/or Mortgage
amendments) and financing statements; provided, that, such estimate shall not
thereafter preclude further settling of accounts between the Borrower and the
Administrative Agent.
(f) The Administrative Agent shall have received the Security Agreement, duly
executed and delivered by the appropriate Credit Parties, together with such
other assignments, conveyances, amendments (other than, for the avoidance of
doubt, any Mortgage amendments required to be delivered pursuant to the last
sentence of Section 6.09), agreements and other writings, including, without
limitation, UCC-1 financing statements and control agreements, creating Liens
prior and superior in right to any other Person, subject to the Liens permitted
under Section 7.02, in all or substantially all of the assets of each Credit
Party, including all of the Equity Interests of each Restricted Subsidiary and
Sponsored Partnership now or hereafter owned by Borrower or any Restricted
Subsidiary.
(g) The Administrative Agent shall have received promissory notes duly executed
by the Borrower for each Lender that has requested the delivery of a promissory
note pursuant to and in accordance with Section 2.09(e).
(h) In the event that any Loans are made on the Effective Date, the
Administrative Agent shall have received a Borrowing Request acceptable to the
Administrative Agent and in accordance with Section 2.05 setting forth the Loans
requested by the Borrower on the Effective Date, the Type and amount of each
Loan and the accounts to which such Loans are to be funded.

 

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(i) If the initial Borrowing includes the issuance of a Letter of Credit, the
Administrative Agent shall have received a written request in accordance with
Section 2.06 of this Agreement.
(j) The Administrative Agent shall have received such financing statements
(including, without limitation, the financing statements referenced in
subclause (f) above) as Administrative Agent shall specify to fully evidence and
perfect all Liens contemplated by the Loan Documents, all of which shall be
filed of record in such jurisdictions as the Administrative Agent shall require
in its sole discretion.
(k) Each Credit Party shall have obtained all approvals required from any
Governmental Authority and all consents of other Persons, in each case that are
necessary or advisable in connection with the Transactions and each of the
foregoing shall be in full force and effect and in form and substance reasonably
satisfactory to the Administrative Agent. All applicable waiting periods shall
have expired without any action being taken or threatened by any competent
authority which would restrain, prevent or otherwise impose adverse conditions
on the transactions contemplated by the Loan Documents or the financing thereof
and no action, request for stay, petition for review or rehearing,
reconsideration, or appeal with respect to any of the foregoing shall be
pending, and the time for any applicable agency to take action to set aside its
consent on its own motion shall have expired.
(l) There shall not exist any action, suit, investigation, litigation or
proceeding or other legal or regulatory developments, pending or threatened in
any court or before any arbitrator or Governmental Authority that, in the
reasonable opinion of Administrative Agent, singly or in the aggregate,
materially impairs the Transactions, the financing thereof or any of the other
transactions contemplated by the Loan Documents or that could reasonably be
expected to result in a Material Adverse Effect.
(m) All partnership, corporate and other proceedings taken or to be taken in
connection with the Transactions and all documents incidental thereto shall be
reasonably satisfactory in form and substance to Administrative Agent and its
counsel, and Administrative Agent and such counsel shall have received all such
counterpart originals or certified copies of such documents as Administrative
Agent may reasonably request.
(n) The Administrative Agent and the Lenders shall have received the Projections
and all of the financial statements described in Section 4.04(a).
(o) The Administrative Agent shall have received Mortgages and title
information, in each case, reasonably satisfactory to the Administrative Agent
with respect to the Borrowing Base Properties, or the portion thereof, as
required by Section 6.09 and 6.10.
(p) The Administrative Agent shall have received such other instruments and
documents incidental and appropriate to the transactions provided for herein as
the Administrative Agent or their special counsel may reasonably request prior
to the Effective Date, and all such documents shall be in form and substance
satisfactory to the Administrative Agent.

 

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The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to continue the Original Loans and
the Existing Swap Agreements and the obligations of the Lenders to make Loans
and of the Issuing Bank to permit the Existing Letters of Credit to remain
outstanding and to issue Letters of Credit hereunder shall not become effective
unless each of the foregoing conditions is satisfied (or waived pursuant to
Section 11.02) at or prior to 3:00 p.m. on November 5, 2010 (and, in the event
such conditions are not so satisfied or waived, the Aggregate Commitment shall
terminate at such time).
Section 5.02. Each Credit Event. The obligation of each Lender to make a Loan on
the occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew or
extend any Letter of Credit, is subject to the satisfaction of the following
conditions:
(a) The representations and warranties of each Credit Party set forth in this
Agreement and the other Loan Documents shall be true and correct on and as of
the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct as of such earlier date.
(b) At the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be continuing.
(c) At the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Borrowing Base Deficiency exists or would be caused thereby.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a),
(b) and (c) of this Section.
Article VI
Affirmative Covenants
Until the Aggregate Commitment has expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, each Credit Party covenants and agrees
with the Lenders that:
Section 6.01. Financial Statements; Other Information. The Borrower will furnish
to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of the Borrower, the
audited consolidated balance sheet and related statements of operations,
stockholders’ equity and cash flows of the Borrower and its Consolidated
Subsidiaries as of the end of and for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on by
PricewaterhouseCoopers L.L.P. or other independent public accountants reasonably
acceptable to Administrative Agent (without a “going concern” or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of the Borrower and its Consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied;

 

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(b) within 45 days after the end of each fiscal quarter of the Borrower, the
consolidated balance sheet and related statements of operations, stockholders’
equity and cash flows of the Borrower and its Consolidated Subsidiaries as of
the end of and for such fiscal quarter and the then elapsed portion of the
fiscal year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Borrower and its Consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
(c) concurrently with any delivery of financial statements under clause (a) or
(b) above, a certificate in a form reasonably acceptable to Administrative Agent
signed by a Financial Officer of the Borrower (i) certifying as to whether a
Default has occurred and, if a Default has occurred, specifying the details
thereof and any action taken or proposed to be taken with respect thereto,
(ii) setting forth reasonably detailed calculations in a form reasonably
acceptable to the Administrative Agent demonstrating compliance with clauses
(A) and (B) of Section 7.05(a), (iii) setting forth, in a form reasonably
acceptable to the Administrative Agent, the aggregate net amount of all unpaid
holdback or reimbursement obligations of the Sponsored Partnerships to the
Credit Parties with respect to all Allocated Partnership Volumes, taken as a
whole, in the event such aggregate amount exceeds $5,000,000 as of the last day
of any fiscal year of the Borrower with respect to the financial statements
delivered under clause (a) above and as of the last day of any fiscal quarter of
the Borrower with respect to the financial statements delivered under clause (b)
above and (iv)  setting forth reasonably detailed calculations demonstrating
compliance with Section 7.11;
(d) promptly after the same become publicly available, copies of all periodic
and other reports, proxy statements and other materials filed by the Borrower or
any Restricted Subsidiary with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, or distributed by the
Borrower to its shareholders generally, as the case may be;
(e) for any Sponsored Partnership, upon the written request (or the verbal
request confirmed in writing within ten days of such verbal request) of the
Administrative Agent, (A)  copies of any tax returns which such Sponsored
Partnership has sent to or filed with the Internal Revenue Service, and (B) the
audited consolidated balance sheet and related statements of operations,
partners’ equity and cash flows of such Sponsored Partnership as of the end of
any fiscal year, setting forth in each case in comparative form the figures for
the previous fiscal year, as reported on by PricewaterhouseCoopers L.L.P. or
other independent public accountants reasonably acceptable to the Administrative
Agent (without a “going concern” or like qualification or exception and without
any qualification or exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly in all material respects
the financial condition and results of operations of such Sponsored Partnership
on a consolidated basis in accordance with GAAP consistently applied;

 

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(f) if requested by the Administrative Agent for such fiscal quarter, as soon as
possible and in any event within 30 days of the end of each fiscal quarter of
the Borrower, a schedule of all cash receipts and other payments received by any
Credit Party with respect to any Direct Interests and by any Sponsored
Partnership with respect to any Attributed Interests and as soon as possible and
in any event within 45 days after the end of each fiscal quarter of the
Borrower, a schedule of all oil, gas, and other mineral production attributable
to the Direct Interests of each Credit Party and the Attributed Interests of
each Sponsored Partnership;
(g) as soon as possible and in any event within 15 days after the execution
thereof, copies of (i) any amendment to any Material Sales Contract to which the
Borrower or any Restricted Subsidiary is a party, and (ii) any Material Sales
Contract executed and delivered after the date hereof to which the Borrower or
any Restricted Subsidiary is a party;
(h) as soon as available, and in any event no later than April 1 and October 1
of each year, the Reserve Reports required on such dates pursuant to
Section 3.01;
(i) together with the Reserve Reports required under clause (h) above, a report,
in reasonable detail, setting forth (i) the Swap Agreements then in effect, the
notional volumes of and prices for, on a monthly basis and in the aggregate, the
Crude Oil and Natural Gas for each such Swap Agreement and the term of each such
Swap Agreement and (ii) the notional volumes of Crude Oil and Natural Gas for
each such Swap Agreement allocated to (x) the Direct Interests and Attributed
Interests and (y) the Other Attributed Interests;
(j) if requested by the Administrative Agent, as soon as possible and in any
event within 30 days of such request, copies of the Organizational Documents of
any one or more of the Sponsored Partnerships as specified by the Administrative
Agent in such request; and
(k) promptly following any request therefor, such other information regarding
the operations, business affairs and financial condition of any Credit Party, or
compliance with the terms of this Agreement, as the Administrative Agent or any
Lender may reasonably request.
Section 6.02. Notices of Material Events. The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the following:
(a) as soon as possible, but in any event within 5 days of obtaining knowledge
thereof, the occurrence of any Default;
(b) as soon as possible, but in any event within 30 days after the filing or
commencement of any action, suit or proceeding by or before any arbitrator or
Governmental Authority against or affecting any Credit Party or any Affiliate
thereof that, if adversely determined, could reasonably be expected to result in
a Material Adverse Effect;
(c) as soon as possible, but in any event within 30 days after the occurrence of
any ERISA Event that, alone or together with any other ERISA Events that have
occurred, could reasonably be expected to result in liability of the Borrower
and the Restricted Subsidiaries in an aggregate amount exceeding $1,000,000;

 

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(d) as soon as possible, but in any event within 30 days after any notice or
claim to the effect that any Credit Party is or may be liable to any Person as a
result of the release by any Credit Party, or any other Person of any Hazardous
Material into the environment, which could reasonably be expected to have a
Material Adverse Effect;
(e) as soon as possible, but in any event within 30 days after any notice
alleging any violation of any Environmental Law by any Credit Party, which could
reasonably be expected to have a Material Adverse Effect;
(f) as soon as possible, but in any event within 30 days after the occurrence of
any breach or default under, or repudiation or termination of, any Material
Sales Contract, which could reasonably be expected to have a Material Adverse
Effect;
(g) as soon as possible, but in any event within 30 days after the receipt by
the Borrower or any Restricted Subsidiary of any management letter or comparable
analysis prepared by the auditors for the Borrower or any such Restricted
Subsidiary; and
(h) as soon as possible, but in any event within 30 days after any other
development that results in, or could reasonably be expected to result in, a
Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Responsible Officer of the Borrower setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
Section 6.03. Existence; Conduct of Business. The Borrower will, and will cause
each Restricted Subsidiary and each Sponsored Partnership to, do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence and the rights, licenses, permits, privileges and franchises
material to the conduct of its business; provided that the foregoing shall not
prohibit any merger, consolidation, liquidation or dissolution permitted under
Section 7.03, nor shall the Borrower, any Restricted Subsidiary or any Sponsored
Partnership be required to preserve any right or franchise unrelated to the
Borrowing Base Properties if the Borrower, such Restricted Subsidiary or such
Sponsored Partnership determines that the preservation thereof is no longer
desirable in the conduct of its business and that the loss thereof is not
adverse in any material respect to the Administrative Agent or any Lender.
Section 6.04. Payment of Obligations. The Borrower will, and will cause each
Restricted Subsidiary and each Sponsored Partnership to, pay its obligations,
including Tax liabilities, that, if not paid, could result in a Material Adverse
Effect before the same shall become delinquent or in default, except where
(a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) the Borrower, such Restricted Subsidiary or such
Sponsored Partnership, as applicable, has set aside on its books adequate
reserves with respect thereto in accordance with GAAP and (c) the failure to
make payment pending such contest could not reasonably be expected to result in
a Material Adverse Effect.

 

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Section 6.05. Maintenance of Properties; Insurance. The Borrower will, and will
cause each Restricted Subsidiary and each Sponsored Partnership and use
commercially reasonable efforts to cause each operator of Borrowing Base
Properties to, (a) keep and maintain all property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted,
and (b) maintain, with financially sound and reputable insurance companies,
insurance in such amounts and against such risks as are customarily maintained
by companies engaged in the same or similar businesses operating in the same or
similar locations. Upon request of the Administrative Agent, the Borrower will
furnish or cause to be furnished to the Administrative Agent from time to time a
summary of the respective insurance coverage of the Borrower, its Restricted
Subsidiaries and the Sponsored Partnerships in form and substance reasonably
satisfactory to the Administrative Agent, and, if requested, will furnish the
Administrative Agent copies of the applicable policies. Upon demand by
Administrative Agent, the Borrower will cause any insurance policies covering
any such property to be endorsed (a) to provide that such policies may not be
cancelled, reduced or affected in any manner for any reason without fifteen
(15) days prior notice to Administrative Agent, (b) to include the
Administrative Agent as loss payee with respect to all property/casualty
policies and additional insured with respect to all liability policies and
(c) to provide for such other matters as the Lenders may reasonably require.
Section 6.06. Books and Records; Inspection Rights. The Borrower will, and will
cause each Restricted Subsidiary and each Sponsored Partnership to, keep proper
books of record and account in which full, true and correct entries are made of
all dealings and transactions in relation to its business and activities. The
Borrower will, and will cause each Restricted Subsidiary and each Sponsored
Partnership to, permit any representatives designated by the Administrative
Agent or any Lender, upon reasonable prior notice, to visit and inspect its
properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested;
provided that so long as no Default exists, such visits and inspections shall
not be more frequent than once in any period of 12 consecutive calendar months
without the prior consent or request of the Borrower.
Section 6.07. Compliance with Laws. The Borrower will, and will cause each
Restricted Subsidiary and each Sponsored Partnership to, comply with all laws,
rules, regulations and orders of any Governmental Authority applicable to it or
its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
Section 6.08. Use of Proceeds and Letters of Credit. The proceeds of the Loans
will be used only to (a) pay the fees, expenses and transaction costs of the
Transactions, (b) make purchases of outstanding Equity Interests in Sponsored
Partnerships to the extent permitted under Section 7.04(b), (c) make investments
in the Equity Interests of PDC Mountaineer to the extent permitted under
Section 7.04(k), (d) make investments consisting of loans to the Marcellus JV
Investor Partner to the extent permitted under Section 7.04(l) and (e) finance
the working capital needs of the Borrower, including capital expenditures, and
for general corporate purposes of the Borrower and the Guarantors, in the
ordinary course of business, including the exploration, acquisition and
development of Oil and Gas Interests. No part of the proceeds of any Loan will
be used, whether directly or indirectly, to purchase or carry any margin stock
(as defined in Regulation U issued by the Board). Letters of Credit will be
issued only to support general corporate purposes of the Borrower and the
Restricted Subsidiaries.

 

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Section 6.09. Mortgages and Other Security. The Borrower will, and will cause
each Restricted Subsidiary to, execute and deliver to the Administrative Agent,
for the benefit of the Secured Parties, (a) Mortgages in form and substance
acceptable to the Administrative Agent together with such other assignments,
conveyances, amendments, agreements and other writings, including, without
limitation, UCC-1 financing statements (each duly authorized and executed, as
applicable) as the Administrative Agent shall deem necessary or appropriate to
grant, evidence and perfect and maintain Liens in Direct Interests having an
Engineered Value equal to or greater than eighty percent (80%) of the Engineered
Value of the Direct Interests included in the Borrowing Base Properties
(b) promptly after entering into any such agreement, collateral assignments of
all right, title and interest of any Credit Party in and to any gathering,
handling, storing, processing, transportation, supply, pipeline or marketing
agreement with any Affiliate that is not a Credit Party (other than PDC
Mountaineer or any of its Subsidiaries), and (c) Security Instruments in form
and substance acceptable to the Administrative Agent together with such other
assignments, conveyances, amendments, agreements and other writings, including,
without limitation, UCC-1 financing statements (each duly authorized and
executed, as applicable) and control agreements as the Administrative Agent
shall deem necessary or appropriate to grant, evidence and perfect Liens in all
or substantially all of the assets of each Credit Party, including all of the
Equity Interests of each Restricted Subsidiary and Sponsored Partnership now or
hereafter owned by Borrower or any Restricted Subsidiary, in each case, subject
only to Permitted Encumbrances and other Liens permitted under Section 7.02.
Within 30 days after the Effective Date (or such longer time as acceptable to
the Administrative Agent in its sole discretion), the Borrower agrees to execute
and deliver, or cause to be executed and delivered, such amendments to, or
amendment and restatements of, the Mortgages, in form and substance reasonably
satisfactory to the Administrative Agent, as the Administrative Agent may
reasonably require in connection with the Transactions.
Section 6.10. Title Data. As soon as available any in any event no later than
thirty (30) days after the Effective Date (or such longer time as acceptable to
the Administrative Agent in its sole discretion), the Borrower will, and will
cause each Guarantor to, deliver to the Administrative Agent such opinions of
counsel (including, if so requested, title opinions, addressed to the
Administrative Agent) and other evidence of title as the Administrative Agent
shall deem necessary or appropriate to verify (i) the title of the Credit
Parties to not less than  eighty percent (80%) of the Engineered Value of the
Borrowing Base Properties that are required to be subject to a Mortgage pursuant
to Section 6.09, and (ii) the validity, perfection and priority of the Liens
created by such Mortgages and such other matters regarding such Mortgages as
Administrative Agent shall reasonably request.

 

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Section 6.11. Swap Agreements. Upon the request of the Majority Lenders, the
Borrower and each Restricted Subsidiary shall take all actions necessary to
cause all of its right, title and interest in each Swap Agreement to which it is
a party to be collaterally assigned to the Administrative Agent, for the benefit
of the Secured Parties, and shall, if requested by the Administrative Agent or
the Majority Lenders, use its commercially reasonable efforts to cause each such
agreement or contract to (a) expressly permit such assignment and (b) upon the
occurrence of any default or event of default under such agreement or contract,
(i) to permit the Lenders to cure such default or event of default and assume
the obligations of such Credit Party under such agreement or contract and
(ii) to prohibit the termination of such agreement or contract by the
counterparty thereto if the Lenders assume the obligations of such Credit Party
under such agreement or contract and the Lenders take the actions required under
the foregoing clause (i). Upon the request of the Administrative Agent, the
Borrower shall, within thirty (30) days of such request, provide to the
Administrative Agent and each Lender copies of all agreements, documents and
instruments evidencing the Swap Agreements not previously delivered to the
Administrative Agent and Lenders, certified as true and correct by a Responsible
Officer of the Borrower, and such other information regarding such Swap
Agreements as the Administrative Agent and Lenders may reasonably request.
Section 6.12. Operation of Oil and Gas Interests.
(a) The Borrower will, and will cause each Restricted Subsidiary (and each
Sponsored Partnership with respect to Attributed Interests) to, maintain,
develop and operate its Oil and Gas Interests in a good and workmanlike manner,
and observe and comply with all of the terms and provisions, express or implied,
of all oil and gas leases relating to such Oil and Gas Interests so long as such
Oil and Gas Interests are capable of producing Hydrocarbons and accompanying
elements in paying quantities, except where such failure to comply could not
reasonably be expected to have a Material Adverse Effect.
(b) Borrower will, and will cause each Restricted Subsidiary (and each Sponsored
Partnership with respect to Attributed Interests) to, comply in all respects
with all contracts and agreements applicable to or relating to its Oil and Gas
Interests or the production and sale of Hydrocarbons and accompanying elements
therefrom, except to the extent a failure to so comply could not reasonably be
expected to have a Material Adverse Effect.
Section 6.13. Restricted Subsidiaries. In the event any Person is or becomes a
Restricted Subsidiary, Borrower will (a) promptly take all action necessary to
comply with Section 6.14, (b) promptly take all such action and execute and
deliver, or cause to be executed and delivered, to the Administrative Agent all
such opinions, documents, instruments, agreements, and certificates similar to
those described in Sections 5.01(b) and 5.01(c) that the Administrative Agent
may request, and (c) promptly cause such Restricted Subsidiary to (i) become a
party to this Agreement and Guarantee the Obligations by executing and
delivering to the Administrative Agent a Counterpart Agreement in the form of
Exhibit C, (ii) to the extent required to comply with Section 6.09 or as
requested by the Administrative Agent, execute and deliver Mortgages and other
Security Instruments creating Liens prior and superior in right to any other
Person, subject to Permitted Encumbrances, in such Restricted Subsidiary’s
Direct Interests and Partnership Interests, and (iii) to the extent required to
comply with Section 6.10, all title opinions and other information relating to
such Restricted Subsidiary’s Direct Interests. Upon delivery of any such
Counterpart Agreement to the Administrative Agent, notice of which is hereby
waived by each Credit Party, such Restricted Subsidiary shall be a Guarantor and
shall be as fully a party hereto as if such Restricted Subsidiary were an
original signatory hereto. Each Credit Party expressly agrees that its
obligations arising hereunder shall not be affected or diminished by the
addition or release of any other Credit Party hereunder. This Agreement shall be
fully effective as to any Credit Party that is or becomes a party hereto
regardless of whether any other Person becomes or fails to become or ceases to
be a Credit Party hereunder. With respect to each such Restricted Subsidiary,
the Borrower shall promptly send to the Administrative Agent written notice
setting forth with respect to such Person the date on which such Person became a
Restricted Subsidiary of the Borrower, and supplement the data required to be
set forth in the Schedules to this Agreement as a result of the acquisition or
creation of such Restricted Subsidiary; provided that such supplemental data
must be reasonably acceptable to the Administrative Agent and Majority Lenders.

 

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Section 6.14. Pledged Equity Interests. On the date hereof and at the time
hereafter that any Restricted Subsidiary of the Borrower or any Sponsored
Partnership is created or acquired or any Unrestricted Subsidiary becomes a
Restricted Subsidiary, the Borrower and the Subsidiaries (as applicable) shall
execute and deliver to the Administrative Agent for the benefit of the Secured
Parties, a Security Agreement (or an amendment or amendment and restatement of
the existing Security Agreement), in form and substance acceptable to the
Administrative Agent, from the Borrower and/or the Restricted Subsidiaries (as
applicable) covering all Equity Interests owned by the Borrower or such
Restricted Subsidiaries in such Restricted Subsidiaries or any Sponsored
Partnership, together with all certificates (or other evidence acceptable to
Administrative Agent) evidencing the issued and outstanding Equity Interests of
each such Restricted Subsidiary or Sponsored Partnership of every class owned by
such Credit Party (as applicable) which, if certificated, shall be duly endorsed
or accompanied by stock powers executed in blank (as applicable), as
Administrative Agent shall deem necessary or appropriate to grant, evidence and
perfect a first priority security interest in the issued and outstanding Equity
Interests owned by Borrower or any Restricted Subsidiary in each Restricted
Subsidiary and each Sponsored Partnership.
Article VII
Negative Covenants
Until the Aggregate Commitment has expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all LC Disbursements
shall have been reimbursed, each Credit Party covenants and agrees with the
Lenders that:
Section 7.01. Indebtedness. The Borrower will not, nor will it permit any of its
Restricted Subsidiaries or any Sponsored Partnership to, create, incur, assume
or permit to exist any Indebtedness, except:
(a) the Obligations;
(b) Indebtedness existing on the date hereof and set forth in Schedule 7.01 and
extensions, renewals and replacements of any such Indebtedness that do not
increase the outstanding principal amount thereof;
(c) Indebtedness of the Borrower to any Guarantor and of any Guarantor to the
Borrower or any other Guarantor; provided, that (i) all such Indebtedness shall
be unsecured and subordinated in right of payment to the payment in full of all
of the Obligations in a manner and on terms and conditions reasonably
satisfactory to the Administrative Agent and (ii) all such Indebtedness is
evidenced by promissory notes in form and substance reasonably satisfactory to
the Administrative Agent, and such promissory notes are subject to a first
priority security interest in favor of the Administrative Agent for the benefit
of the Secured Parties on terms and conditions reasonably satisfactory to the
Administrative Agent;

 

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(d) Guarantees of the Obligations;
(e) Indebtedness of the Borrower and the Restricted Subsidiaries incurred to
finance the acquisition, construction or improvement of any fixed or capital
assets (including office equipment, data processing equipment and motor
vehicles), including Capital Lease Obligations and any Indebtedness assumed in
connection with the acquisition of any such assets or secured by a Lien on any
such assets prior to the acquisition thereof, and extensions, renewals and
replacements of any such Indebtedness that do not increase the outstanding
principal amount thereof; provided that (i) such Indebtedness is incurred prior
to or within 90 days after such acquisition or the completion of such
construction or improvement and (ii) the aggregate principal amount of
Indebtedness permitted by this clause (e) together with the aggregate principal
amount of Indebtedness permitted by clause (i) of this Section 7.01 shall not
exceed $15,000,000 at any time outstanding;
(f) Indebtedness incurred or deposits made by the Borrower, any Restricted
Subsidiary or any Sponsored Partnership (i) under worker’s compensation laws,
unemployment insurance laws or similar legislation, or (ii) in connection with
bids, tenders, contracts (other than for the payment of Indebtedness) or leases
to which such Credit Party or such Sponsored Partnership is a party, (iii) to
secure public or statutory obligations of such Credit Party or such Sponsored
Partnership, and (iv) of cash or U.S. Government Securities made to secure the
performance of statutory obligations, surety, stay, customs and appeal bonds to
which such Credit Party or such Sponsored Partnerships a party in connection
with the operation of the Oil and Gas Interests, in each case in the ordinary
course of business;
(g) Indebtedness of the Borrower, any Restricted Subsidiary or any Sponsored
Partnership under (i) Swap Agreements to the extent permitted under
Section 7.05, (ii) Advance Payment Contracts permitted under Section 7.12 and
(iii) Sale and Leaseback Transactions to the extent permitted under
Section 7.12;
(h) subject to any adjustment of the Borrowing Base required under Section 3.05
and any mandatory prepayment required under Section 2.11(c), unsecured
Indebtedness under the Senior Notes (and any Permitted Refinancing thereof),
including any Indebtedness constituting Guarantees thereof by any Credit Party,
in an aggregate principal amount not to exceed the sum of $500,000,000 minus the
aggregate principal amount of all repayments and prepayments of the Senior Notes
to the extent permitted under the terms of this Agreement; provided that at the
time of and immediately after giving effect to each issuance of Senior Notes
(and any Permitted Refinancing thereof), no Default shall have occurred and be
continuing;
(i) Other unsecured Indebtedness of the Credit Parties; provided that the
aggregate principal amount of Indebtedness permitted by this clause (i) together
with the aggregate principal amount of Indebtedness permitted by clause (e) of
this Section 7.01 shall not exceed $15,000,000 at any time outstanding;

 

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(j) Other unsecured Indebtedness of the Sponsored Partnership: provided the
aggregate principal amount of such Indebtedness shall not exceed $1,000,000 at
any time outstanding; and
(k) Indebtedness of Marcellus JV PDC Partner to Marcellus JV Investor Partner
for the unfunded portion of any capital contribution Marcellus JV PDC Partner is
required to make to PDC Mountaineer in accordance with the Marcellus JV
Documents; provided that (i) the aggregate principal amount of such Indebtedness
shall not exceed $40,000,000 at any time outstanding, (ii) on each date such
Indebtedness is incurred, the Borrower is in compliance with the financial
covenants set forth in Section 7.11 as of the last day of the fiscal quarter
most recently ended for which financial statements are available, calculated on
a pro forma basis after giving effect to the incurrence of such Indebtedness as
if such Indebtedness had been incurred on the first day of such fiscal quarter,
and (iii) Aggregate Commitment Usage is less than eighty percent (80%) on each
date such Indebtedness is incurred.
Section 7.02. Liens. The Borrower will not, nor will it permit any of its
Restricted Subsidiaries or any Sponsored Partnership to, create, incur, assume
or permit to exist any Lien on any property or asset now owned or hereafter
acquired by it, or assign or sell any income or revenues (including accounts
receivable) or rights in respect of any thereof, except:
(a) any Lien created pursuant to this Agreement or the Security Instruments;
(b) Permitted Encumbrances;
(c) any Lien on any property or asset of the Borrower or any Restricted
Subsidiary existing on the date hereof and set forth in Schedule 7.02; provided
that (i) such Lien shall not apply to any other property or asset of the
Borrower or any other Restricted Subsidiary and (ii) such Lien shall secure only
those obligations which it secures on the date hereof and extensions, renewals
and replacements thereof that do not increase the outstanding principal amount
thereof;
(d) any Lien existing on any property or asset prior to the acquisition thereof
by the Borrower or any Restricted Subsidiary or existing on any property or
asset of any Person that becomes a Restricted Subsidiary after the date hereof
prior to the time such Person becomes a Restricted Subsidiary; provided that
(i) such Lien secures Indebtedness permitted by clause (e) of Section 7.01,
(ii) such Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming a Restricted Subsidiary, as the case may be,
(ii) such Lien shall not apply to any other property or assets of the Borrower
or any other Restricted Subsidiary and (iii) such Lien shall secure only those
obligations which it secures on the date of such acquisition or the date such
Person becomes a Restricted Subsidiary, as the case may be and extensions,
renewals and replacements thereof that do not increase the outstanding principal
amount thereof;
(e) Liens on fixed or capital assets (including office equipment, data
processing equipment and motor vehicles) acquired, constructed or improved by
the Borrower or any Restricted Subsidiary; provided that (i) such Liens, secure
Indebtedness permitted by clause (e) of Section 7.01, (ii) such security
interests and the Indebtedness secured thereby are incurred prior to or within
90 days after such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed the cost of
acquiring, constructing or improving such fixed or capital assets and (iv) such
security interests shall not apply to any other property or assets of the
Borrower or any other Restricted Subsidiaries;

 

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(f) Liens in favor of Marcellus JV Investor Partner on the Equity Interests of
PDC Mountaineer owned by Marcellus JV PDC Partner; provided that (i) the only
Indebtedness secured by such Liens is the Indebtedness permitted by clause
(k) of Section 7.01, (ii) the only property or assets of the Borrower or any
Restricted Subsidiary encumbered by such Liens are such Equity Interests and the
proceeds thereof and (iii) except for the Liens permitted by this
Section 7.02(f), no other Liens encumber such Equity Interests or the proceeds
thereof.
Section 7.03. Fundamental Changes.
(a) The Borrower will not, nor will it permit any of its Restricted Subsidiaries
to, merge into or consolidate with any other Person, or permit any other Person
to merge into or consolidate with it, or Dispose of (in one transaction or in a
series of transactions) all or any substantial part of its assets, or any of its
Borrowing Base Properties (or permit any Sponsored Partnership to Dispose of any
Attributed Interests included in the Borrowing Base Properties) or the Equity
Interests of any Credit Party in any Restricted Subsidiary or any Sponsored
Partnership that holds title to any Attributed Interest (in each case, whether
now owned or hereafter acquired), or effect, or enter into an agreement to
effect, any Hedge Modification, or liquidate or dissolve, except that, the
Borrower, any Restricted Subsidiary or any Sponsored Partnership may sell
Hydrocarbons produced from its Oil and Gas Interests in the ordinary course of
business and, if at the time thereof and immediately after giving effect thereto
no Default shall have occurred and be continuing:
(i) any Restricted Subsidiary may merge into the Borrower in a transaction in
which the Borrower is the surviving entity;
(ii) any Restricted Subsidiary may merge into any other Restricted Subsidiary in
a transaction in which the surviving entity is a Restricted Subsidiary;
(iii) any Restricted Subsidiary or any Sponsored Partnership may Dispose of its
assets to the Borrower or to another Restricted Subsidiary;
(iv) any Restricted Subsidiary or Sponsored Partnership may liquidate or
dissolve if the Borrower determines in good faith that such liquidation or
dissolution is in the best interests of the Borrower (or in the case of any
Sponsored Partnership the best interest of the holders of the Equity Interests
of such Sponsored Partnership) and is not materially disadvantageous to the
Lenders;
(v) the Borrower, any Restricted Subsidiary or any Sponsored Partnership may
Dispose of equipment and related items in the ordinary course of business, that
are obsolete or no longer necessary in the business of the Borrower or any of
its Subsidiaries or that is being replaced by equipment of comparable value and
utility;

 

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(vi) subject to Section 2.11(b) and Section 2.11(c), the Borrower, any
Restricted Subsidiary or any Sponsored Partnership may Dispose of Borrowing Base
Properties (whether pursuant to a Disposition of all, but not less than all, of
the Equity Interests of any Restricted Subsidiary or otherwise) or enter into
Hedge Modifications; provided that the Engineered Value (as assigned by the
Administrative Agent) of all Borrowing Base Properties Disposed of and the
economic effect (as determined by the Administrative Agent) of all Hedge
Modifications entered into between Scheduled Redeterminations does not exceed,
in the aggregate for all Credit Parties and the Sponsored Partnerships taken as
a whole, ten percent (10%) of the Borrowing Base most recently determined;
provided, further, that Borrower shall promptly and in any event within three
(3) Business Days thereafter, provide written notice to the Administrative Agent
of any such Hedge Modification, setting forth in reasonable detail the terms of
such Hedge Modification; and
(vii) so long as (x) no Borrowing Base Deficiency exists or would exist after
giving effect to any such Disposition or Hedge Modification, as the case may be,
and (y) no Default exists or would exist after giving effect to such Disposition
or Hedge Modification, as the case may be, the Borrower, the Restricted
Subsidiaries and the Sponsored Partnerships may Dispose of Borrowing Base
Properties (whether pursuant to a Disposition of all, but not less than all, of
the Equity Interests of any Restricted Subsidiary or otherwise) and enter into
Hedge Modifications not otherwise permitted by the foregoing clause (vi);
provided that:
(1) the Borrower provides the Administrative Agent and the Lenders with at least
fifteen (15) days prior written notice of such Disposition or Hedge
Modification, setting forth in reasonable detail the Borrowing Base Properties
that are subject to such Disposition or the terms of such Hedge Modification, as
the case may be;
(2) the Administrative Agent and the Lenders may request a Special
Redetermination of the Borrowing Base in accordance with the procedures and
standards set forth in Section 3.03;
(3)(a) with respect to any Disposition of Borrowing Base Properties, the
consideration received shall be equal to or greater than the fair market value
of the Oil and Gas Interests subject to such Disposition and (b) with respect to
any Hedge Modification, the consideration received for such Hedge Modification
is greater than or equal to fair market value, in each case, as reasonably
determined in good faith by the board of directors of the Borrower and, if
requested by the Administrative Agent, the Borrower shall deliver to the
Administrative Agent a certificate of a Responsible Officer certifying to that
effect;
(4) at least 90% of the consideration received by the Borrower, any Restricted
Subsidiary or any Sponsored Partnership in respect of any such Disposition or
Hedge Modification is cash or cash equivalents;
(5) the Borrower prepays the Loans to the extent required by Sections 2.11(b)
and 2.11(c) as a result of such Disposition or Hedge Modification (as determined
after giving effect to any Special Redetermination pursuant to clause
(2) above), and with respect to any Disposition, uses any remaining Net Cash
Proceeds received from such Disposition in accordance with the terms and
conditions set forth in Section 2.11(b); and

 

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(6) unless otherwise approved in writing by all of the Lenders, such Disposition
by the Credit Parties (whether pursuant to one transaction or a series of
related transactions) is not a Disposition of all or substantially all of the
Borrowing Base Properties (whether pursuant to a Disposition of all, but not
less than all, of the Equity Interests of any Restricted Subsidiary or
otherwise).
(b) The Borrower will not, nor will it permit any of its Restricted Subsidiaries
or any Sponsored Partnership to, engage to any material extent in any business
other than businesses of the type conducted by the Borrower and its Restricted
Subsidiaries on the date of execution of this Agreement and businesses
reasonably related thereto.
Section 7.04. Investments, Loans, Advances, Guarantees and Acquisitions. The
Borrower will not, nor will it permit any of its Restricted Subsidiaries to,
purchase, hold or acquire (including pursuant to any merger with any Person that
was not a wholly owned Restricted Subsidiary prior to such merger) any capital
stock, evidences of Indebtedness or other securities (including any option,
warrant or other right to acquire any of the foregoing) of, make or permit to
exist any loans or advances to, Guarantee any Indebtedness of, or make or permit
to exist any investment or any other interest in, any other Person, or purchase
or otherwise acquire (in one transaction or a series of transactions) any assets
of any other Person constituting a business unit, except:
(a) Permitted Investments;
(b) investments by the Borrower in the Equity Interests of any Restricted
Subsidiary or Sponsored Partnership; provided that with respect to investments
made by the Borrower to purchase outstanding Equity Interests of any Sponsored
Partnership, (i) immediately after giving effect to such investment, the
aggregate amount of investments made by the Borrower to purchase outstanding
Equity Interests of any Sponsored Partnership since July 15, 2008 shall not
exceed $250,000,000, (ii) both before and immediately after giving effect to
such investment, no Default shall have occurred and be continuing, and
(iii) both before and immediately after giving effect to such investment,
Aggregate Commitment Usage is less than eighty percent (80%);
(c) investments by the Borrower or any Guarantor consisting of intercompany
Indebtedness permitted under Section 7.01(c)
(d) Guarantees constituting Indebtedness permitted by Section 7.01;
(e) investments by the Borrower and its Restricted Subsidiaries that are
(i) customary in the oil and gas business, (ii) made in the ordinary course of
the Borrower’s or such Restricted Subsidiary’s business, and (iii) made in the
form of, or pursuant to, oil, gas and mineral leases, operating agreements,
farm-in agreements, farm-out agreements, development agreements, unitization
agreements, joint bidding agreements, services contracts and other similar
agreements that a reasonable and prudent oil and gas industry owner or operator
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(f) investments consisting of Swap Agreements to the extent permitted under
Section 7.05;
(g) investments existing as the date hereof and set forth on Schedule 7.04;
(h) Investments consisting of (i) loans and advances to employees for moving,
entertainment, travel and other similar expenses in the ordinary course of
business and (ii) other short term loans to employees not to exceed, with
respect to the foregoing clauses (i) and (ii) together, $250,000 in the
aggregate at any time outstanding;
(i) Investments representing the non-cash portion of the consideration received
for any Disposition of any assets permitted under Section 7.03, not to exceed
$1,000,000 in the aggregate at any time outstanding;
(j) other investments by the Borrower and the Restricted Subsidiaries; provided
that, (1) on the date any such investment is made, the amount of such
investment, together with all other investments made pursuant to this clause
(j) of Section 7.04 (in each case determined based on the cost of such
investment), since the Effective Date does not exceed in the aggregate,
$10,000,000, and (2) both before and after giving effect to such investment,
Aggregate Commitment Usage is less than ninety percent (90%);
(k) (i) the investment made by the Borrower in the Equity Interests of PDC
Mountaineer in exchange for the Borrower’s contribution of the Marcellus
Properties pursuant to the Marcellus JV Contribution Agreement and (ii) so long
as no Default shall have occurred and be continuing or would be caused thereby,
(A) additional cash equity investments by the Borrower in the Equity Interests
of PDC Mountaineer at any time during the Marcellus JV Catch-Up Period not to
exceed $40,000,000, and (B) additional cash equity investments by the Borrower
in the Equity Interests of PDC Mountaineer at any time after the end of the
Marcellus JV Catch-Up Period; provided that, with respect to each such cash
equity investment made pursuant to this clause (B), (1) the Borrower is in
compliance with the financial covenants set forth in Section 7.11 as of the last
day of the fiscal quarter most recently ended for which financial statements are
available, calculated on a pro forma basis after giving effect to such
investment as if such investment had been made on the first day of such fiscal
quarter and (2) both immediately before and immediately after giving effect to
such investment, Aggregate Commitment Usage is less than eighty percent (80%);
and
(l) investments consisting of loans to Marcellus JV Investor Partner for the
unfunded portion of any capital contribution Marcellus JV Investor Partner is
required to make to PDC Mountaineer in accordance with the Marcellus JV
Documents; provided that (i) no Default shall have occurred and be continuing or
would be caused thereby, (ii) the aggregate principal amount of such loans shall
not exceed $40,000,000 at any time outstanding, (iii) on the date each such loan
is made, the Borrower shall be in compliance with the financial covenants set
forth in Section 7.11 as of the last day of the fiscal quarter most recently
ended for which financial statements are available, calculated on a pro forma
basis after giving effect to such loan as if such loan had been made on the
first day of such fiscal quarter, and (iv) both immediately before and
immediately after giving effect to each such loan, Aggregate Commitment Usage is
less than eighty percent (80%).

 

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Section 7.05. Swap Agreements. The Borrower will not, nor will the Borrower
permit any of its Restricted Subsidiaries or any Sponsored Partnership to, enter
into any Swap Agreement, except the Existing Swap Agreements and Swap Agreements
entered into in the ordinary course of business and not for speculative purposes
to:
(a) hedge or mitigate Crude Oil and Natural Gas price risks to which the
Borrower, any Restricted Subsidiary or any Sponsored Partnership has actual
exposure (whether or not treated as a hedge for accounting purposes under GAAP);
provided that at the time the Borrower (whether on its own behalf or on behalf
of any Sponsored Partnership), any Restricted Subsidiary or any Sponsored
Partnership enters into any such Swap Agreement, such Swap Agreement (x) does
not have a term greater than sixty (60) months from the date such Swap Agreement
is entered into, and (y) when aggregated with all other Swap Agreements then in
effect would not cause the aggregate notional volume per month for each of Crude
Oil and Natural Gas, calculated separately, under all Swap Agreements then in
effect (other than Excluded Hedges) to exceed, as of the date such Swap
Agreement is executed, (A) for any month during the first two years of the
forthcoming five year period, (i) eighty percent (80%) of the “forecasted
production from total proved reserves” (as defined below) of the Borrower, the
Restricted Subsidiaries, and the Sponsored Partnerships, taken as a whole or
(ii) eighty percent (80%) of the “forecasted production from total proved
reserves” of the Borrower and the Restricted Subsidiaries (including the
Attributed Interests), and (B) for any month during the last three years of the
forthcoming five year period, (i) eighty percent (80%) of the “forecasted
production from proved producing reserves” (as defined below) of the Borrower,
the Restricted Subsidiaries, and the Sponsored Partnerships, taken as a whole or
(ii) eighty percent (80%) of the “forecasted production from proved producing
reserves” of the Borrower and the Restricted Subsidiaries (including the
Attributed Interests); and
(b) effectively cap, collar or exchange interest rates (from fixed to floating
rates, from one floating rate to another floating rate or otherwise) with
respect to any interest-bearing liability or investment of any Credit Party.
As used in this Section 7.05, “forecasted production from proved producing
reserves” and “forecasted production from total proved reserves” means the
forecasted production from proved producing reserves or total proved reserves,
as the case may be, of each of Crude Oil and Natural Gas as reflected in the
most recent Reserve Report delivered to the Administrative Agent pursuant to
Section 6.01, after giving effect to any pro forma adjustments for the
consummation of any Acquisitions or Dispositions since the effective date of
such Reserve Report.
Except as otherwise permitted in Section 7.03, in the event any Credit Party or
Sponsored Partnership enters into a Swap Agreement (including the Existing Swap
Agreements), the terms and conditions of such Swap Agreement may not be amended
or modified, nor may any Credit Party sell, assign, monetize, transfer, cancel
or otherwise dispose of any of its rights and interests in any such Swap
Agreement without the prior written consent of the Required Lenders (it being
understood that any Lender Counterparty may sell, assign, transfer, novate, or
otherwise dispose of its rights and interests in any Swap Agreement to any
Approved Counterparty at any time).

 

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Each Credit Party and each Lender agrees and acknowledges that (i) the Existing
Swap Agreements are Swap Agreements permitted under this Section 7.05, (ii) as
of the Effective Date, the counterparty to each Existing Swap Agreement is a
Lender Counterparty (or was a Lender Counterparty under and as defined in the
Original Credit Agreement), (iii) the obligations of the Credit Parties under
the Existing Swap Agreements are included in the defined term “Lender Hedging
Obligations” and such obligations are entitled to the benefits of, and are
secured by the Liens granted under, the Security Instruments, and (iv) as of the
Effective Date, the aggregate notional volume of Hydrocarbons under all Swap
Agreements of the Credit Parties then in effect does not exceed the percentages
of forecasted production from total proved reserves and forecasted production
from proved producing reserves, as the case may be, permitted pursuant to this
Section 7.05 (calculated as if a Credit Party was entering into a new
transaction under a Swap Agreement on the Effective Date).
Section 7.06. Restricted Payments. The Borrower will not, nor will it permit any
of its Restricted Subsidiaries to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, except that (a) the Borrower may
declare and pay dividends with respect to its Equity Interests payable solely in
additional shares of its common stock, (b) the Borrower may make Restricted
Payments pursuant to and in accordance with stock option plans or other benefit
plans for management or employees of the Borrower and its Restricted
Subsidiaries in an aggregate amount not to exceed $5,000,000 in any fiscal year,
and (c) any Restricted Subsidiary may make Restricted Payments to the Borrower
or any Guarantor.
Section 7.07. Transactions with Affiliates. The Borrower will not, nor will it
permit any of its Restricted Subsidiaries to, sell, lease or otherwise transfer
any property or assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions with, any of its
Affiliates (including any Sponsored Partnership), except (a) in the ordinary
course of business at prices and on terms and conditions not less favorable to
the Borrower or such Restricted Subsidiary than could be obtained on an
arm’s-length basis from unrelated third parties, (b) transactions between or
among the Borrower and its Restricted Subsidiaries not involving any other
Affiliate (including any Sponsored Partnership), (c) transactions described on
Schedule 7.07, (d) any Restricted Payment permitted by Section 7.06, (e)
investments permitted by Section 7.04 and (f) transactions with PDC Mountaineer
entered into in connection with the Marcellus Joint Venture.
Section 7.08. Restrictive Agreements. The Borrower will not, nor will it permit
any of its Restricted Subsidiaries to, directly or indirectly, enter into, incur
or permit to exist any agreement or other arrangement that prohibits, restricts
or imposes any condition upon (a) the ability of the Borrower or any Restricted
Subsidiary to create, incur or permit to exist any Lien upon any of its property
or assets, or (b) the ability of any Restricted Subsidiary to pay dividends or
other distributions with respect to any of its Equity Interests or to make or
repay loans or advances to the Borrower or any Restricted Subsidiary or to
Guarantee Indebtedness of the Borrower or any Restricted Subsidiary; provided
that (i) the foregoing shall not apply to restrictions and conditions imposed by
law or by this Agreement or the Indenture (or any documents evidencing or
relating to the issuance of any permitted Senior Notes or any Permitted
Refinancing), (ii) the foregoing shall not apply to restrictions and conditions
existing on the date hereof identified on Schedule 7.08 (but shall apply to any
extension or renewal of, or any amendment or modification expanding the scope
of, any such restriction

 

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or condition), (iii) clause (a) of the foregoing shall not apply to restrictions
or conditions imposed by any agreement relating to secured Indebtedness
permitted by this Agreement if such restrictions or conditions apply only to the
property or assets securing such Indebtedness, (iv) clause (a) of the foregoing
shall not apply to customary provisions in leases and other contracts
restricting the assignment thereof and (v) the foregoing shall not apply to the
Organizational Documents of the Borrower or any Restricted Subsidiary as in
effect on the Effective Date or any amendment or modification thereof after the
Effective Date that complies with Section 7.10. Neither the Borrower nor any of
its Restricted Subsidiaries will permit any Sponsored Partnership to, directly
or indirectly, enter into, incur or permit to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon the ability
of any Sponsored Partnership to (x) create, incur or permit to exist any Lien
upon any of its Oil and Gas Interests, (y) pay dividends or other distributions
with respect to any of its Equity Interests or (z) to make or repay loans or
advances to the Borrower or any Restricted Subsidiary; provided that the
foregoing shall not apply to the Organizational Documents of any existing
Sponsored Partnership as in effect on the Effective Date or any Sponsored
Partnership formed after the date hereof if the Organizational Documents of such
Sponsored Partnership are substantially the same as the Organizational Documents
of the Sponsored Partnerships existing on the Effective Date or any amendment or
modification thereof after the Effective Date that complies with Section 7.10.
Section 7.09. Disqualified Stock. The Borrower will not, nor will it permit any
of its Restricted Subsidiaries or any Sponsored Partnership to, issue any
Disqualified Stock.
Section 7.10. Amendments to Organizational Documents. The Borrower will not, nor
will it permit any of its Restricted Subsidiaries nor any Sponsored Partnership
to, enter into or permit any modification or amendment of, or waive any material
right or obligation of any Person under its Organizational Documents if the
effect thereof would be materially adverse to the Administrative Agent or any
Lender or violate Section 7.08.
Section 7.11. Financial Covenants.
(a) Consolidated Current Ratio. The Borrower will not permit the Consolidated
Current Ratio as of the end of any fiscal quarter ending on or after
September 30, 2010, to be less than 1.00 to 1.00.
(b) Leverage Ratio.
(i) The Borrower will not permit the Consolidated Leverage Ratio, determined as
of the end of each fiscal quarter ending on or after September 30, 2010 and on
or before December 31, 2011 to be greater than 4.25 to 1.00.
(ii) The Borrower will not permit the Consolidated Leverage Ratio, determined as
of the end of each fiscal quarter ending on or after March 31, 2012 to be
greater than 4.00 to 1.00.
As used herein, with respect to any fiscal quarter, “Consolidated Leverage
Ratio” means the ratio of (A) Consolidated Funded Indebtedness as of the end of
such fiscal quarter to (B) Consolidated EBITDAX for the trailing four fiscal
quarter period ending on the last day of such fiscal quarter.

 

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Section 7.12. Sale and Leaseback Transactions and other Off-Balance Sheet
Liabilities. The Borrower will not, nor will it permit any Restricted Subsidiary
to, enter into or suffer to exist any (i) Sale and Leaseback Transaction, except
Sale and Leaseback Transactions in which the aggregate amount of liability
incurred by any Credit Party does not exceed $5,000,000 for all such Sale and
Leaseback Transactions, taken as a whole, or (ii) any other transaction pursuant
to which it incurs or has incurred Off-Balance Sheet Liabilities, except for
(x) Swap Agreements permitted under the terms of Section 7.05 and (y) Advance
Payment Contracts; provided that the aggregate amount of all Advance Payments
received by any Credit Party that have not been satisfied by delivery of
production at any time does not exceed, in the aggregate $5,000,000.
Section 7.13. Senior Notes Restrictions. The Borrower will not, nor will it
permit any Restricted Subsidiary to, except for regularly scheduled payments of
interest required under the Senior Notes, directly or indirectly, retire,
redeem, defease, repurchase or prepay prior to the scheduled due date thereof
any part of the principal of, or interest on, the Senior Notes (or any Permitted
Refinancing thereof); provided that so long as no Default has occurred and is
continuing, the Borrower may retire, redeem, defease, repurchase or prepay the
Senior Notes with the proceeds of any Permitted Refinancing permitted pursuant
to Section 7.01(h). The Borrower will not, nor will it permit any of its
Restricted Subsidiaries to, enter into or permit any modification or amendment
of the Senior Notes Documents the effect of which is to (a) increase the maximum
principal amount of the Senior Notes or the rate of interest on any of the
Senior Notes (other than as a result of the imposition of a default rate of
interest in accordance with the terms of the Senior Notes Documents), (b) change
or add any event of default or any covenant with respect to the Senior Notes
Documents if the effect of such change or addition is to cause any one or more
of the Senior Notes Documents to be more restrictive on the Borrower or any of
its Subsidiaries than such Senior Notes Documents were prior to such change or
addition, (c) change the dates upon which payments of principal or interest on
the Senior Notes are due, (d) change any redemption or prepayment provisions of
the Senior Notes, (e) alter the subordination provisions, if any, with respect
to any of the Senior Notes Documents, (f) grant any Liens in any assets of the
Borrower or any of its Subsidiaries, or (g) permit any Subsidiary to Guarantee
the Senior Notes unless such Subsidiary is (or concurrently with any such
Guarantee becomes) a Guarantor hereunder.
Section 7.14. Marcellus JV Documents. Without the Administrative Agent’s prior
written consent, the Borrower will not, nor will it permit any Restricted
Subsidiary to, enter into or permit any supplement, modification or amendment
of, or waive any right or obligation of any Person under, any Marcellus JV
Document if the effect thereof would be materially adverse to the Administrative
Agent and/or any Lender or would change the definition of “AMI”, “Special PDC
Withdrawal” or “Catch-Up Period”.

 

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Article VIII
Guarantee of Obligations
Section 8.01. Guarantee of Payment. Each Guarantor unconditionally and
irrevocably guarantees to the Administrative Agent for the benefit of the
Secured Parties, the punctual payment of all Obligations now or which may in the
future be owing by any Credit Party (the “Guaranteed Liabilities”). This
Guarantee is a guaranty of payment and not of collection only. The
Administrative Agent shall not be required to exhaust any right or remedy or
take any action against the Borrower or any other Person or any collateral. The
Guaranteed Liabilities include interest accruing after the commencement of a
proceeding under bankruptcy, insolvency or similar laws of any jurisdiction at
the rate or rates provided in the Loan Documents, or the Swap Agreements between
any Credit Party and any Lender Counterparty, as the case may be. Each Guarantor
agrees that, as between the Guarantor and the Administrative Agent, the
Guaranteed Liabilities may be declared to be due and payable for the purposes of
this Guarantee notwithstanding any stay, injunction or other prohibition which
may prevent, delay or vitiate any declaration as regards the Borrower or any
other Guarantor and that in the event of a declaration or attempted declaration,
the Guaranteed Liabilities shall immediately become due and payable by each
Guarantor for the purposes of this Guarantee.
Section 8.02. Guarantee Absolute. Each Guarantor guarantees that the Guaranteed
Liabilities shall be paid strictly in accordance with the terms of this
Agreement and the Swap Agreements to which any Secured Party is a party. The
liability of each Guarantor hereunder is absolute and unconditional irrespective
of: (a) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Loan Documents or the Guaranteed Liabilities, or any
other amendment or waiver of or any consent to departure from any of the terms
of any Loan Document or Guaranteed Liability, including any increase or decrease
in the rate of interest thereon; (b) any release or amendment or waiver of, or
consent to departure from, any other guaranty or support document, or any
exchange, release or non-perfection of any collateral, for all or any of the
Loan Documents or Guaranteed Liabilities; (c) any present or future law,
regulation or order of any jurisdiction (whether of right or in fact) or of any
agency thereof purporting to reduce, amend, restructure or otherwise affect any
term of any Loan Document or Guaranteed Liability; (d) without being limited by
the foregoing, any lack of validity or enforceability of any Loan Document or
Guaranteed Liability; and (e) any other setoff, defense or counterclaim
whatsoever (in any case, whether based on contract, tort or any other theory)
with respect to the Loan Documents or the transactions contemplated thereby
which might constitute a legal or equitable defense available to, or discharge
of, the Borrower or a Guarantor.
Section 8.03. Guarantee Irrevocable. This Guarantee is a continuing guaranty of
the payment of all Guaranteed Liabilities now or hereafter existing under this
Agreement and the Swap Agreements to which any Secured Party is a party, and
shall remain in full force and effect until payment in full of all Guaranteed
Liabilities and other amounts payable hereunder and until this Agreement and the
Swap Agreements are no longer in effect or, if earlier, when the Guarantor has
given the Administrative Agent written notice that this Guarantee has been
revoked; provided that any notice under this Section shall not release the
revoking Guarantor from any Guaranteed Liability, absolute or contingent,
existing prior to the Administrative Agent’s actual receipt of the notice at its
branches or departments responsible for this Agreement and the Swap Agreements
and reasonable opportunity to act upon such notice.
Section 8.04. Reinstatement. This Guarantee shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Liabilities is rescinded or must otherwise be returned by the
Administrative Agent, any Lender or any Lender Counterparty on the insolvency,
bankruptcy or reorganization of the Borrower, or any other Credit Party, or
otherwise, all as though the payment had not been made.

 

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Section 8.05. Subrogation. No Guarantor shall exercise any rights which it may
acquire by way of subrogation, by any payment made under this Guarantee or
otherwise, until all the Guaranteed Liabilities have been paid in full and this
Agreement and the Swap Agreements are no longer in effect. If any amount is paid
to the Guarantor on account of subrogation rights under this Guarantee at any
time when all the Guaranteed Liabilities have not been paid in full, the amount
shall be held in trust for the benefit of the Secured Parties and shall be
promptly paid to the Administrative Agent to be credited and applied to the
Guaranteed Liabilities, whether matured or unmatured or absolute or contingent,
in accordance with the terms of this Agreement and the Swap Agreements. If any
Guarantor makes payment to any Secured Party of all or any part of the
Guaranteed Liabilities and all the Guaranteed Liabilities are paid in full and
this Agreement and the Swap Agreements are no longer in effect, the
Administrative Agent, Lenders and Lender Counterparties shall, at such
Guarantor’s request, execute and deliver to such Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to such Guarantor of an interest in the
Guaranteed Liabilities resulting from the payment.
Section 8.06. Subordination. Without limiting the rights of the Administrative
Agent, the Lenders and the Lender Counterparties under any other agreement, any
liabilities owed by the Borrower to any Guarantor in connection with any
extension of credit or financial accommodation by any Guarantor to or for the
account of the Borrower, including but not limited to interest accruing at the
agreed contract rate after the commencement of a bankruptcy or similar
proceeding, are hereby subordinated to the Guaranteed Liabilities, and such
liabilities of the Borrower to such Guarantor, if the Administrative Agent so
requests, shall be collected, enforced and received by any Guarantor as trustee
for the Administrative Agent and shall be paid over to the Administrative Agent
on account of the Guaranteed Liabilities but without reducing or affecting in
any manner the liability of the Guarantor under the other provisions of this
Guarantee.
Section 8.07. Payments Generally. All payments by the Guarantors shall be made
in the manner, at the place and in the currency (the “Payment Currency”)
required by the Loan Documents and the Swap Agreement, as the case may be;
provided, however, that (if the Payment Currency is other than Dollars) any
Guarantor may, at its option (or, if for any reason whatsoever any Guarantor is
unable to effect payments in the foregoing manner, such Guarantor shall be
obligated to) pay to the Administrative Agent at its principal office the
equivalent amount in Dollars computed at the selling rate of the Administrative
Agent or a selling rate chosen by the Administrative Agent, most recently in
effect on or prior to the date the Guaranteed Liability becomes due, for cable
transfers of the Payment Currency to the place where the Guaranteed Liability is
payable. In any case in which any Guarantor makes or is obligated to make
payment in Dollars, the Guarantor shall hold the Administrative Agent, the
Lenders and the Lender Counterparties harmless from any loss incurred by the
Administrative Agent, any Lender or any Lender Counterparty arising from any
change in the value of Dollars in relation to the Payment Currency between the
date the Guaranteed Liability becomes due and the date the Administrative Agent,
such Lender or such Lender Counterparty is actually able, following the
conversion of the Dollars paid by such Guarantor into the Payment Currency and
remittance of such Payment Currency to the place where such Guaranteed Liability
is payable, to apply such Payment Currency to such Guaranteed Liability.

 

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Section 8.08. Setoff. Each Guarantor agrees that, in addition to (and without
limitation of) any right of setoff, banker’s lien or counterclaim the
Administrative Agent, any Lender or any Lender Counterparty may otherwise have,
the Administrative Agent, such Lender or such Lender Counterparty shall be
entitled, at its option, to offset balances (general or special, time or demand,
provisional or final) held by it for the account of any Guarantor at any office
of the Administrative Agent, such Lender or such Lender Counterparty, in Dollars
or in any other currency, against any amount payable by such Guarantor under
this Guarantee which is not paid when due (regardless of whether such balances
are then due to such Guarantor), in which case it shall promptly notify such
Guarantor thereof; provided that the failure of the Administrative Agent, such
Lender, or such Lender Counterparty to give such notice shall not affect the
validity thereof.
Section 8.09. Formalities. Each Guarantor waives presentment, notice of
dishonor, protest, notice of acceptance of this Guarantee or incurrence of any
Guaranteed Liability and any other formality with respect to any of the
Guaranteed Liabilities or this Guarantee.
Section 8.10. Limitations on Guarantee. The provisions of the Guarantee under
this Article VIII are severable, and in any action or proceeding involving any
state corporate law, or any state, federal or foreign bankruptcy, insolvency,
reorganization or other law affecting the rights of creditors generally, if the
obligations of any Guarantor under this Guarantee would otherwise be held or
determined to be avoidable, invalid or unenforceable on account of the amount of
such Guarantor’s liability under this Guarantee, then, notwithstanding any other
provision of this Guarantee to the contrary, the amount of such liability shall,
without any further action by the Guarantors, the Administrative Agent, any
Lender or any Lender Counterparty, be automatically limited and reduced to the
highest amount that is valid and enforceable as determined in such action or
proceeding (such highest amount determined hereunder being the relevant
Guarantor’s “Maximum Liability”). This Section 8.10 with respect to the Maximum
Liability of the Guarantors is intended solely to preserve the rights of the
Administrative Agent, Lenders and Lender Counterparties hereunder to the maximum
extent not subject to avoidance under applicable law, and no Guarantor nor any
other Person shall have any right or claim under this Section 8.10 with respect
to the Maximum Liability, except to the extent necessary so that none of the
obligations of any Guarantor hereunder shall not be rendered voidable under
applicable law.
Article IX
Events of Default
If any of the following events (each an “Event of Default” and collectively, the
“Events of Default”) shall occur:
(a) the Borrower shall fail to pay any principal of any Loan (including any
payments required under Section 2.11) or any reimbursement obligation in respect
of any LC Disbursement when and as the same shall become due and payable,
whether at the due date thereof or at a date fixed for prepayment thereof or
otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee or any
other amount (other than an amount referred to in clause (a) of this Article)
payable under this Agreement, when and as the same shall become due and payable,
and such failure shall continue unremedied for a period of five days;

 

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(c) any representation or warranty made or deemed made by or on behalf of the
Borrower, any Restricted Subsidiary or any Sponsored Partnership in or in
connection with this Agreement or any amendment or modification hereof or waiver
hereunder, or in any report, certificate, financial statement or other document
furnished pursuant to or in connection with this Agreement or any amendment or
modification hereof or waiver hereunder or in any Loan Document furnished
pursuant to or in connection with this Agreement or any amendment or
modification thereof or waiver hereunder, shall prove to have been incorrect in
any material respect when made or deemed made and such materiality is
continuing;
(d) the Borrower or any Restricted Subsidiary shall fail to observe or perform
any covenant, condition or agreement contained in Section 2.11, Section 6.02,
Section 6.03 (with respect to the Borrower, any Restricted Subsidiary’s or any
Sponsored Partnership’s existence), Section 6.05 (with respect to insurance),
Section 6.08, or in Article VII;
(e) the Borrower or any Restricted Subsidiary shall fail to observe or perform
any covenant, condition or agreement contained in this Agreement (other than
those specified in clause (a), (b) or (d) of this Article) or any Loan Document,
and such failure shall continue unremedied for a period of 30 days after receipt
of written notice thereof from the Administrative Agent to the Borrower (which
notice will be given at the request of any Lender);
(f) the Borrower or any Restricted Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable and
such failure shall continue beyond the applicable grace period, if any.
(g) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of any Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity;
provided that this clause (g) shall not apply to (i) secured Indebtedness that
becomes due as a result of the voluntary sale or transfer of the property or
assets securing such Indebtedness and (ii) Indebtedness that becomes due as a
result of a change in law, tax regulation or accounting treatment so long as
such Indebtedness is paid when due;
(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of the Borrower, any Restricted Subsidiary or any Sponsored Partnership
or its debts, or of a substantial part of its assets, under any Federal, state
or foreign bankruptcy, insolvency, receivership or similar law now or hereafter
in effect or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower, any Restricted
Subsidiary or any Sponsored Partnership or for a substantial part of its assets,
and, in any such case, such proceeding or petition shall continue undismissed
for 60 days or an order or decree approving or ordering any of the foregoing
shall be entered;

 

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(i) the Borrower, any Restricted Subsidiary or any Sponsored Partnership shall
(i) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (h) of this
Article, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Borrower, any
Restricted Subsidiary or any Sponsored Partnership or for a substantial part of
its assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of effecting any of
the foregoing;
(j) the Borrower or any Restricted Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an aggregate amount in
excess of $15,000,000 shall be rendered against the Borrower, any Restricted
Subsidiary or any Sponsored Partnership or any combination thereof and either
the same shall remain undischarged or unsatisfied for a period of 30 consecutive
days during which execution shall not be effectively stayed, or any action shall
be legally taken by a judgment creditor to attach or levy upon any assets of the
Borrower or any Restricted Subsidiary or any Sponsored Partnership to enforce
any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the Majority
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in a Material Adverse Effect;
(m) the delivery by any Guarantor to the Administrative Agent of written notice
that a Guarantee under Article VIII has been revoked; or
(n) a Change of Control shall occur;
then, and in every such event (other than an event with respect to the Borrower,
any Restricted Subsidiary or any Sponsored Partnership described in clause
(h) or (i) of this Article), and at any time thereafter during the continuance
of such event, the Administrative Agent may, and at the request of the Majority
Lenders shall, by notice to the Borrower, take either or both of the following
actions, at the same or different times:  (i) terminate the Aggregate
Commitment, and thereupon the Aggregate Commitment shall terminate immediately,
and (ii) declare the Loans then outstanding to be due and payable in whole (or
in part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower; and
in case of any event with respect to the Borrower described in clause (h) or
(i) of this Article, the Aggregate Commitment shall automatically terminate and
the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower.
Without limiting the foregoing, upon the occurrence and during the continuance
of an Event of Default, the Administrative Agent, the Issuing Bank and each
Lender may protect and enforce its rights under this Agreement and the other
Loan Documents by any appropriate proceedings, including proceedings for
specific performance of any covenant or agreement contained in this Agreement or
any other Loan Document, and the Administrative Agent, the Issuing Bank and each
Lender may enforce payment of any Obligations due and payable hereunder or
enforce any other legal or equitable right and remedies which it may have under
this Agreement, any other Loan Document, or under applicable law or in equity.

 

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Article X
The Administrative Agent
Each of the Lenders and the Issuing Bank hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms hereof, together with such actions and
powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with any Credit Party or other Affiliate thereof as if
it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations except those
expressly set forth herein. Without limiting the generality of the foregoing,
(a) the Administrative Agent shall not be subject to any fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing,
(b) the Administrative Agent shall not have any duty to take any discretionary
action or exercise any discretionary powers, except discretionary rights and
powers expressly contemplated hereby that the Administrative Agent is required
to exercise in writing as directed by the Majority Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 11.02), and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to any Credit Party
that is communicated to or obtained by the bank serving as Administrative Agent
or any of its Affiliates in any capacity. The Administrative Agent shall not be
liable for any action taken or not taken by it with the consent or at the
request of the Majority Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in
Section 11.02) or in the absence of its own gross negligence or willful
misconduct. The Administrative Agent shall be deemed not to have knowledge of
any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrower or a Lender, and the Administrative Agent
shall not be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty or representation made in or in connection with this
Agreement, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article V or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent. No Person identified as a Syndication Agent,
Co-Documentation Agent or Co-Lead Arranger, in each case in its respective
capacity as such, shall have any responsibilities or duties, or incur any
liability, under this Agreement or the other Loan Documents.

 

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The Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and exercise its
rights and powers by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor Administrative Agent as
provided in this paragraph, the Administrative Agent may resign at any time by
notifying the Lenders, the Issuing Bank and the Borrower. Upon any such
resignation, the Majority Lenders shall have the right, with the consent of the
Borrower (which consent shall not be unreasonably withheld or delayed), to
appoint a successor; provided that no consent of the Borrower shall be required
if any Event of Default has occurred and is continuing. If no successor shall
have been so appointed by the Majority Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Bank, appoint a successor Administrative Agent which
shall be a bank with an office in Chicago, Illinois or New York, New York, or an
Affiliate of any such bank. Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Administrative Agent’s resignation hereunder, the
provisions of this Article and Section 11.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.

 

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Each Lender acknowledges that it has, independently and without reliance upon
the Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any related agreement or any
document furnished hereunder or thereunder.
Each Lender and the Issuing Bank hereby authorizes the Administrative Agent to
release any Collateral that it is permitted to be sold or released pursuant to
the terms of the Loan Documents. Each Lender and the Issuing Bank hereby
authorizes the Administrative Agent to execute and deliver to the Borrower, at
the Borrower’s sole cost and expense, any and all releases of Liens, termination
statements, assignments or other documents reasonably requested by the Borrower
in connection with any Disposition of Collateral to the extent such Disposition
is permitted by the terms of Section 7.03 or is otherwise authorized by the
terms of the Loan Documents.
Article XI
Miscellaneous
Section 11.01. Notices.
(a) Except in the case of notices and other communications expressly permitted
to be given by telephone (and subject to paragraph (b) below), all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(i) if to the Borrower, to Petroleum Development Corporation, 1775 Sherman St.,
Suite 3000, Denver, CO 80203 Attention: Chief Financial Officer, Telecopy
No. (303) 831-3988;
(ii) if to the Administrative Agent or Issuing Bank, to JPMorgan Chase Bank,
N.A., Mail Code IL1-0010, 10 South Dearborn, Floor 07, Chicago, Illinois,
60603-2003, Telecopy No.: (312) 385-7096, Attention: Claudia A. Kech, with a
copy to JPMorgan Chase Bank, N.A., Mail Code TX2-S038, 712 Main Street, 8th
Floor, Houston, Texas 77002, Telecopy No. (713) 216-7770, Attention: Jo Linda
Papadakis;
(iii) if to the Syndication Agent, Co-Documentation Agent, Co-Lead Arranger or
any Lender, to its address (or telecopy number) set forth in its Administrative
Questionnaire.
(b) Notices and other communications to the Lenders hereunder may be delivered
or furnished by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article II unless otherwise agreed by the Administrative Agent and
the applicable Lender. The Administrative Agent or the Borrower may, in their
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or
communications.

 

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(c) Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.
Section 11.02. Waivers; Amendments.
(a) No failure or delay by the Administrative Agent, the Issuing Bank or any
Lender in exercising any right or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent, the Issuing
Bank and the Lenders hereunder are cumulative and are not exclusive of any
rights or remedies that they would otherwise have. No waiver of any provision of
this Agreement or consent to any departure by the Borrower therefrom shall in
any event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
the Administrative Agent, any Lender or the Issuing Bank may have had notice or
knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Credit Parties and the Majority Lenders or by the Credit Parties and the
Administrative Agent with the consent of the Majority Lenders; provided that no
such agreement shall
(i) increase the Borrowing Base without the written consent of each Lender;
(ii) increase the Commitment of any Lender or, except as set forth in the
definition of Applicable Percentage, increase the Applicable Percentage of any
Lender, in each case, without the written consent of such Lender;
(iii) increase the Maximum Facility Amount without the written consent of each
Lender;
(iv) reduce the principal amount of any Loan or LC Disbursement or reduce the
rate of interest thereon, or reduce any fees payable hereunder, without the
written consent of each Lender affected thereby;
(v) postpone the scheduled date of payment of the principal amount of any Loan
or LC Disbursement, or any interest thereon, or any fees payable hereunder, or
reduce the amount of, waive or excuse any such payment, or postpone the
scheduled date of expiration of any of the Aggregate Commitment, without the
written consent of each Lender affected thereby (it being understood that waiver
of a mandatory prepayment of the Loans or a mandatory reduction of the
Commitments shall not constitute a postponement or waiver of a scheduled payment
or date of expiration);

 

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(vi) change Section 2.18(b) or Section 2.18(c) in a manner that would alter the
pro rata sharing of payments required thereby, without the written consent of
each Lender;
(vii) except in connection with any Dispositions permitted in Section 7.03,
release any Credit Party from its obligations under the Loan Documents or
release any of the Collateral without the written consent of each Lender; or
(viii) change any of the provisions of this Section or the definition of
“Majority Lenders”, “Required Lenders” or any other provision hereof specifying
the number or percentage of Lenders required to waive, amend or modify any
rights hereunder or make any determination or grant any consent hereunder,
without the written consent of each Lender;
provided further that no such agreement shall (x) amend, modify or otherwise
affect the rights or duties of the Administrative Agent or the Issuing Bank
hereunder without the prior written consent of the Administrative Agent or the
Issuing Bank, as the case may be or (y) change any of the provisions of
Section 2.20 without the prior written consent of the Administrative Agent and
the Issuing Bank.
Section 11.03. Expenses; Indemnity; Damage Waiver.
(a) The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by
the Administrative Agent and its Affiliates, including the reasonable fees,
charges and disbursements of counsel for the Administrative Agent, in connection
with the syndication of the credit facilities provided for herein, the
preparation and administration of this Agreement and the other Loan Documents or
any amendments, modifications or waivers of the provisions hereof (whether or
not the transactions contemplated hereby or thereby shall be consummated),
(ii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in
connection with the issuance, amendment, renewal or extension of any Letter of
Credit or any demand for payment thereunder and (iii) all reasonable
out-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank or
any Lender, including the fees, charges and disbursements of any counsel for the
Administrative Agent, the Issuing Bank or any Lender, in connection with the
enforcement or protection of its rights in connection with this Agreement,
including its rights under this Section, or in connection with the Loans made or
Letters of Credit issued hereunder, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans or Letters of Credit.

 

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(b) THE CREDIT PARTIES SHALL INDEMNIFY THE ADMINISTRATIVE AGENT, THE CO-LEAD
ARRANGERS, THE ISSUING BANK AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF
THE FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”) AGAINST,
AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES,
LIABILITIES AND RELATED EXPENSES, INCLUDING THE FEES, CHARGES AND DISBURSEMENTS
OF ANY COUNSEL FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY
INDEMNITEE ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (I) THE
EXECUTION OR DELIVERY OF THIS AGREEMENT OR ANY AGREEMENT OR INSTRUMENT
CONTEMPLATED HEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE
OBLIGATIONS HEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS OR ANY OTHER
TRANSACTIONS CONTEMPLATED HEREBY, (II) ANY LOAN OR LETTER OF CREDIT OR THE USE
OF THE PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY THE ISSUING BANK TO HONOR A
DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN
CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER
OF CREDIT), (III) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS
MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE BORROWER OR ANY
RESTRICTED SUBSIDIARY, OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE
BORROWER OR ANY RESTRICTED SUBSIDIARY, OR (IV) ANY ACTUAL OR PROSPECTIVE CLAIM,
LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING,
WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND REGARDLESS OF WHETHER
ANY INDEMNITEE IS A PARTY THERETO; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO
ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES,
LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE OR FROM A CLAIM BROUGHT BY A
CREDIT PARTY AGAINST SUCH INDEMNITEE FOR BREACH IN BAD FAITH OF SUCH
INDEMNITEE’S OBLIGATIONS UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS. FOR
THE AVOIDANCE OF DOUBT, WITH RESPECT TO THE FOREGOING PROVISO “ANY INDEMNITEE”
MEANS ONLY THE INDEMNITEE OR INDEMNITEES, AS THE CASE MAY BE, THAT ARE
DETERMINED BY SUCH COURT TO HAVE BEEN GROSSLY NEGLIGENT OR TO HAVE ENGAGED IN
WILLFUL MISCONDUCT OR BREACHED THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN BAD
FAITH AND NOT ANY OTHER INDEMNITEE.
(c) To the extent that any Credit Party fails to pay any amount required to be
paid by it to the Administrative Agent or the Issuing Bank under paragraph
(a) or (b) of this Section, each Lender severally agrees to pay to the
Administrative Agent or the Issuing Bank, as the case may be, such Lender’s
Applicable Percentage of such unpaid amount with respect to amounts to be paid
to the Issuing Bank and such Lender’s Applicable Percentage of such unpaid
amount with respect to amounts to be paid to the Administrative Agent (in each
case, determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought); provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Administrative Agent or the Issuing
Bank in its capacity as such.

 

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(d) To the extent permitted by applicable law, the Credit Parties shall not
assert, and hereby waive, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable not later than 10 days
after written demand therefor.
Section 11.04. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit), except that (i) no Credit Party may assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by such Credit
Party without such consent shall be null and void) and (ii) no Lender may assign
or otherwise transfer its rights or obligations hereunder except in accordance
with this Section. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit), Participants (to the extent
provided in paragraph (c) of this Section) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent,
the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.
(b)
(i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender
may assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans at the time owing to it) with the prior written consent (such
consent not to be unreasonably withheld) of:
(A) the Borrower, provided that no consent of the Borrower shall be required for
an assignment to a Lender, an Affiliate of a Lender, a Federal Reserve Bank, an
Approved Fund or, if an Event of Default has occurred and is continuing, any
other assignee;
(B) the Administrative Agent; and
(C) the Issuing Bank.
(ii) Assignments shall be subject to the following additional conditions:
(A) except in the case of an assignment to a Lender, an Affiliate of a Lender,
an Approved Fund or an assignment of the entire remaining amount of the
assigning Lender’s Commitment or Loans, the amount of the Commitment or Loans of
the assigning Lender subject to each such assignment (determined as of the date
the Assignment and Assumption with respect to such assignment is delivered to
the Administrative Agent) shall not be less than $5,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, provided that no such
consent of the Borrower shall be required if an Event of Default has occurred
and is continuing;

 

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(B) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations in respect of such
Lender’s Commitment and such Lender’s Loans under this Agreement;
(C) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500; and
(D) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire.
For the purposes of this Section 11.04(b), the term “Approved Fund” has the
following meaning:
“Approved Fund” means any Person (other than a natural person) that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.
(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv)
of this Section, from and after the effective date specified in each Assignment
and Assumption the assignee thereunder shall be a party hereto and, to the
extent of the interest assigned by such Assignment and Assumption, have the
rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of
Section 2.15, Section 2.16, Section 2.17 and Section 11.03). Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does not
comply with this Section 11.04 shall be treated for purposes of this Agreement
as a sale by such Lender of a participation in such rights and obligations in
accordance with paragraph (c) of this Section except that any attempted
assignment or transfer by any Lender that does not comply with clause (C) of
Section 11.04(b)(ii) shall be null and void.
(iv) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment and Applicable Percentage of, and
principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries in
the Register shall be conclusive, and the Credit Parties, the Administrative
Agent, the Issuing Bank and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Credit Parties, the Issuing
Bank and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.

 

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(v) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section any
written consent to such assignment required by paragraph (b) of this Section,
the Administrative Agent shall accept such Assignment and Assumption and record
the information contained therein in the Register; provided that if either the
assigning Lender or the assignee shall have failed to make any payment required
to be made by it pursuant to Section 2.06(d) or Section 2.06(e), Section 2.07,
Section 2.18(d) or Section 11.03(c), the Administrative Agent shall have no
obligation to accept such Assignment and Assumption and record the information
therein in the Register unless and until such payment shall have been made in
full, together with all accrued interest thereon. No assignment shall be
effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.
(c)
(i) Any Lender may, without the consent of the Borrower, the Administrative
Agent or the Issuing Bank, sell participations to one or more banks or other
entities (a “Participant”) in all or a portion of such Lender’s rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided that (A) such Lender’s obligations under
this Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the Administrative Agent, the Issuing Bank and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to
Section 11.02(b) that affects such Participant. Subject to paragraph (c)(ii) of
this Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Section 2.15, Section 2.16 and Section 2.17 to the same extent as if
it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section. To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 11.08 as though it were a
Lender, provided such Participant agrees to be subject to Section 2.18(c) as
though it were a Lender.

 

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(ii) A Participant shall not be entitled to receive any greater payment under
Section 2.15 or Section 2.17 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the prior written
consent of the Borrower. A Participant that would be a Foreign Lender if it were
a Lender shall not be entitled to the benefits of Section 2.17 unless the
Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with
Section 2.17(e) as though it were a Lender.
(d) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
Section 11.05. Survival. All covenants, agreements, representations and
warranties made by the Credit Parties herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Aggregate Commitment has not
expired or terminated. The provisions of Section 2.15, Section 2.16,
Section 2.17 and Section 11.03 and Article X shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Loans, the expiration or termination of the Letters
of Credit and the Aggregate Commitment or the termination of this Agreement or
any provision hereof.
Section 11.06. Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the Administrative
Agent constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof. THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES. Except as provided in Section 5.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.

 

PDC CREDIT AGREEMENT – Page 92

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Section 11.07. Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.
Section 11.08. Right of Setoff. If an Event of Default shall have occurred and
be continuing, each Lender and each of its Affiliates is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of the Borrower
against any of and all the obligations of any Credit Party now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of each Lender under this Section
and Section 8.08 are in addition to other rights and remedies (including other
rights of setoff) which such Lender may have.
Section 11.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.
(b) EACH CREDIT PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF
AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL
OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR, TO THE EXTENT
PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT
A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE
ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY LENDER MAY OTHERWISE HAVE TO BRING
ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST ANY CREDIT PARTY OR
ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

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(c) EACH CREDIT PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN
PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(d) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN
THE MANNER PROVIDED FOR NOTICES IN SECTION 11.01. NOTHING IN THIS AGREEMENT WILL
AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW.
Section 11.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 11.11. Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
Section 11.12. Confidentiality. Each of the Administrative Agent, the Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its and its
Affiliates’ directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority having jurisdiction over any
Lender, (c) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Credit Parties
and their obligations,

 

PDC CREDIT AGREEMENT – Page 94

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(g) with the consent of the Borrower or (h) to the extent such Information
(i) becomes publicly available other than as a result of a breach of this
Section or (ii) becomes available to the Administrative Agent, the Issuing Bank
or any Lender on a nonconfidential basis from a source other than a Credit
Party. For the purposes of this Section, “Information” means all information
received from any Credit Party relating to any Credit Party or its business,
other than any such information that is available to the Administrative Agent,
the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by
any Credit Party; provided that, in the case of information received from any
Credit Party after the date hereof, such information is clearly identified at
the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
Section 11.13. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which are treated as interest on such Loan
under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender. In the event that,
notwithstanding Section 11.09, applicable law is the law of the State of Texas
and such applicable law provides for an interest ceiling under Chapter 303 of
the Texas Finance Code (the “Texas Finance Code”) as amended, for each day, the
ceiling shall be the “weekly ceiling” as defined in the Texas Finance Code and
shall be used in this Note and the other Loan Documents for calculating the
Maximum Rate and for all other purposes. Chapter 346 of the Texas Finance Code
(which regulates certain revolving credit accounts (formerly Tex. Rev. Civ.
Stat. Ann. Art. 5069, Ch. 15)) shall not apply to this Agreement or to any Loan,
nor shall this Agreement or any Loan be governed by or be subject to the
provisions of such Chapter 346 in any manner whatsoever.
Section 11.14. USA PATRIOT Act. Each Lender that is subject to the requirements
of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”) hereby notifies each Credit Party that pursuant to the
requirements of the Act, it is required to obtain, verify and record information
that identifies each Credit Party, which information includes the name and
address of each Credit Party and other information that will allow such Lender
to identify each Credit Party in accordance with the Act.
Section 11.15. Original Credit Agreement. Upon the Effective Date, this
Agreement shall supersede and replace in its entirety the Original Credit
Agreement; provided, however, that (i) all loans, letters of credit, and other
indebtedness, obligations and liabilities outstanding under the Original Credit
Agreement on such date shall continue to constitute Loans, Letters of Credit and
other indebtedness, obligations and liabilities under this Agreement, (ii) the
execution and delivery of this Agreement or any of the Loan Documents hereunder
shall not constitute a novation, refinancing or any other fundamental change in
the relationship among the parties and (iii) the Loans, Letters of Credit, and
other indebtedness, obligations and liabilities outstanding hereunder, to the
extent outstanding under the Original Credit Agreement immediately prior to the
date hereof, shall constitute the same loans, letters of credit, and other
indebtedness, obligations and liabilities as were outstanding under the Original
Credit Agreement.

 

PDC CREDIT AGREEMENT – Page 95

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Section 11.16. Reaffirmation and Grant of Security Interest. Each Credit Party
hereby (a) confirms that each Security Instrument (as defined in the Original
Credit Agreement) to which it is a party or is otherwise bound and all
Collateral encumbered thereby, will continue to guarantee or secure, as the case
may be, to the fullest extent possible in accordance with the Loan Documents,
the payment and performance of all Obligations and Guaranteed Liabilities under
this Agreement and the Secured Indebtedness (as such term is defined in the
Mortgages) and all other indebtedness, obligations and liabilities under the
Mortgages, as the case may be, and (b) reaffirms its grant to the Administrative
Agent for the benefit of the Secured Parties of a continuing Lien on and
security interest in and to such Credit Party’s right, title and interest in, to
and under all Collateral as collateral security for the prompt payment and
performance in full when due of the Obligations and Guaranteed Liabilities under
this Agreement and the Secured Indebtedness and all other indebtedness,
obligations and liabilities under the Mortgages (whether at stated maturity, by
acceleration or otherwise) in accordance with the terms thereof.
Section 11.17. Reallocation of Commitments and Loans. The Lenders party to the
Original Credit Agreement have agreed among themselves to reallocate their
respective Revolving Commitments (as defined in the Original Credit Agreement)
as contemplated by this Agreement, and to, among other things, allow certain
financial institutions identified by the Co-Lead Arrangers in consultation with
the Borrower, to become a party to this Agreement as a Lender (each, a “New
Lender”) by acquiring an interest in the Aggregate Commitment. On the Effective
Date and after giving effect to such reallocation and adjustment of the
Aggregate Commitment, the Commitment and Applicable Percentage of each Lender,
including each New Lender, shall be as set forth on Schedule 2.01 and each
Lender, including each New Lender, shall own its Applicable Percentage of the
outstanding Loans. The reallocation and adjustment to the Commitments of each
Lender, including each New Lender, as contemplated by this Section 11.17 shall
be deemed to have been consummated pursuant to the terms of the Assignment and
Assumption attached as Exhibit A hereto as if each of the Lenders, including
each New Lender, had executed an Assignment and Assumption with respect to such
reallocation and adjustment. The Borrower and the Administrative Agent hereby
consent to such reallocation and adjustment of the Commitments and each New
Lender’s acquisition of an interest in the Aggregate Commitment. The
Administrative Agent hereby waives the $3,500 processing and recordation fee set
forth in Section 11.04(b)(ii)(C) with respect to the assignments and
reallocations of the Commitments contemplated by this Section 11.17. To the
extent requested by any Lender, and in accordance with Section 2.16, the
Borrower shall pay to such Lender, within the time period prescribed by
Section 2.16, any amounts required to be paid by the Borrower under Section 2.16
in the event the payment of any principal of any Eurodollar Loan or the
conversion of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto is required in connection with the reallocation
contemplated by this Section 11.17.
[Signature Page Follows]

 

PDC CREDIT AGREEMENT – Page 96

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

            BORROWER:

PETROLEUM DEVELOPMENT CORPORATION
      By:           Name:   Gysle R. Shellum        Title:   Chief Financial
Officer        GUARANTORS:

RILEY NATURAL GAS COMPANY
      By:           Name:   Darwin L. Stump        Title:   Treasurer       
UNIOIL
      By:           Name:   Darwin L. Stump        Title:   President &
Treasurer   

                    PDC CREDIT AGREEMENT   Signature Page    

 

 

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            JPMORGAN CHASE BANK, N.A., as
Administrative Agent, Issuing Bank and a Lender
      By:           Name:   Jo Linda Papadakis        Title:   Authorized
Officer   

                    PDC CREDIT AGREEMENT   Signature Page    

 

 

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            BNP PARIBAS,
as a Lender and as Syndication Agent
      By:           Name:           Title:               By:           Name:    
      Title:      

                    PDC CREDIT AGREEMENT   Signature Page    

 

 

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            BANK OF AMERICA, N.A.,
as a Lender and as a Co-Documentation Agent
      By:           Name:           Title:      

                    PDC CREDIT AGREEMENT   Signature Page    

 

 

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            BANK OF MONTREAL,
as a Lender and as a Co-Documentation Agent
      By:           Name:           Title:      

                    PDC CREDIT AGREEMENT   Signature Page    

 

 

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            THE ROYAL BANK OF SCOTLAND PLC,
as a Lender and as a Co-Documentation Agent
      By:           Name:           Title:      

                    PDC CREDIT AGREEMENT   Signature Page    

 

 

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            COMPASS BANK,
as a Lender
      By:           Name:           Title:      

                    PDC CREDIT AGREEMENT   Signature Page    

 

 

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            CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK,
as a Lender
      By:           Name:           Title:               By:           Name:    
      Title:      

                    PDC CREDIT AGREEMENT   Signature Page    

 

 

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            THE BANK OF NOVA SCOTIA,
as a Lender
      By:           Name:           Title:      

                    PDC CREDIT AGREEMENT   Signature Page    

 

 

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            SCOTIABANC INC.,
as a Lender
      By:           Name:           Title:      

                    PDC CREDIT AGREEMENT   Signature Page    

 

 

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            WELLS FARGO BANK, N.A.,
as a Lender
      By:           Name:           Title:      

                    PDC CREDIT AGREEMENT   Signature Page    

 

 

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            BANK OF OKLAHOMA,
as a Lender
      By:           Name:           Title:      

                    PDC CREDIT AGREEMENT   Signature Page    

 

 

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            CAPITAL ONE, N.A.,
as a Lender
      By:           Name:           Title:      

                    PDC CREDIT AGREEMENT   Signature Page    

 

 

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            COMERICA BANK,
as a Lender
      By:           Name:           Title:      

                    PDC CREDIT AGREEMENT   Signature Page    

 

 

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            NATIXIS,
as a Lender
      By:           Name:           Title:      

                    PDC CREDIT AGREEMENT   Signature Page    

 

 

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            TEXAS CAPITAL BANK, N.A.,
as a Lender
      By:           Name:           Title:      

                    PDC CREDIT AGREEMENT   Signature Page    

 

 

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            U.S. BANK NATIONAL ASSOCIATION,
as a Lender
      By:           Name:           Title:      

                    PDC CREDIT AGREEMENT   Signature Page    

 

 

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EXHIBIT A
ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, the
“Credit Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of
this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the respective facilities
identified below (including any letters of credit and guarantees included in
such facilities) and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender) against any Person, whether known or
unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including contract claims, tort claims, malpractice claims, statutory claims and
all other claims at law or in equity related to the rights and obligations sold
and assigned pursuant to clause (i) above (the rights and obligations sold and
assigned pursuant to clauses (i) and (ii) above being referred to herein
collectively as the “Assigned Interest”). Such sale and assignment is without
recourse to the Assignor and, except as expressly provided in this Assignment
and Assumption, without representation or warranty by the Assignor.

         
1.
  Assignor:    
 
     
 
 
 
       
2.
  Assignee:    
 
     
 
 
 
     
[and is an Affiliate/Approved Fund of [identify Lender]]
 
       
3.
  Borrower:  
Petroleum Development Corporation
 
       
4.
  Administrative Agent:  
JPMorgan Chase Bank, N.A., as the administrative agent under the Credit
Agreement
 
       
5.
  Credit Agreement:  
Second Amended and Restated Credit Agreement, dated as of November 5, 2010 among
Petroleum Development Corporation, as Borrower, certain Subsidiaries of
Borrower, as Guarantors, the Lenders parties thereto, and JPMorgan Chase Bank,
N.A., as Administrative Agent

 

PDC CREDIT AGREEMENT- EXHIBIT A – PAGE 1

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6.
  Assigned Interest:    

                              Aggregate     Amount of     Applicable      
Commitment/Loans     Commitment/Loans     Percentage of   Facility Assigned  
for all Lenders     Assigned     Commitment/Loans  
 
  $       $         %  
 
  $       $         %  
 
  $       $         %  

Effective Date:                            , 20     
The terms set forth in this Assignment and Assumption are hereby agreed to:

            ASSIGNOR

[NAME OF ASSIGNOR]
      By:           Title:              ASSIGNEE

[NAME OF ASSIGNEE]
      By:           Title:   

 

PDC CREDIT AGREEMENT- EXHIBIT A – PAGE 2

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          [Consented to and] Accepted:
 
        JPMORGAN CHASE BANK, N.A.
as Administrative Agent and Issuing Bank
 
       
By:
       
 
 
 
Title:    
 
        [Consented to:]
 
        PETROLEUM DEVELOPMENT CORPORATION
 
       
By:
       
 
 
 
Title    

 

PDC CREDIT AGREEMENT- EXHIBIT A – PAGE 3

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ANNEX 1
Second Amended and Restated Credit Agreement dated as of November 5, 2010 among
Petroleum Development Corporation, as Borrower, certain Subsidiaries of
Borrower, as Guarantors, the Lenders party thereto and JPMorgan Chase Bank,
N.A., as Administrative Agent.
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties.
1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal
and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is
free and clear of any lien, encumbrance or other adverse claim and (iii) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of the
Borrower, any Subsidiary or Affiliates or any other Person obligated in respect
of any Loan Document or (iv) the performance or observance by the Borrower, any
Subsidiary or Affiliates or any other Person of any of their respective
obligations under any Loan Document.
1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the
requirements, if any, specified in the Credit Agreement that are required to be
satisfied by it in order to acquire the Assigned Interest and become a Lender,
(iii) from and after the Effective Date, it shall be bound by the provisions of
the Credit Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 6.01 thereof, as applicable,
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase the Assigned Interest on the basis of which it has
made such analysis and decision independently and without reliance on the
Administrative Agent or any other Lender, and (v) if it is a Foreign Lender,
attached to the Assignment and Assumption is any documentation required to be
delivered by it pursuant to the terms of the Credit Agreement, duly completed
and executed by the Assignee; and (b) agrees that (i) it will, independently and
without reliance on the Administrative Agent, the Assignor or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.

 

PDC CREDIT AGREEMENT- ANNEX 1 OF EXHIBIT A – PAGE 1

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2. Payments. From and after the Effective Date, the Administrative Agent shall
make all payments in respect of the Assigned Interest (including payments of
principal, interest, fees and other amounts) to the Assignor for amounts which
have accrued to but excluding the Effective Date and to the Assignee for amounts
which have accrued from and after the Effective Date.
3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by
telecopy or other electronic means shall be effective as delivery of a manually
executed counterpart of this Assignment and Assumption. This Assignment and
Assumption shall be governed by, and construed in accordance with, the law of
the State of New York.

 

PDC CREDIT AGREEMENT- ANNEX 1 OF EXHIBIT A – PAGE 2

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EXHIBIT B
OPINION OF COUNSEL FOR THE BORROWER
[See attached]

 

PDC CREDIT AGREEMENT- EXHIBIT B – PAGE 1

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EXHIBIT C
COUNTERPART AGREEMENT
This COUNTERPART AGREEMENT, dated [                    ] (this “Counterpart
Agreement”) is delivered pursuant to that certain Second Amended and Restated
Credit Agreement, dated as of November 5, 2010 (as it may be amended,
supplemented or otherwise modified, the “Credit Agreement”; the terms defined
therein and not otherwise defined herein being used herein as therein defined),
by and among Petroleum Development Corporation, as Borrower, certain
Subsidiaries of Borrower, as Guarantors, the Lenders party thereto, and JPMorgan
Chase Bank, N.A., as Administrative Agent (the “Administrative Agent”).
Section 1. Pursuant to Section 6.13 of the Credit Agreement, the undersigned
hereby:
(a) agrees that this Counterpart Agreement may be attached to the Credit
Agreement and that by the execution and delivery hereof, the undersigned becomes
a Guarantor under the Credit Agreement and agrees to be bound by all of the
terms thereof;
(b) represents and warrants that each of the representations and warranties set
forth in the Credit Agreement and each other Loan Document and applicable to the
undersigned is true and correct both before and after giving effect to this
Counterpart Agreement, except to the extent that any such representation and
warranty relates solely to any earlier date, in which case such representation
and warranty is true and correct as of such earlier date (if applicable to the
undersigned);
(c) certifies that no event has occurred or is continuing as of the date hereof,
or will result from the transactions contemplated hereby on the date hereof,
that would constitute an Event of Default or a Default;
(d) agrees to irrevocably and unconditionally guaranty the due and punctual
payment in full of all Obligations when the same shall become due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a))
and in accordance with Article VIII of the Credit Agreement; and
(e) (i) agrees that this counterpart may also be attached to the Security
Agreement, (ii) agrees that the undersigned will comply with all the terms and
conditions of the Security Agreement as if it were an original signatory
thereto, (iii) grants to the Administrative Agent a security interest in all of
the undersigned’s right, title and interest in and to all “Collateral” (as such
term is defined in the Security Agreement) of the undersigned, in each case
whether now or hereafter existing or in which the undersigned now has or
hereafter acquires an interest and wherever the same may be located and
(iv) delivers to the Administrative Agent supplements to all schedules attached
to the Security Agreement. All such Collateral shall be deemed to be part of the
“Collateral” and hereafter subject to each of the terms and conditions of the
Security Agreement.

 

PDC CREDIT AGREEMENT- EXHIBIT C – PAGE 1

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Section 2. The undersigned agrees from time to time, upon request of
Administrative Agent, to take such additional actions and to execute and deliver
such additional documents and instruments as Administrative Agent may request to
effect the transactions contemplated by, and to carry out the intent of, this
Counterpart Agreement. Neither this Counterpart Agreement nor any term hereof
may be changed, waived, discharged or terminated, except by an instrument in
writing signed by the party (including, if applicable, any party required to
evidence its consent to or acceptance of this Counterpart Agreement) against
whom enforcement of such change, waiver, discharge or termination is sought. Any
notice or other communication herein required or permitted to be given shall be
given in pursuant to Section 11.01 of the Credit Agreement, and for all purposes
thereof, the notice address of the undersigned shall be the address as set forth
on the signature page hereof. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES THEREOF.

 

PDC CREDIT AGREEMENT- EXHIBIT C – PAGE 2

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IN WITNESS WHEREOF, the undersigned has caused this Counterpart Agreement to be
duly executed and delivered by its duly authorized officer as of the date above
first written.

            [NAME OF SUBSIDIARY]
      By:           Name:           Title:      

Address for Notices:
                                        
                                        
                                        
Attention:
Telecopier
with a copy to:
                                        
                                        
                                        
Attention:
Telecopier
ACKNOWLEDGED AND ACCEPTED,
as of the date above first written:
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent

         
By:
       
 
 
 
Name:    
 
  Title:    

 

PDC CREDIT AGREEMENT- EXHIBIT C – PAGE 3

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EXHIBIT D
FORM OF INTEREST ELECTION REQUEST
Reference is made to the Second Amended and Restated Credit Agreement, dated as
of November 5, 2010 (as it may be amended, supplemented or otherwise modified,
the “Credit Agreement”; the terms defined therein and not otherwise defined
herein being used herein as therein defined), by and among Petroleum Development
Corporation, as Borrower, certain Subsidiaries of Borrower, as Guarantors, the
Lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent.
Pursuant to Section 2.08 of the Credit Agreement, the Borrower desires to
convert or to continue the following Loans, each such conversion and/or
continuation to be effective as of [mm/dd/yy]:

          $ [___,___,___]    
Eurodollar Loans to be continued with Interest Period of ____ month(s)
       
 
$ [___,___,___]    
ABR Loans to be converted to Eurodollar Loans with Interest Period of ____
month(s)
       
 
$ [___,___,___]    
Eurodollar Loans to be converted to ABR Loans

The Borrower hereby certifies that as of the date hereof, no event has occurred
and is continuing or would result from the consummation of the conversion and/or
continuation contemplated hereby that would constitute a Default.

          Date: [mm/dd/yy]   PETROLEUM DEVELOPMENT CORPORATION
      By:           Name:           Title:      

 

PDC CREDIT AGREEMENT- EXHIBIT D – PAGE 1

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EXHIBIT E
NOTE

      New York, New York  

                    ,      

FOR VALUE RECEIVED, the undersigned PETROLEUM DEVELOPMENT CORPORATION, a Nevada
corporation (“Borrower”) hereby unconditionally promises to pay to the order of
                                         (the “Lender”) the principal sum equal
to its Commitment as set forth in the Credit Agreement (as hereinafter defined),
or, if greater or less, the aggregate unpaid principal amount of the Loans
advanced by Lender to Borrower pursuant to the terms of the Credit Agreement,
together with interest on the unpaid principal balance thereof as set forth in
the Credit Agreement, both principal and interest payable as therein provided in
lawful money of the United States of America at the offices of Administrative
Agent provided in Section 11.01 of the Credit Agreement, or at such other place,
as from time to time may be designated by Administrative Agent in accordance
with the Credit Agreement.
The principal and all accrued interest on this Note shall be due and payable in
accordance with the terms and provisions of the Credit Agreement.
This Note is executed pursuant to that certain Second Amended and Restated
Credit Agreement dated as of November 5, 2010, between Borrower, certain
Subsidiaries of the Borrower, as Guarantors, the Administrative Agent and
Lenders (as amended, modified, supplemented or restated from time to time, the
“Credit Agreement”; the terms defined therein and not otherwise defined herein
being used herein as therein defined), is one of the promissory notes referred
to in Section 2.09(e) therein and is secured by the Security Instruments.
Reference is made to the Credit Agreement and the Loan Documents for a statement
of prepayment rights and obligations of Borrower, for a statement of the terms
and conditions under which the due date of this Note may be accelerated and for
statements regarding other matters affecting this Note (including without
limitation the obligations of the holder hereof to advance funds hereunder,
principal and interest payment due dates, voluntary and mandatory prepayments,
exercise of rights and remedies, payment of attorneys’ fees, court costs and
other costs of collection and certain waivers by Borrower and others now or
hereafter obligated for payment of any sums due hereunder). Upon the occurrence
of an Event of Default, the Administrative Agent may declare forthwith to be
entirely and immediately due and payable the principal balance hereof and the
interest accrued hereon, and the Lender shall have all rights and remedies of
the Lender under the Credit Agreement and the other Loan Documents. This Note
may be prepaid in accordance with the terms and provisions of the Credit
Agreement.

 

PDC CREDIT AGREEMENT- EXHIBIT E – PAGE 1

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Regardless of any provision contained in this Note, the holder hereof shall
never be entitled to receive, collect or apply, as interest on this Note, any
amount in excess of the Maximum Rate, and, if the holder hereof ever receives,
collects, or applies as interest, any such amount which would be excessive
interest, it shall be deemed a partial prepayment of principal and treated
hereunder as such; and, if the indebtedness evidenced hereby is paid in full,
any remaining excess shall forthwith be paid to Borrower. In determining whether
or not the interest paid or payable, under any specific contingency, exceeds the
Maximum Rate, Borrower and the holder hereof shall, to the maximum extent
permitted under applicable law (i) characterize any non-principal payment as an
expense, fee or premium rather than as interest, (ii) exclude voluntary
prepayments and the effects thereof, and (iii) spread the total amount of
interest throughout the entire contemplated term of the obligations evidenced by
this Note and/or referred to in the Credit Agreement so that the interest rate
is uniform throughout the entire term of this Note; provided that, if this Note
is paid and performed in full prior to the end of the full contemplated term
thereof; and if the interest received for the actual period of existence thereof
exceeds the Maximum Rate, the holder hereof shall refund to Borrower the amount
of such excess or credit the amount of such excess against the indebtedness
evidenced hereby, and, in such event, the holder hereof shall not be subject to
any penalties provided by any laws for contracting for, charging, taking,
reserving or receiving interest in excess of the Maximum Rate.
If any payment of principal or interest on this Note shall become due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall in such case be included in
computing interest in connection with such payment.
If this Note is placed in the hands of an attorney for collection, or if it is
collected through any legal proceeding at law or in equity or in bankruptcy,
receivership or other court proceedings, Borrower agrees to pay all costs of
collection, including, but not limited to, court costs and reasonable attorneys’
fees.
Borrower and each surety, endorser, guarantor and other party ever liable for
payment of any sums of money payable on this Note, jointly and severally waive
presentment and demand for payment, notice of intention to accelerate the
maturity, protest, notice of protest and nonpayment, as to this Note and as to
each and all installments hereof, and agree that their liability under this Note
shall not be affected by any renewal or extension in the time of payment hereof,
or in any indulgences, or by any release or change in any security for the
payment of this Note, and hereby consent to any and all such renewals,
extensions, indulgences, releases or changes.
This Note shall be governed by and construed in accordance with the applicable
laws of the United States of America and the laws of the State of New York.
THIS NOTE, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENTS AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

 

PDC CREDIT AGREEMENT- EXHIBIT E – PAGE 2

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EXECUTED as of the date and year first above written.

            BORROWER:

PETROLEUM DEVELOPMENT CORPORATION
      By:           Name:           Title:      

 

PDC CREDIT AGREEMENT- EXHIBIT E – PAGE 3

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EXHIBIT F
FORM OF LENDER CERTIFICATE
                     , 200     

To:  
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent

The Borrower, the Guarantors, the Administrative Agent and the Lenders have
entered into that certain Second Amended and Restated Credit Agreement dated as
of November 5, 2010 (as the same has been and may further be amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”).
Unless otherwise defined herein, capitalized terms used herein have the meaning
specified in the Credit Agreement.
[Language for Existing Lender]
[Please be advised that the undersigned has agreed (a) to increase its
Commitment under the Credit Agreement effective  _____, 20_____  (the “Effective
Date”) from $_____  to $_____  and (b) that, from and after the Effective Date,
it shall continue to be a Lender in all respects under the Credit Agreement and
the other Loan Documents.]
[Language for New Lender]
[Please be advised that the undersigned has agreed (a) to become a Lender under
the Credit Agreement effective  _____, 20_____  (the “Effective Date”) with a
Commitment of $_____  and (b) that, from and after the Effective Date, it shall
be deemed to be a Lender in all respects under the Credit Agreement and the
other Loan Documents and shall be bound thereby.]

            Very truly yours,

 

      By:           Name:           Title:      

 

PDC CREDIT AGREEMENT- EXHIBIT F – PAGE 1

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Accepted and Agreed:
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent

         
By:
       
 
 
 
Name:    
 
  Title:    
 
        Accepted and Agreed:
 
        PETROLEUM DEVELOPMENT CORPORATION
 
       
By:
       
 
 
 
Name:    
 
  Title:    

 

PDC CREDIT AGREEMENT- EXHIBIT F – PAGE 2

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SCHEDULE 1.01
EXISTING LETTERS OF CREDIT

                          Letter of                       Letter of Credit
Credit #   Applicant   Beneficiary   Amount     Type   Expiration Date
CPCS-796752
  Petroleum Development Corporation   DOMINION TRANSMISSION, INC.
445 WEST MAIN STREET   $ 18,676,327     Irrevocable Standby L/C   5/22/2012

SCHEDULE 1.01

 

 

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SCHEDULE 2.01
APPLICABLE PERCENTAGES AND COMMITMENTS

                                      Applicable         Lender   Title  
Percentage     Commitment  
JPMorgan Chase Bank, N.A.
  Administrative Agent     9.1428571 %   $ 32,000,000.00  
BNP Paribas
  Syndication Agent     8.1428571 %   $ 28,500,000.00  
Bank of America, N.A.
  Co-Documentation Agent     8.1428571 %   $ 28,500,000.00  
Bank of Montreal
  Co-Documentation Agent     8.1428571 %   $ 28,500,000.00  
The Royal Bank of Scotland plc
  Co-Documentation Agent     8.1428571 %   $ 28,500,000.00  
Compass Bank
            8.1428571 %   $ 28,500,000.00  
Credit Agricole Corporate and Investment Bank
            8.1428571 %   $ 28,500,000.00  
Wells Fargo Bank, N.A.
            8.1428571 %   $ 28,500,000.00  
Bank of Oklahoma
            4.2857143 %   $ 15,000,000.00  
Capital One, N.A.
            4.2857143 %   $ 15,000,000.00  
Comerica Bank
            4.2857143 %   $ 15,000,000.00  
Natixis
            4.2857143 %   $ 15,000,000.00  
Texas Capital Bank, N.A.
            4.2857143 %   $ 15,000,000.00  
U.S. Bank National Association
            4.2857143 %   $ 15,000,000.00  
The Bank of Nova Scotia
            4.07142855 %   $ 14,250,000.00  
Scotiabanc Inc.
            4.07142855 %   $ 14,250,000.00  
TOTAL
            100.00 %   $ 350,000,000.00  

SCHEDULE 2.01

 

 

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SCHEDULE 4.06
DISCLOSED MATTERS
Gobel et al. v. Petroleum Development Corporation, Case No. 09-C-40 in U.S.
District Court, Northern District of West Virginia, filed on January 27, 2009.
David W. Gobel, individually and as representative of the class of all similarly
situated individuals and entities, filed a lawsuit against the Petroleum
Development Corporation (“PDC”) alleging that PDC failed to properly pay
royalties (the “Gobel Lawsuit”). The allegations state that PDC improperly
deducted certain charges and costs before applying the royalty percentage.
Punitive damages are requested in addition to breach of contract, tort and fraud
allegations. The stay was in effect as of December 31, 2009 and lapsed in
February 2010. On August 31, 2010 the federal judges issued an order remanding
the case to the state court.
Colorado Department of Public Health and Environment Matters.
In July 2008, PDC self-reported to the Colorado Department of Public Health and
Environment (the “CDPHE”) certain non-compliance with air laws at a compressor
station in the Piceance Basin. The CDPHE subsequently initiated a review and
inspection of air compliance at the station. In November and December 2009, PDC
received related compliance advisories for alleged non-compliance. On May 27,
2010, PDC entered into a settlement agreement providing for a civil penalty of
$162,900, which was accrued in prior periods and paid in the second quarter of
2010.
In December 2008, PDC received a Notice of Violation/Cease and Desist Order (the
“Notice”) from the CDPHE, related to the stormwater permit for the Garden Gulch
Road. PDC manages the private road for Garden Gulch LLC. PDC is one of eight
users of this road, all of which are natural gas and oil companies operating in
the Piceance region of Colorado. Operating expenses, including this fine, if
any, are allocated among the users of the road based upon their respective
usage. The Notice alleges a deficient and/or incomplete stormwater management
plan, failure to implement best management practices and failure to conduct
required permit inspections. The Notice states that a violation could result in
civil penalties up to $10,000 per day. PDC’s responses were submitted on
February 6, 2009 and April 8, 2009. Commencing in December 2009, PDC entered
into negotiations with the CDPHE regarding this Notice and continues to work to
bring the matter to closure.
SCHEDULE 4.06

 

 

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SCHEDULE 4.13
CAPITALIZATION

     
Borrower:
  Petroleum Development Corporation (PDC), a Nevada corporation
 
   
Restricted Subsidiaries:
  Riley Natural Gas Company, a West Virginia corporation with 500 shares of
$1.00 par value capital stock outstanding, owned 100% by PDC
 
   
 
  Unioil, a Nevada corporation with 1,000 shares of $0.01 per value capital
stock outstanding, owned 100% by PDC.

PDC Ownership of Sponsored Partnerships as of November 3, 2010

                          NAME OF PARTNERSHIP   GP     LP     TOTAL  
PENNWEST PETROLEUM GROUP 1984 LIMITED PARTNERSHIP
    5.00 %     39.06 %     44.06 %
PENNWEST PETROLEUM GROUP 1985-A LIMITED PARTNERSHIP
    5.00 %     63.84 %     68.84 %
PETROWEST GAS GROUP 1987-B LIMITED PARTNERSHIP
    5.00 %     55.40 %     60.40 %
PDC 1989-A LIMITED PARTNERSHIP
    27.50 %     38.35 %     65.85 %
PDC 1989-B LIMITED PARTNERSHIP
    20.00 %     35.69 %     55.69 %
PDC 1996-D LIMITED PARTNERSHIP
    20.00 %     6.00 %     26.00 %
PDC 1997-D LIMITED PARTNERSHIP
    20.00 %     7.80 %     27.80 %
PDC 1998-D LIMITED PARTNERSHIP
    20.00 %     6.01 %     26.01 %
PDC 1999-D LIMITED PARTNERSHIP
    20.00 %     4.34 %     24.34 %
PDC 2000-B LIMITED PARTNERSHIP
    20.00 %     3.58 %     23.58 %
PDC 2000-C LIMITED PARTNERSHIP
    20.00 %     1.92 %     21.92 %

SCHEDULE 4.13

 

 

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                          NAME OF PARTNERSHIP   GP     LP     TOTAL  
PDC 2000-D LIMITED PARTNERSHIP
    20.00 %     5.02 %     25.02 %
PDC 2001-A LIMITED PARTNERSHIP
    20.00 %     3.21 %     23.21 %
PDC 2001-B LIMITED PARTNERSHIP
    20.00 %     3.48 %     23.48 %
PDC 2001-C LIMITED PARTNERSHIP
    20.00 %     4.07 %     24.07 %
PDC 2001-D LIMITED PARTNERSHIP
    20.00 %     3.22 %     23.22 %
PDC 2002-A LIMITED PARTNERSHIP
    20.00 %     1.49 %     21.49 %
PDC 2002-B LIMITED PARTNERSHIP
    20.00 %     3.60 %     23.60 %
PDC 2002-C LIMITED PARTNERSHIP
    20.00 %     2.34 %     22.34 %
PDC 2002-D LIMITED PARTNERSHIP
    20.00 %     7.60 %     27.60 %
PDC 2003-A LIMITED PARTNERSHIP
    20.00 %     3.60 %     23.60 %
PDC 2003-B LIMITED PARTNERSHIP
    20.00 %     3.15 %     23.15 %
PDC 2003-C LIMITED PARTNERSHIP
    20.00 %     2.79 %     22.79 %
PDC 2003-D LIMITED PARTNERSHIP
    20.00 %     1.98 %     21.98 %
PDC 2004-A LIMITED PARTNERSHIP
    20.00 %     3.35 %     23.35 %
PDC 2004-B LIMITED PARTNERSHIP
    20.00 %     1.62 %     21.62 %
PDC 2004-C LIMITED PARTNERSHIP
    20.00 %     1.42 %     21.42 %
PDC 2004-D LIMITED PARTNERSHIP
    20.00 %     4.11 %     24.11 %
PDC 2005-A LIMITED PARTNERSHIP
    20.00 %     1.25 %     21.25 %
PDC 2005-B LIMITED PARTNERSHIP
    20.00 %     2.00 %     22.00 %
ROCKIES REGION PRIVATE LIMITED PARTNERSHIP
    30.00 %     .24 %     30.24 %
ROCKIES REGION 2006 LIMITED PARTNERSHIP
    37.00 %     .18 %     37.18 %
ROCKIES REGION 2007 LIMITED PARTNERSHIP
    37.00 %     0.00 %     37.00 %

SCHEDULE 4.13

 

 

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SCHEDULE 7.01
EXISTING INDEBTEDNESS
None.
SCHEDULE 7.01

 

 

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SCHEDULE 7.02
EXISTING LIENS
None.
SCHEDULE 7.02

 

 

--------------------------------------------------------------------------------

 

SCHEDULE 7.04
EXISTING INVESTMENTS
None.
SCHEDULE 7.04

 

 

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SCHEDULE 7.07
TRANSACTIONS WITH AFFILIATES
None.
SCHEDULE 7.07

 

 

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SCHEDULE 7.08
EXISTING RESTRICTIONS
None.
SCHEDULE 7.08