ex10_22.htm


    
      

    

    Exhibit 10.22


    


    Separation
Agreement

    


    This
Separation Agreement (the “Agreement”) is made and entered into this 8th day of
February, 2008 by and between Petroleum Development Corporation, a Nevada
Corporation (the “Company”), and Thomas E. Riley (the “Employee”) (collectively,
the “Parties”).

    


    WHEREAS, the Parties acknowledge that
on December 20, 2007 the Board of Directors of the Company (the “Board”)
selected a successor for Steven R. Williams upon his retirement as Chief
Executive Officer and authorized the successor to determine what changes he
wanted to make to the executive leadership team of the Company.

    


    WHEREAS, after further evaluation of
these changes, the Company has determined that the Employee would best serve the
Company in the role of Executive Vice President;

    


    WHEREAS, the Parties acknowledge that
the Employee does not wish to serve in the capacity of Executive Vice President
of the Company;

    


    WHEREAS, Employee desires to terminate
his employment with the Company pursuant to the “Good Reason” provisions of his
Employment Agreement and has given written notice of his intention to terminate
his employment with the Company unless he continues in the capacity of President
of the Company;

    


    WHEREAS, the Company has advised the
Employee that it does not intend to reconsider the actions taken with respect to
Employee;

    


    WHEREAS, the Parties desire to entire
into a definitive agreement to set forth the terms of Employee’s separation from
the Company;

    


    NOW THEREFORE, in consideration of the
premises and mutual covenants and obligations set forth herein and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged and accepted, the parties hereto, intending to be legally bound,
agree as follows:

    


    1.   Termination
Date.  Employee resigns his employment and his position as President
and as a member of the Board effective as of March 9, 2008 (the “Termination
Date”). The Parties acknowledge that his resignation is due to “Good Reason” as
defined under his Employment Agreement.

    


    2.   Nondisparagement. 
Employee agrees not to make negative comments or otherwise disparage the Company
or its officers, directors, employees, shareholders or agents, in any manner
likely to be harmful to them or their business, business reputation or personal
reputation. The Company agrees that the members of the Board and officers of the
Company as of the date hereof will not, while employed by the Company or serving
as a director of the Company, as the case may be, make negative comments about
the Employee or otherwise disparage the Employee in any manner that is likely to
be harmful to the Employee’s business or personal reputation. The foregoing
shall not be violated by truthful statements in response to legal process or
required governmental testimony or filings, and the foregoing limitation on the
Company’s directors and officers will not be violated by statements that they in
good faith believe are necessary or 

     

    
      
        
        

      

      
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    appropriate
to make in connection with performing their duties for or on behalf of the
Company.  Either Party will be entitled to execute the remedies provided
for in Section 6.e. of the Employment Agreement.

    


    3.   References.  The
President of the Company shall provide employment references when requested by
Employee and all such references shall characterize Employee’s separation as
voluntary.

    


    4.   Compensation and
Benefits.

    


    
      	
              (a)  

            	
              The
      Company shall pay to Employee the following
  amounts:

            


    

    


    
      	
              (1) 
       

            	
              Separation
      Compensation. Within thirty (30) days after the Termination Date or
      seven (7) days after the Revocation Date (as defined in Section 11 below)
      without revocation, whichever is greater, the Company shall pay to the
      Employee a lump sum amount of $1,877,343, such amount is acknowledged by
      the Parties as being in full satisfaction of the amount due to Employee
      pursuant to Section 7(d) of his Employment Agreement; providing
      for three times the sum of: (a) the Employee’s highest Base Salary
      during the previous two years of employment immediately preceding the
      Termination Date, plus (b) the highest Bonus paid to the Employee during
      the same two year period.

            


    

    


    
      	
              (2) 
       

            	
              Compensation and
      Bonus.  Employee will be entitled to receive his full
      compensation earned in 2008 prior to the Termination Date paid in
      accordance with the Company’s normal payroll practices.  Such
      payment is based on a Base Salary of $315,000 for
      2008.  Employee will also be entitled to receive the benefit
      earned by him under the Short-Term Incentive Compensation program for
      2007.  The parties agree that such amount under the Short-Term
      Incentive Compensation program shall be $310,781, payable at the same time
      as the amounts noted in Section 4(a)(1) above. If the earnings part of the
      2007 bonus calculation under the percent (50%) for the other executive
      officers (“Excess Amount”), Employee will receive a lump sum payment
      within thirty days after such determination, equal to four (4) times the
      amount of the additional bonus amount attributable to the Excess
      Amount.

            


    

    


    
      	
              (3) 
       

            	
              Expense
      Reimbursement.  Company shall pay to the Employee any unpaid
      expense reimbursement for periods on or prior to the Termination Date upon
      presentation by the Employee of an accounting of such expenses in
      accordance with normal Company practices. Employee agrees to submit all
      unpaid expense reimbursements to the Company by April 10, 2008. In no
      event shall such expense reimbursements be made later than April 30, 2008.
      The Parties acknowledge that Employee will not be entitled to any expense
      reimbursements (including, but not limited to, reimbursements for costs of
      premiums on Employee’s one million dollar life insurance
      policy

            


    


    
      
         


      

      
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    and
reimbursements for the cost of the Employee’s current disability policy) for any
expenses incurred on or after the Termination Date.

    


    
      	
              (4) 
       

            	
              Option to Purchase
      Automobile and Computer.  Employee shall have an option to
      purchase the automobile and computer currently furnished to him by the
      Company for $13,185 and $500, respectively. The computer shall be cleaned
      of all Company information by Company’s IT department prior to delivery.
      Full payment shall be due to the Company on or before February 28,
      2008.

            


    

    


    
      	
              (5) 
       

            	
              Stock Options and
      Restricted Stock.  Company agrees that all unvested Company
      stock options and restricted stock shall be vested on the Termination
      Date.  Company acknowledges that Four Thousand Six Hundred and
      Seventy Eight (4,678) stock options shall become fully vested and Sixteen
      Thousand One Hundred Twenty Three (16,123) shares of restricted stock
      shall become fully vested.

            


    

    


    
      	
              (6) 
       

            	
              Performance
      Shares.  Company shall deliver to Employee as soon as
      practicable after the Termination Date, Three Thousand Seventy Eight
      (3,078) shares of Company stock in satisfaction of amounts due to Employee
      under Section 2.3 of the Company’s 2007 Long-Term Incentive Program.
      Employee acknowledges that such shares are his full entitlement from the
      Seven Thousand Six Hundred Ninety-Four (7,694) performance shares award
      under the 2007 Long-Term Incentive
Program.

            


    

    


    
      	
              (7) 
       

            	
              Retirement
      Payment.  Company shall pay Employee the Retirement Payment
      earned under Section 4.c. of the Employment Agreement. The Retirement
      Payment shall be paid in ten (10) annual installments on the first
      business day of January each year, beginning January 2, 2009. The annual
      retirement payment shall be $37,500, which amount is acknowledged by the
      Parties as being equal to $7,500 times the number of completed years of
      service under his Employment Agreement with credit for a full year of
      service for 2008 (i.e., five
years).

            


    

    


    
      	
              (8) 
       

            	
              COBRA
      Coverage.  Company shall continue coverage of the Employee and
      any dependents covered at the time of termination under the Company’s
      group health plans at the Company’s cost for a period equal to the lesser
      of (i) 18 months or (ii) such period as the Employee is eligible to
      participate in another employer’s health
plan.

            


    

    


    
      	
              (9) 
       

            	
              Tax
      Withholding.  Company will be entitled to withhold from the
      benefits and payments described in this Agreement, all income and
      employment taxes as directed by Employee, as long as such request meets
      the minimum required to be withheld under applicable law. For all vested
      stock awards, the Company will withhold the designated income and
      employment tax amount in shares of Company
  Stock.

            


    


    
      
         


      

      
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              (10) 
       

            	
              Stock
      Purchase.  The Company shall purchase from the Employee Fifty
      Thousand (50,000) shares of Employee’s Company Stock. Such stock purchase
      will be made on the Termination Date. The amount paid for such shares will
      be based on the closing market price of the shares on February 8, 2008. In
      order to comply with the Exchange Act exemption provided by Rule 16b-3,
      the Board shall adopt a resolution providing that the repurchase of the
      shares will be in accordance with the terms set forth in this Section and
      expressly providing that this resolution has been adopted to comply with
      Rule 16b-3.

            


    

    


    
      	
              (b)  

            	
              Code Section 409A
      Compliance.  Company represents that this Agreement is
      complaint with Internal Revenue Code Section 409A (“Code Section 409A”)
      and shall be construed to amend the Employment Agreement entered into
      between the Parties in December, 2003 to comply with Code Section 409A.
      For purposes of this Agreement and the Employment
    Agreement:

            


    

     

    
      	
              
                (1)  

              

            	
              "Change of Control"
      shall have the meaing provided under Treas. Reg. §
      1.409-A-3(i)(5).

            


    

     

    
      	
              (2)  

            	
              “Good
      Reason” shall have the meaning provided under Treas.
      Reg. § 1.409A-1(n). However, the Parties acknowledge
      that the Company’s thirty (30) day cure period is waived due to the fact
      that the Company does not intend to reconsider the actions taken with
      respect to Employee.

            


    

    


    
      	
              (3)  

            	
              Employee
      is considered a “specified employee” as such term is defined under Code
      Section 409A(a)(2)(B). Payment of those amounts considered nonqualified
      deferred compensation under Code Section 409A, including those amounts
      payable under Section 4(a)(7) of this Agreement, shall not be made until
      at least six (6) months following the Employee’s separation from service
      of the Company (or, if earlier, the date of death of
      Employee).

            


    

    


    
      	
              (4)  

            	
              It
      is intended that amounts payable under paragraphs (1), (2), (3), (5), (6)
      and (8) of Section 4(a) shall not be considered nonqualified deferred
      compensation under Code Section
409A.

            


    

    


    5.   Qualified Retirement
Plan.  As of the date hereof, Employee had a vested account balance
in the Company’s qualified retirement plan. Employee shall be entitled to such
vested account balance under the Company’s qualified retirement plan upon
processing the appropriate distribution forms following his separation. Such
vested account balance shall include Employee’s share of the 2007 Company
contribution and Employee’s 401(k) deferrals through his Termination Date, all
as adjusted for earnings to the date of distribution.

     

    6.   Confidential Material and
Employee Obligations.  Employee acknowledges the validity of the
confidentiality, non-solicitation and non-compete provisions found in Section 6
of his Employment Agreement and the remedies called for therein. Employee agrees
to abide by the terms of Section 6 of his Employment Agreement, provided that
if, during the period specified in


    
      
         


      

      
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    Section
6d. of his Employment Agreement Employee notifies the Company of either an
employment or business opportunity he intends to pursue, the Company has five
(5) days to object. If the Company fails to object within the five (5) day
period, Employee is free to pursue the employment or business opportunity,
provided further that any objection by the Company shall not be
unreasonable.

     

    7.   Return of
Property.  On or before the Termination Date, Employee will return
to the Company all of the Company’s property in his possession. The Company’s
property includes, without limitation, privileged information, reports, files,
memoranda, correspondence, door and file keys, identification cards, credit
cards, computer access codes, computer programs, software and hardware, customer
and client lists or information and other property or material which he prepared
or helped to prepare or to which he had access including any reproductions
thereof.

     

    8.   Cooperation with
Investigations.  Employee agrees to cooperate fully with the Company
and its attorneys in connection with any investigation or litigation relating to
any Company matter in which Employee was involved, provided advice or has
knowledge and will be reimbursed for Employee’s expenses and time at a mutually
agreed rate. The Company will consult with Employee and make reasonable
efforts to schedule any of Employee’s time required under this Section 8 so as
not to materially disrupt Employee’s business and personal affairs, and the
Company will reimburse Employee for reasonable direct expenses incurred by him
in so complying. The Company agrees to promptly notify Employee, unless
precluded by law, in the event the Company has knowledge that Employee is named
or will be involved in any legal or regulatory proceeding, and the Company will
designate an individual at the Company who will serve as Employee’s point of
contact in the matter.

     

    9.   Other.

    


    
      	
              (a)  

            	
              This
      Agreement shall be construed and enforced pursuant to the laws of the
      State of West Virginia without giving effects to its conflict of laws. If
      any provision hereof is declared to be unenforceable by a court of law,
      such provision shall be fully severable, and this Agreement shall be
      construed and enforced as if such unenforceable provision had never
      comprised a part hereof, the remaining provisions hereof shall remain in
      full force and effect, and the court construing the Agreement shall add as
      a part hereof a provision as similar in terms and effect to such
      unenforceable  provision as may be enforceable, in lieu of the
      unenforceable provision.

            


    

    


    
      	
              (b)  

            	
              This
      Agreement sets forth the entire agreement between the parties hereto, and
      fully supersedes any and all prior oral or written agreements between the
      parties pertaining to the subject matter
hereof.

            


    

    


    
      	
              (c)  

            	
              All
      notices, requests, demands or other communications under the Agreement
      will be in writing and shall be deemed to have been duly given when
      delivered in person or deposited in the United States mail, postage
      prepaid, by registered or certified mail, return receipt requested, to the
      party to whom such notice is being given as
  follows:

            


    


    
      
         


      

      
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                As
      to Thomas E. Riley:

              	 
      	
                Thomas
      E. Riley

                P.
      O.  Box 4471

                Clarksburg,
      West Virginia 26302

              
	 	 
      	 
      	 
      
	 	
                As
      to the Company:

              	 
      	
                Petroleum
      Development Corporation

                120
      Genesis Boulevard

                Bridgeport,
      West Virginia 26330

              


      

    

    


    10.   Waiver and
Release.  In consideration of the Company’s obligations as set forth
above.  Employee hereby releases, acquits and forever
discharges Company and each of its subsidiaries and affiliates and each of
their respective officers, employees, directors, successors and assigns from any
and all claims, actions or causes of action in any way related to her employment
with the Company or the termination thereof, whether arising from tort,
statute or contract, including but not limited to, claims of defamation,
claims arising under the Employee Retirement Income Security Act of 1974, as
amended, the Age Discrimination in Employment Act of 1967, as amended by the
Older Workers Benefit Protection Act of 1990, Title VII of the Civil Rights Act
of 1964, as amended, the Americans with Disabilities Act, the Family and Medical
Leave Act, the discrimination and wage payment laws of West Virginia and any
other federal, state or local statutes or ordinances of the United States, it
being Employee’s intention and the intention of the Company to make this release
as broad and as general as the law permits.  Employee understands that
this Agreement does not waive any rights or claims that may arise after his
execution of it and does not apply to claims arising under the terms of this
Agreement.

    


    11.    Knowing and Voluntary
Consent.   Employee agrees that the consideration to which he
is entitled as a result of this Agreement exceeds the consideration to which
Employee would otherwise have been entitled, and is sufficient to make this
Agreement fully enforceable.

    


    Employee
acknowledges that he was provided a period of at least twenty-one (21) days to
consider this Agreement and that his signature on this Agreement prior to the
expiration of the twenty-one (21) days shall constitute a waiver of the
remainder of the twenty-one (21) day consideration period. Employee further
acknowledges that he has a period of seven days following the date that he
signs below to revoke this Agreement by delivering a written revocation to the
Company at the address below by the end of business on the seventh day of the
revocation period (“Revocation  Date”).  In the event of
revocation, the Company’s obligations under this Agreement will be
void.

    


    Employee
acknowledges that he has been encouraged, and has had a full opportunity, to
consult with an attorney of his choosing in reviewing this Agreement, and
Employee has had a reasonable time within which to review and consider it.
Employee acknowledges that: (a) this Agreement is written in terms and set,
forth conditions in a manner which he understands; (b) he has carefully read and
understands all of the terms and conditions of this Agreement; (c) he agrees
with the terms and conditions of this Agreement; (d) the payment to be made to
him pursuant to this Agreement is not something to which he is entitled except
as consideration for this Agreement; and (e) he enters into this Agreement
knowingly and voluntarily.


    
      
         


      

      
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    IN
WITNESS WHEROF, the Company and the Employee have duly executed this Separation
Agreement as of this 8th day of
February, 2008.

    


    
      	
              Company

            	 
      	
              Employee

            
	 
      	 
      	 
      
	
              Petroleum
      Development Corporation

            	 
      	 
      
	
              By:  /s/
      Steven R. Williams

            	 
      	
              /s/
      Thomas E. Riley

            
	 
      	 
      	
              Thomas
      E. Riley

            


    

     

     

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