Exhibit 10.1





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









 


 









 







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	 





 


i









 





	 	 	 	 	 
	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	 





 


ii









 





	 	 	 	 	 
	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	 





 


iii









 





	 	 	 	 	 
	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	 





 


iv









 





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
	 	 





 


v









 





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









 





“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









 





“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.


 


PDC CREDIT AGREEMENT – Page 3









 





“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









 





“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.


 


PDC CREDIT AGREEMENT – Page 5









 





“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









 





“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).


 


PDC CREDIT AGREEMENT – Page 7









 





“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


 


PDC CREDIT AGREEMENT – Page 8









 







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.


 


PDC CREDIT AGREEMENT – Page 9









 





“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.


 


PDC CREDIT AGREEMENT – Page 10









 





“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.


 


PDC CREDIT AGREEMENT – Page 11









 





“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.


 


PDC CREDIT AGREEMENT – Page 12









 





“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.


 


PDC CREDIT AGREEMENT – Page 13









 





“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.


 


PDC CREDIT AGREEMENT – Page 14









 





“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).


 


PDC CREDIT AGREEMENT – Page 15









 





“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.


 


PDC CREDIT AGREEMENT – Page 16









 





“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.


 


PDC CREDIT AGREEMENT – Page 17









 





“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


 


PDC CREDIT AGREEMENT – Page 18









 







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


 


PDC CREDIT AGREEMENT – Page 19









 






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.


 


PDC CREDIT AGREEMENT – Page 20









 





“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 with the ordinary conduct of business of any Credit Party;


 


PDC CREDIT AGREEMENT – Page 21









 





(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;


 


PDC CREDIT AGREEMENT – Page 22









 





(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.


 


PDC CREDIT AGREEMENT – Page 23









 





“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.


 


PDC CREDIT AGREEMENT – Page 24









 





“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.


 


PDC CREDIT AGREEMENT – Page 25









 





“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.



 


PDC CREDIT AGREEMENT – Page 26









 






“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).


 


PDC CREDIT AGREEMENT – Page 27









 





“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.


 


PDC CREDIT AGREEMENT – Page 28









 





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.


 


PDC CREDIT AGREEMENT – Page 29









 





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.


 


PDC CREDIT AGREEMENT – Page 30









 





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;


 


PDC CREDIT AGREEMENT – Page 31









 






(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.


 


PDC CREDIT AGREEMENT – Page 32









 





(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.


 


PDC CREDIT AGREEMENT – Page 33









 





(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.


 


PDC CREDIT AGREEMENT – Page 34









 





(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.


 


PDC CREDIT AGREEMENT – Page 35









 






(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.


 


PDC CREDIT AGREEMENT – Page 36









 





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.


 


PDC CREDIT AGREEMENT – Page 37









 





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).


 


PDC CREDIT AGREEMENT – Page 38









 





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.


 


PDC CREDIT AGREEMENT – Page 39









 





(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.


 


PDC CREDIT AGREEMENT – Page 40









 





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.


 


PDC CREDIT AGREEMENT – Page 41









 





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;


 


PDC CREDIT AGREEMENT – Page 42









 





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.


 


PDC CREDIT AGREEMENT – Page 43









 





(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.


 


PDC CREDIT AGREEMENT – Page 44









 





(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.


 


PDC CREDIT AGREEMENT – Page 45









 





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


 


PDC CREDIT AGREEMENT – Page 46









 






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


 


PDC CREDIT AGREEMENT – Page 49









 





(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.


 


PDC CREDIT AGREEMENT – Page 53









 





(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.


 


PDC CREDIT AGREEMENT – Page 56









 





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.


 


PDC CREDIT AGREEMENT – Page 58









 





(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.


 


PDC CREDIT AGREEMENT – Page 59









 





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;


 


PDC CREDIT AGREEMENT – Page 60









 





(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;


 


PDC CREDIT AGREEMENT – Page 61









 





(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;


 


PDC CREDIT AGREEMENT – Page 62









 





(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.


 


PDC CREDIT AGREEMENT – Page 63









 





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.


 


PDC CREDIT AGREEMENT – Page 64









 





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.



 


PDC CREDIT AGREEMENT – Page 65









 






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;


 


PDC CREDIT AGREEMENT – Page 67









 





(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;


 


PDC CREDIT AGREEMENT – Page 68









 





(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;


 


PDC CREDIT AGREEMENT – Page 69









 





(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;


 


PDC CREDIT AGREEMENT – Page 70









 






(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


 


PDC CREDIT AGREEMENT – Page 71









 






(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 would find acceptable;


 


PDC CREDIT AGREEMENT – Page 72









 





(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%).


 


PDC CREDIT AGREEMENT – Page 73









 





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).


 


PDC CREDIT AGREEMENT – Page 74









 





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


 


PDC CREDIT AGREEMENT – Page 75









 






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;


 


PDC CREDIT AGREEMENT – Page 80









 





(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;


 


PDC CREDIT AGREEMENT – Page 81









 





(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.


 


PDC CREDIT AGREEMENT – Page 82









 





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.


 


PDC CREDIT AGREEMENT – Page 83









 





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.


 


PDC CREDIT AGREEMENT – Page 84









 





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);


 


PDC CREDIT AGREEMENT – Page 86









 






(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.


 


PDC CREDIT AGREEMENT – Page 88









 





(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;


 


PDC CREDIT AGREEMENT – Page 89









 






(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.


 


PDC CREDIT AGREEMENT – Page 90









 






(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.


 


PDC CREDIT AGREEMENT – Page 91









 






(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









 





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.


 


PDC CREDIT AGREEMENT – Page 93









 





(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









 






(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









 





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









 





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
	 	 





 


 









 





	 	 	 	 	 
	 	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
	 	 





 


 









 





	 	 	 	 	 
	 	BNP PARIBAS,

as a Lender and as Syndication Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	 	 	 	 
	PDC CREDIT AGREEMENT
	 	Signature Page
	 	 





 


 









 





	 	 	 	 	 
	 	BANK OF AMERICA, N.A.,

as a Lender and as a Co-Documentation Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	 	 	 	 
	PDC CREDIT AGREEMENT
	 	Signature Page
	 	 





 


 









 





	 	 	 	 	 
	 	BANK OF MONTREAL,

as a Lender and as a Co-Documentation Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	 	 	 	 
	PDC CREDIT AGREEMENT
	 	Signature Page
	 	 





 


 









 





	 	 	 	 	 
	 	THE ROYAL BANK OF SCOTLAND PLC,

as a Lender and as a Co-Documentation Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	 	 	 	 
	PDC CREDIT AGREEMENT
	 	Signature Page
	 	 





 


 









 





	 	 	 	 	 
	 	COMPASS BANK,

as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	 	 	 	 
	PDC CREDIT AGREEMENT
	 	Signature Page
	 	 





 


 









 





	 	 	 	 	 
	 	CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK,

as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	 	 	 	 
	PDC CREDIT AGREEMENT
	 	Signature Page
	 	 





 


 









 





	 	 	 	 	 
	 	THE BANK OF NOVA SCOTIA,

as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	 	 	 	 
	PDC CREDIT AGREEMENT
	 	Signature Page
	 	 





 


 









 





	 	 	 	 	 
	 	SCOTIABANC INC.,

as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	 	 	 	 
	PDC CREDIT AGREEMENT
	 	Signature Page
	 	 





 


 









 





	 	 	 	 	 
	 	WELLS FARGO BANK, N.A.,

as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	 	 	 	 
	PDC CREDIT AGREEMENT
	 	Signature Page
	 	 





 


 









 





	 	 	 	 	 
	 	BANK OF OKLAHOMA,

as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	 	 	 	 
	PDC CREDIT AGREEMENT
	 	Signature Page
	 	 





 


 









 






	 	 	 	 	 
	 	CAPITAL ONE, N.A.,

as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	 	 	 	 
	PDC CREDIT AGREEMENT
	 	Signature Page
	 	 





 


 









 





	 	 	 	 	 
	 	COMERICA BANK,

as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	 	 	 	 
	PDC CREDIT AGREEMENT
	 	Signature Page
	 	 





 


 









 





	 	 	 	 	 
	 	NATIXIS,

as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	 	 	 	 
	PDC CREDIT AGREEMENT
	 	Signature Page
	 	 





 


 









 





	 	 	 	 	 
	 	TEXAS CAPITAL BANK, N.A.,

as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	 	 	 	 
	PDC CREDIT AGREEMENT
	 	Signature Page
	 	 





 


 









 





	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION,

as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	 	 	 	 
	PDC CREDIT AGREEMENT
	 	Signature Page
	 	 





 


 









 





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









 





	 	 	 	 	 
	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









 





	 	 	 	 	 
	[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









 





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









 





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









 







EXHIBIT B




OPINION OF COUNSEL FOR THE BORROWER




[See attached]





 


PDC CREDIT AGREEMENT- EXHIBIT B – PAGE 1











 




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









 





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









 





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









 





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









 







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









 






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









 





EXECUTED as of the date and year first above written.



	 	 	 	 	 
	 	BORROWER:


PETROLEUM DEVELOPMENT CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 


PDC CREDIT AGREEMENT- EXHIBIT E – PAGE 3









 





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









 








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









 





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




 


 









 







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




 


 









 







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




 


 









 







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


 


 









 





	 	 	 	 	 	 	 	 	 	 	 	 	 
	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


 


 









 





SCHEDULE 7.01




EXISTING INDEBTEDNESS




None.




SCHEDULE 7.01



 


 









 





SCHEDULE 7.02




EXISTING LIENS




None.



SCHEDULE 7.02




 


 









 







SCHEDULE 7.04




EXISTING INVESTMENTS




None.



SCHEDULE 7.04



 


 









 





SCHEDULE 7.07




TRANSACTIONS WITH AFFILIATES




None.



SCHEDULE 7.07



 


 









 





SCHEDULE 7.08




EXISTING RESTRICTIONS




None.



SCHEDULE 7.08