Document:

ex10_10.htm

    
      

    

    Exhibit 10.10

     

    Employment
Agreement

     

    This
Employment Agreement (the “Agreement”) is made and entered into this 31st day of
December, 2008, by and between Petroleum Development Corporation, a Nevada
Corporation (the “Company”), and Eric R. Stearns (the “Employee”).

     

    WHEREAS,
the Company currently employs the Employee in the capacity of Executive Vice
President and, prior to March 9, 2008, had employed the Employee in the capacity
of Executive Vice President of Exploration and Development;

     

    WHEREAS,
the Company desires to employ the Employee to perform the duties and services
incident to such position for the Company, and the Employee wishes to be so
employed by the Company, all upon the terms and conditions set forth in this
Agreement;

     

    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.  

            	
              Effective Date and
      Term

            

    

     

    
      	
              a.  

            	
              Initial
      Term.  The effective date of this Agreement will be
      January 1, 2008 (the “Effective Date”), and the initial term will be for
      the period beginning on the Effective Date and ending December 31,
      2009.

            

    

     

    
      	
              b.  

            	
              Automatic
      Extensions.  The Term of this Agreement will be extended
      for an additional twelve (12) months beginning on December 31, 2008 and on
      each successive December 31 unless either party provides the other with at
      least thirty (30) days prior written notice, or unless the contract has
      been terminated by the parties in accordance with the provisions of
      Section 7 of this Agreement.  The period of time from the
      Effective Date until the Termination Date, as defined in Section 7.b.,
      will be the “Term.”

            

    

     

    
      	
              c.  

            	
              Change of
      Control.  In the event of a Change of Control, the Term
      of this Agreement will automatically be extended to the date that is
      twenty-four (24) months after the date of the Change of Control without
      any action on the part of the Company or the
      Employee.  Thereafter, the date of the Change of Control will be
      treated as the Effective Date for purposes of further automatic 12-month
      extensions of the Agreement under this section.  “Change of
      Control” of the Company will occur on the earliest of the following
      events:

            

    

     

    
      	
              (i)  

            	
              Change in
      Ownership: A change in ownership of the Company occurs on the date
      that any one person, or more than one person acting as a group, acquires
      ownership of stock of the Company that, together with stock held by such
      person or group, constitutes more than 50% of the total fair market value
      or total voting power of the stock of the Company, excluding the
      acquisition of 

            

    

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      
        	
                 

              	
                 additional
      stock by a person or more than one person acting as a group who is
      considered to own more than 50% of the total fair market value or total
      voting power of the stock of the
Company.

              

      

       

    

    
      	
              (ii)  

            	
              Change in Effective
      Control: A change in effective control of the Company occurs on the
      date that either:

            

    

     

    
      	
              (A)  

            	
              Any
      one person, or more than one person acting as a group, acquires (or has
      acquired during the l2-month period ending on the date of the most recent
      acquisition by such person or persons) ownership of stock of the Company
      possessing 30% or more of the total voting power of the stock of the
      Company; or

            

    

     

    
      	
              (B)  

            	
              A
      majority of the members of the Board of Directors of the Company (the
      “Board”) is replaced during any l2-month period by directors whose
      appointment or election is not endorsed by a majority of the members of
      the board of directors prior to the date of the appointment or election;
      provided, that this paragraph (B) will apply only to the Company if no
      other corporation is a majority
shareholder.

            

    

     

    
      	
              (iii)  

            	
              Change in Ownership of
      Substantial Assets: A change the ownership of a substantial portion
      of the Company's assets occurs on the date that any one person, or more
      than one person acting as a group, acquires (or has acquired during the
      l2-month period ending on the date of the most recent acquisition by such
      person or persons) assets from the Company that have a total gross fair
      market value equal to or more than 40% of the total gross fair market
      value of the assets of the Company immediately prior to such acquisition
      or acquisitions. For this purpose, “gross fair market value” means the
      value of the assets of the Company, or the value of the assets being
      disposed of, determined without regard to any liabilities associated with
      such assets.

            

    

     

    It is the
intent that this definition be construed consistent with the definition of
“Change of Control” as defined under Internal Revenue Code Section 409A and the
applicable Treasury Regulations, as amended from time to time.

     

    
      	
              2.  

            	
              Place of
      Employment

            

    

     

    The place
of employment will be the Company’s headquarters building in Bridgeport, West
Virginia unless the Employee and the Company agree to an alternative
location.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
              3.  

            	
              Position and
      Responsibilities

            

    

     

    
      	
              a.  

            	
              Position.  The
      Employee served as the Executive Vice President of Exploration and
      Development until March 9, 2008.  For periods on or after March
      9, 2008, the Employee will serve as Executive Vice
      President.  In such capacities, the Employee will report to the
      Chief Executive Officer of the Company and be under the general direction
      and control of the Chief Executive
Officer.

            

    

     

    
      	
              b.  

            	
              Responsibilities.  The
      Employee will have obligations, duties, authority and power to do such
      acts as are customarily done by a person holding the same or equivalent
      positions in corporations of similar size to the Company.  The
      Employee shall perform such managerial duties and responsibilities for the
      Company as may reasonably be assigned to him by the Chief Executive
      Officer and, at no additional compensation, shall serve in other such
      positions with any subsidiary corporation of the Company, or any
      partnership, limited liability company or other entity in which the
      Company has an interest (herein collectively called “Affiliates”), as the
      Chief Executive Officer may from time to time
  determine.

            

    

     

    
      	
              c.  

            	
              Dedication of
      Professional Services.  The Employee shall devote
      substantially all of his business time, best efforts and attention to
      promote and advance the business of the Company and its Affiliates to
      perform diligently and faithfully all the duties, responsibilities and
      obligations of his positions with the Company.  Employee shall
      not be employed in any other business activity, other than with the
      Company and its Affiliates, during the Term, whether or not such activity
      is pursued for gain, profit or other pecuniary advantage without approval
      by the Compensation Committee of the Board (“Compensation Committee”);
      provided, however, that this restriction will not be construed as
      preventing Employee from investing his or her personal assets in a
      business which does not compete with the Company or its Affiliates, where
      the form or manner of such investment will not require services of any
      significance on the part of Employee in the operation of the affairs of
      the business in which such investment is made and in which his
      participation is solely that of a passive
  investor.

            

    

     

    
      	
              d.  

            	
              Adherence to
      Standards.  Employee shall comply with the written
      policies, standards, rules and regulations of the Company from time to
      time established for all executive officers of the Company consistent with
      Employee's position and level of
authority.

            

    

     

    
      	
              e.  

            	
              Minimum Stock
      Ownership.  Employee shall comply with the Company’s
      minimum stock ownership requirements for executive officers of the
      Company, such requirement being that by March 9, 2009 (the fifth
      anniversary of the date such minimum stock ownership requirements were
      

            

    

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
       

      
        	
                 

              	
                adopted
      by the Board) and until his Termination Date, Employee shall have a
      minimum stock ownership equal to two (2) times the Employee’s Base Salary,
      as defined in Section 4.a (or such level as adjusted from time to
      time).

              

      

       

    

    
      	
              4.  

            	
              Compensation

            

    

     

    
      	
              a.  

            	
              Base
      Salary.  The Company shall pay the Employee an annual
      base salary of $305,000 (the “Base Salary”) commencing on the Effective
      Date and ending on the Termination Date.  The Base Salary will
      be payable in accordance with the ordinary payroll practices of the
      Company.  The Compensation Committee shall review the Base
      Salary annually, and the Base Salary may be changed by the Compensation
      Committee in its sole discretion, taking into account the base salaries,
      aggregate annual cash compensation, and other compensation of individuals
      holding similar positions at other comparable companies and the
      performance of the Employee and the
Company.

            

    

     

    
      	
              b.  

            	
              Performance
      Bonus.  In addition to his Base Salary, the Employee will
      be eligible to earn an annual performance bonus (the “Bonus”) during the
      Term based on the achievement of corporate performance objectives as
      determined by the Compensation Committee in its sole
      discretion.  The “Target Bonus” will be a specified percentage
      of the Base Salary, as set forth in the Petroleum Development Corporation
      Short-Term Incentive Compensation Plan for a given year which may be
      earned if the Employee meets all of the criteria established by the
      Compensation Committee.  However, the Bonus may be less than or
      more than the Target Bonus based on the level of performance of the
      Employee and the criteria established by and at the sole discretion of,
      the Compensation Committee.  For 2008, the Target Bonus will be
      equal to 62.5% of the Employee’s Base Salary and the maximum percentage
      will be 125% of the Employee’s Base Salary.  The Bonus will be
      paid in cash no later than March 15 of the following year.  To
      the extent practicable, the Bonus will meet the requirements for qualified
      performance-based compensation under Internal Revenue Code Section
      162(m).

            

    

     

    
      	
              c.  

            	
              Retirement
      Compensation.  Pursuant to prior employment agreements,
      the Employee, as of the Effective Date, has earned a right to ten (10)
      annual payments of $30,000 (total $300,000).  For each
      additional complete year of employment with the Company, the Employee will
      earn and be entitled to receive an additional annual retirement payment
      equal to $7,500 (the “Retirement Payment”).  In the event the
      Employee terminates employment with the Company prior to the last day of a
      year pursuant to Sections 7.d., 7.f. or 7.h., the Employee will also earn
      an additional Retirement Payment equal to $7,500.  The
      Retirement Payment will be payable to the Employee, or in the event of the
      Employee’s death, to his estate, beneficiaries, or designees, on each of
      the first ten anniversary 

            

    

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
       

      
        	
                 

              	
                dates
      following the date the Employee leaves the service of the
      Company.  The Retirement Payment will be in addition to any
      deferred compensation, pension, or other payments the Employee has earned
      under this and any other previous and subsequent agreements with the
      Company and any other payments he may be due under the Company’s employee
      benefit plans.  The Retirement Payment is payable to the
      Employee, even if the Employee's termination is for Just Cause pursuant to
      Section 7.c.

              

      

       

    

    
      	
              d.  

            	
              Equity Compensation
      Grant.  In addition to cash compensation, the Employee
      will be eligible to earn equity compensation during the
      Term.  The amounts and form of all equity compensation awards
      shall be determined at the sole discretion of the Board or its designee
      and only in accordance with shareholder approved stock compensation
      plans.  As of the Effective Date, under the Company’s Long-Term
      Equity Compensation Plan, the Employee will receive an award equal in
      value to $442,250, 50% of which will be awarded as restricted stock and
      50% of which will be awarded as long-term incentive performance (“LTIP”)
      shares.  For this purpose, the value of the restricted stock and
      the LTIP shares will be determined by the Company’s compensation
      consultants and will be based on the average closing price of the stock of
      the Company for the month of December, 2007.  The restricted
      stock will vest at the rate of 25% for each complete year worked by the
      Employee under this Agreement, beginning on March 7, 2008 and vesting at
      the rate of 25% on each anniversary thereof.  The performance
      shares will vest in accordance with the timing and performance targets set
      forth in the documentation for such LTIP shares.  Future awards
      will vest on the schedule specified by the Board or its designee at the
      time of the award.

            

    

     

    
      	
              e.  

            	
              Succession-Related
      Grant.  On the date that Employee assumes the position of
      Executive Vice President of the Company (March 9, 2008), the Employee will
      receive a one-time award of restricted stock equal in value to
      $450,000.  For this purpose, the value of the restricted stock
      will be determined by the Company’s compensation consultants and will be
      based on the average closing price of the stock of the Company for the
      month of December, 2007.  The restricted stock will vest at the
      rate of 20% for each complete year worked by the Employee under this
      Agreement, beginning from the Effective
Date.

            

    

     

    
      	
              f.  

            	
              Other
      Compensation.  The Employee will continue to be eligible
      to participate in all other cash or stock compensation plans or programs
      maintained by the Company, as in effect from time to time, in which other
      senior executives of the Company are allowed to
    participate.

            

    

     

    
      	
              g.  

            	
              Recoupment of Certain
      Compensation.  If the Company has to restate all or a
      portion of its financial statements due to the material noncompliance of
      the Company with any financial reporting requirement under the securities
      laws, the Employee shall, for the affected years, reimburse the
      

            

    

     

    
       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                Company
      for any excess bonus paid to the Employee pursuant to Section
      4.b.  The reimbursements shall be equal to the difference
      between the bonus paid to him for the affected years and the bonus that
      would have been paid to the Employee had the financial results been
      properly reported.  Such reimbursement shall be paid to the
      Company within ninety days after the Company notifies the Employee of the
      amount owed to the Company.

              

      

       

    

    
      	
              5.  

            	
              Employee
      Benefits

            

    

     

    
      	
              a.  

            	
              Participation in
      Company Benefit Plans.  During the Term, the Company
      shall provide the Employee with coverage under all employee pension and
      welfare benefit programs, plans and practices commensurate with his
      positions in the Company and to the extent permitted under the respective
      employee benefit plan.

            

    

     

    
      	
              b.  

            	
              Vacation.  The
      Employee will be entitled to twenty (20) days of paid vacation in each
      calendar year, to be taken at such times as is reasonably determined by
      the Employee to be consistent with the Employee’s responsibilities under
      this Agreement.

            

    

     

    
      	
              c.  

            	
              Expense
      Reimbursement.  The Employee is authorized to incur
      reasonable expenses in carrying out his duties and responsibilities under
      this Agreement, including, without limitation, expenses related to travel,
      meals, entertaining, and similar items related to such duties and
      responsibilities.  The Company shall reimburse the Employee for
      all such expenses on presentation by Employee from time to time of
      appropriately itemized and approved (consistent with the Company’s policy)
      accounts of such expenditures.  The Company shall reimburse the
      Employee for reasonable dues and expenses of membership in such club or
      clubs as the Board reasonably deems necessary for the Employee to
      entertain on behalf of the Company and for costs associated with
      continuing education and professional dues if approved in advance by the
      Chief Executive Officer.  All expense reimbursements for a
      calendar year will be paid in the normal course, but no later than March
      15 of the following calendar year.

            

    

     

    
      	
              d.  

            	
              Life and Disability
      Insurance.  The Company will reimburse the Employee for
      the cost of life insurance on the Employee in the face amount of one
      million dollars ($1,000,000) with a person or persons named by the
      Employee as either the owner or the beneficiary as the Employee directs,
      and for the cost of a disability policy consistent with what is provided
      to other executive officers of the Company.  All reimbursements
      for a calendar year will be paid in the normal course, but no later than
      March 15 of the following calendar
year.

            

    

     

    
      	
              e.  

            	
              Health
      Insurance.  The Company shall include the Employee under
      any hospital, surgical, or group health plan or policy adopted generally
      for the 

            

    

     

    
       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                benefit
      of its employees.  The payment of the premiums for the Employee
      and his dependents will be determined in accordance with the rules and
      regulations adopted by the Company for its employees.  In
      addition to including the Employee and his dependents in such plan, the
      Company shall pay all reasonable hospital, surgical, medical, dental, and
      prescription expenses of the Employee and his dependents not covered by
      such a plan.  If the Company has no group health plan, the
      Company agrees to pay all reasonable premiums on any health insurance
      policy obtained by the Employee to provide such
  coverage.

              

      

       

    

    
      	
              f.  

            	
              Automobile.  During
      the Term, the Employee will be entitled to use of a Company automobile or
      payment of a car allowance in accordance with a plan approved by the Board
      or its designee.

            

    

     

    
      	
              6.  

            	
              Confidential Material
      and Employee Obligations.

            

    

     

    
      	
              a.  

            	
              Confidential
      Material.  The Employee shall not, directly or
      indirectly, either during the Term or thereafter, disclose to anyone
      (except in the regular course of the Company's business or as required by
      law), or use in any manner, any information acquired by the Employee
      during his employment by the Company with respect to any clients or
      customers of the Company or any confidential, proprietary or secret aspect
      of the Company's operations or affairs unless such information has become
      public knowledge other than by reason of actions, direct or indirect, of
      the Employee. Information subject to the provisions of this paragraph will
      include, without limitation:

            

    

     

    
      	
              (i)  

            	
              Brokers,
      broker/dealer firms, law firms used to prepare Company and partnership
      registration statements, due diligence investigations, or other parties
      involved with the registration, review, or offering of the Company’s
      securities and drilling programs;

            

    

     

    
      	
              (ii)  

            	
              Names,
      addresses, and other information regarding investors in the Company’s
      drilling programs;

            

    

     

    
      	
              (iii)  

            	
              Names,
      addresses and other information regarding investors who participate with
      the Company in the drilling, completion or operation of oil and gas wells
      as joint venture partners, working interest owners, or in any other form
      of ownership;

            

    

     

    
      	
              (iv)  

            	
              Lists
      of or information about personnel seeking employment with or who are
      currently employed by the Company;

            

    

     

    
      	
              (v)  

            	
              Maps,
      logs, drilling reports and any other information regarding past, planned
      or possible future leasing, drilling, acquisition, or other operations
      that the Company has completed or is

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
       

      
        	
                 

              	
                investigating
      or has investigated for possible inclusion in future
      activities;

              

      

       

    

    
      	
              (vi)  

            	
              Any
      other information or contacts relating to the Company's drilling,
      development, fund-raising, purchasing, engineering, marketing,
      merchandising, and selling
activities.

            

    

     

    
      	
              b.  

            	
              Return of Confidential
      Material.  All maps, logs, data, drawings and other
      records, electronic data and written material prepared or compiled by the
      Employee or furnished to the Employee during the Term will be the sole and
      exclusive property of the Company and none of such material may be
      retained by the Employee upon termination of his
      employment.  Notwithstanding the foregoing, the Employee will be
      under no obligation to return public information.  Notwithstanding the foregoing, the Employee will be under no
      obligation to return public
information.

            

    

     

    
      	
              c.  

            	
              No
      Solicitation.  The Employee shall not, directly or
      indirectly, either during the Term or for a period of one (1) year
      thereafter (i) solicit,
      directly or indirectly, the services of any person who was a full-time
      employee of the Company, its subsidiaries, divisions, or affiliates, or
      otherwise induce such employee to terminate or reduce employment, or (ii) solicit
      the business of any person who was a client or customer of the Company,
      its subsidiaries, divisions, or affiliates, in each case at any time
      during the last year of the Term. For purposes of this Agreement, the term
      “person” includes natural persons, corporations, business trusts,
      associations, sole proprietorships, unincorporated organizations,
      partnerships, joint ventures, limited liability companies or partnerships,
      and governments, or any agencies, instrumentalities, or political
      subdivisions thereof.

            

    

     

    
      	
              d.  

            	
              Non-Compete.  The
      Employee shall not directly, either during the Term or for a period of one
      (1) year thereafter, engage in any Competitive Business in West Virginia,
      Pennsylvania, Colorado, Utah, Wyoming, North Dakota, Michigan, Ohio,
      Kentucky, Texas and Tennessee; provided, however, that the ownership of
      less than five percent (5%) of the outstanding capital stock of a
      corporation whose shares are traded on a national securities exchange or
      on the over-the-counter market shall not be deemed engaging any
      Competitive Business.  "Competitive Business" shall mean the oil
      and natural gas industry, including oil and gas leasing, drilling, and
      other operations, syndication and marketing of partnership or other
      investments related to oil and natural gas operations, or any other
      business activities that are the same as or similar to the Company’s
      business operations as its business exists on the Effective Date or on the
      Termination Date.

            

    

     

    
      	
              e.  

            	
              Remedies.  Employee
      acknowledges and agrees that the Company's remedy at law for a breach or a
      threatened breach of the provisions herein would be inadequate, and in
      recognition of this fact, in the event of a

            

    

     

    
      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                breach
      or threatened breach by Employee of any of the provisions of this
      Agreement, it is agreed that the Company will be entitled to equitable
      relief in the form of specific performance, a temporary restraining order,
      a temporary or permanent injunction or any other equitable remedy which
      may then be available, without posting bond or other
      security.  Employee acknowledges that the granting of a
      temporary injunction, a temporary restraining order or other permanent
      injunction merely prohibiting Employee from engaging in any business
      activities would not be an adequate remedy upon breach or threatened
      breach of this Agreement, and consequently agrees upon any such breach or
      threatened breach to the granting of injunctive relief prohibiting
      Employee from engaging in any activities prohibited by this
      Agreement.  No remedy herein conferred is intended to be
      exclusive of any other remedy, and each and every such remedy will be
      cumulative and will be in addition to any other remedy given hereunder now
      or hereinafter existing at law or in equity or by statute or
      otherwise.

              

      

       

    

    
      	
              7.  

            	
              Termination of the
      Agreement

            

    

     

    
      	
              a.  

            	
              Notice of
      Termination.  Either the Employee or the Board may
      terminate this Agreement at any time and in his or their sole discretion
      upon no less than thirty (30) days written Notice of Termination to the
      other party.  “Notice of Termination” means a written notice
      which indicates the specified termination provision in this Agreement
      relied upon (Section 7.c., Section 7.d., Section 7.e., Section 7.f,
      Section 7.g. or Section 7.h.) and sets forth in reasonable detail the
      facts and circumstances claimed to provide a basis for termination of
      Employee's employment under the provision so indicated; provided, however,
      no such purported termination will be effective without such Notice of
      Termination; provided further, however, any purported termination by the
      Company or by Employee must be communicated by a Notice of Termination to
      the other party hereto in accordance with  Section 9 (“Notices”)
      of this Agreement.

            

    

     

    
      	
              b.  

            	
              Termination
      Date.  The "Termination Date" shall mean the date
      specified in the Notice of Termination. The Termination Date shall not be
      less than thirty (30) days from the date such Notice of Termination is
      given; provided, however, that if within fifteen (15) days after any
      Notice of Termination is given the party receiving such Notice of
      Termination notifies the other party that a dispute exists concerning the
      termination, the Date of Termination shall be the date finally determined
      by either mutual written agreement of the parties or by the final
      judgment, order or decree of a court of competent jurisdiction (the time
      for appeal there from having expired and no appeal having been
      taken).

            

    

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	
              c.  

            	
              Termination by the
      Company for Just Cause.

            

    

     

    
      	
              (i)  

            	
              The
      Company may terminate the Employee for “Just Cause” (as defined in Section
      7.c.ii), provided that the Company
shall:

            

    

     

    
      	
              (A)  

            	
              Give
      the Employee Notice of Termination as specified in Section 7.a.,
      and

            

    

     

    
      	
              (B)  

            	
              Pay
      the Employee, within thirty (30) days after his Termination Date, his Base
      Salary through the Termination Date at the rate in effect at the time the
      Notice of Termination is given plus any Bonus(only for periods completed
      and accrued, but not paid), incentive, deferred, or other compensation,
      and provide any other benefits, which have been earned or become payable
      as of the Termination Date, pursuant to the terms of this or any other
      agreement, or compensation or benefit plan, but which have not yet been
      paid or provided.

            

    

     

    
      	
              (ii)  

            	
              For
      purposes of this Agreement “Just Cause” means a good faith determination
      of the Board that the Employee:

            

    

     

    
      	
              (A)  

            	
              Failed
      to substantially perform his duties with the Company (other than a failure
      resulting from his incapacity due to physical or mental illness) after a
      written demand for substantial performance has been delivered to him by
      the Board, which demand specifically identifies the manner in which the
      Board believes he has not substantially performed his
    duties;

            

    

     

    
      	
              (B)  

            	
              Has
      engaged in conduct the consequences of which are materially adverse to the
      Company, monetarily or otherwise;
or

            

    

     

    
      	
              (C)  

            	
              Has
      pleaded guilty to or been convicted of a felony;
  or

            

    

     

    
      	
              (D)  

            	
              Has
      materially breached the terms of this
Agreement.

            

    

     

    No act,
or failure to act, on the Employee's part shall be grounds for termination with
Just Cause unless he has acted or failed to act with an absence of good faith or
without a reasonable belief that his action or failure to act was in or at least
not opposed to the best interests of the Company.  The Employee will
not be deemed to have been terminated with Just Cause under (ii)(B), (C) or (D),
unless there will have been delivered to the Employee a letter setting forth the
reasons for the Company’s termination of the Employee for Just Cause and the
Employee has failed to cure such 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    reason
for termination within thirty (30) days of the receipt of such
notice.

     

    
      	
              d.  

            	
              Termination by the
      Company Without Just Cause.  If the Company terminates
      this Agreement prior to its expiration (including extensions as provided
      in Section 1.b.) for any reason other than for Just Cause or the death or
      Disability (as defined in Section 7.e.) of the Employee, the Company
      shall:

            

    

     

    
      	
              (i)  

            	
              Within
      thirty (30) days of the Termination Date, pay to the Employee a lump sum
      severance payment equal to 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
      or payable to the Employee for a year within the same two year period of
      employment immediately preceding the Termination
  Date,

            

    

     

    
      	
              (ii)  

            	
              Pay
      to the Employee any unpaid expense reimbursement upon presentation by the
      Employee of an accounting of such expenses in accordance with normal
      Company practices, but no later than March 15 of the year following the
      year of termination,

            

    

     

    
      	
              (iii)  

            	
              Immediately
      vest any unvested Company stock options and restricted stock (excluding
      all LTIP shares, including the 2007 and 2008 LTIP
  shares),

            

    

     

    
      	
              (iv)  

            	
              Pay
      any deferred income or Retirement Compensation (under Section 4.c.) or
      other benefit payments due under this or any other agreements or plans,
      provided such payments will be made under the schedule originally
      contemplated in the agreement under which they were
    granted,

            

    

     

    
      	
              (v)  

            	
              Make
      any other payments or provide any benefits earned under this or any other
      employment agreement or plan, including the Company’s Long-Term Incentive
      Plan, and

            

    

     

    
      	
              (vi)  

            	
              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.

            

    

     

    
      	
              e.  

            	
              Termination in the
      Event of Death or Disability.  This Agreement will be
      terminated by the Company in the event of the death of the Employee and
      may be terminated by the Company in the event of the Disability (as
      hereinafter defined) of the Employee upon proper notification to the
      Employee (or his estate in the event of his death), provided the Company
      shall pay to the Employee (or to the estate of the Employee in the event
      of

            

    

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    
       

      
        	
                 

              	
                termination
      due to the death of the Employee) the compensation and other benefits
      described in Section 4.a. of this Agreement which would have been earned
      for (6) months after the Termination Date and any amounts earned under
      Section 4.b. of this Agreement prorated for the period up to the
      Termination Date.  “Disability” means being eligible to receive
      a disability benefit under the Federal Social Security Act.  All
      amounts payable under this Section 7.e. will be paid in a lump sum as soon
      as practicable, but no later than two and one-half (2-1/2) months
      following the close of the calendar year in which the death or Disability
      occurred.

              

      

       

    

    
      	
              f.  

            	
              Termination by the
      Employee for Good Reason.

            

    

     

    
      	
              (i)  

            	
              If
      the Employee terminates this Agreement for Good Reason (as defined in
      Section 7.f.ii.), provided that such Employee’s termination of employment
      occurs within two years of the Good Reason, the Company
    shall:

            

    

     

    
      	
              (A)  

            	
              Within
      thirty (30) days of the Termination Date, pay to the Employee a lump sum
      severance payment equal to 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
      or payable to the Employee for a year within the same two year period of
      employment immediately preceding the Termination
  Date,

            

    

     

    
      	
              (B)  

            	
              Pay
      to the Employee any unpaid expense reimbursement upon presentation by the
      Employee of an accounting of such expenses in accordance with normal
      Company practices, but no later than March 15 of the year following the
      year of termination,

            

    

     

    
      	
              (C)  

            	
              Immediately
      vest any unvested Company stock options and restricted stock (excluding
      all LTIP shares, including the 2007 and 2008 LTIP
  shares),

            

    

     

    
      	
              (D)  

            	
              Pay
      any deferred income or Retirement Compensation (under Section 4.c.) or
      other benefit payments due under this or any other agreements or plans,
      provided such payments will be made under the schedule originally
      contemplated in the agreement under which they were
    granted,

            

    

     

    
      	
              (E)  

            	
              Make
      any other payments or provide any benefits earned under this or any other
      employment agreement or plan, including the Company’s Long-Term Incentive
      Plan, and

            

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      	
              (F)  

            	
              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.

            

    

     

    
      	
              (ii)  

            	
              “Good
      Reason” means the occurrence of any of the following events without
      Employee's prior express written
consent:

            

    

     

    
      	
              (A)  

            	
              A
      material diminution in the Employee’s Base
  Salary;

            

    

     

    
      	
              (B)  

            	
              A
      material diminution in the Employee’s authority, duties, or
      responsibilities;

            

    

     

    
      	
              (C)  

            	
              A
      material diminution in the authority, duties, or responsibilities of the
      supervisor to whom the Employee is required to report, including a
      requirement that the Employee report to a corporate officer or employee
      instead of reporting directly to the board of directors of a corporation
      (or similar governing body with respect to an entity other than a
      corporation);

            

    

     

    
      	
              (D)  

            	
              A
      material diminution in the budget over which the Employee retains
      authority;

            

    

     

    
      	
              (E)  

            	
              A
      material diminution in reward opportunities under the annual Performance
      Bonus of Section 4.b. of this
Agreement;

            

    

     

    
      	
              (F)  

            	
              A
      material change in the geographic location at which the Employee must
      perform the services; or

            

    

     

    
      	
              (G)  

            	
              Any
      other action or inaction that constitutes a material breach by the Company
      of this Agreement.

            

    

     

    Employee
must provide notice to the Company of the condition described in paragraphs
(A)-(G) of this section within ninety (90) days, upon the notice of which the
Company will have a period of thirty (30) days during which it may remedy the
condition and not be required to pay the amount

     

    
      	
              g.  

            	
              Termination by the
      Employee for other than Good
Reason.

            

    

     

    The
Employee may terminate this Agreement for other than Good Reason upon proper
notification as provided in Section 7.a.  In such event the Company
shall pay to the Employee:

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

     

    
      	
              (i)  

            	
              Within
      thirty (30) days after his Termination Date, in a lump sum, the
      compensation provided in Section 4 at the rate in effect at the time of
      the Notice of Termination.  The Base Salary, Bonus and
      incremental Retirement Payments will be prorated for the portion of the
      year that the Employee is employed by the Company; provided, however, that
      if the Employee’s termination occurs prior to March 31 of the year the
      Employee will not be entitled to a prorated Bonus for the
      year;

            

    

     

    
      	
              (ii)  

            	
              Any
      incentive, deferred or other compensation which has been earned or has
      become payable pursuant to the terms of this or any other agreement or
      compensation or benefit plan as of the Termination Date, but which has not
      yet been paid, provided such payments will be made under the schedule
      originally contemplated in the agreement under which they were
      granted;

            

    

     

    
      	
              (iii)  

            	
              Any
      unpaid expense reimbursement upon presentation by the Employee of an
      accounting of such expenses in accordance with normal Company practices
      but not later than March 15 of the year following the year of termination;
      and

            

    

     

    
      	
              (iv)  

            	
              Any
      other payments for benefits earned under this or any other employment
      agreement or plan.

            

    

     

    
      	
              h.  

            	
              Termination by the
      Employee following Change of
Control.

            

    

     

    
      	
              (i)  

            	
              If
      the Employee terminates this Agreement within two years following a Change
      of Control of the Company (as defined in Section 1.c.), the Company
      shall:

            

    

     

    
      	
              (A)  

            	
              Within
      thirty (30) days of the Termination Date, pay to the Employee a lump sum
      severance payment equal to 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
      or payable to the Employee for a year within the same two year period of
      employment immediately preceding the Termination
  Date,

            

    

     

    
      	
              (B)  

            	
              Pay
      to the Employee any unpaid reimbursement upon presentation by the Employee
      of an accounting of such expenses in accordance with normal Company
      practices, but not later than March 15 of the year following the year of
      termination,

            

    

     

    
      	
              (C)  

            	
              Immediately
      vest any unvested Company stock options and restricted stock (excluding
      LTIP shares),

            

    

     

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	
              (D)  

            	
              Pay
      any deferred income or Retirement Compensation (under Section 4.c.) or
      retirement payment or other benefit payments due under this or any other
      agreements or plans, provided such payments will be made under the
      schedule originally contemplated in the agreement under which they were
      granted,

            

    

     

    
      	
              (E)  

            	
              Make
      any other payments or provide any benefits earned under this or any other
      employment agreement or plan, including the Company’s Long-Term Incentive
      Plan, and

            

    

     

    
      	
              (F)  

            	
              Continue
      coverage of the Employee 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 receiving COBRA health continuation
      coverage from the Company.

            

    

     

    
      	
              i.  

            	
              Code Section 409A
      Compliance.

            

    

     

    Except
with respect to amounts paid pursuant to a schedule in a plan or arrangement
outside of this Employment Agreement, it is intended that amounts payable under
this Section 7 not be considered non-qualified deferred compensation subject to
Internal Revenue Code Section 409A.  Employee is a Specified Employee
under Internal Revenue Code Section 409A, therefore, to the extent such amounts
are considered non-qualified deferred compensation payable upon a separation
from service under Internal Revenue Code Section 409A, payment of those amounts
so deferred under Internal Revenue Code Section 409A may 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).

     

    
      	
              8.  

            	
              Life
      Insurance.  The Company may, at any time after the
      execution of this Agreement, maintain any outstanding life insurance
      policies and apply for and procure as owner and for its own benefit new
      life insurance on Employee, in such amounts and in such form or forms as
      the Company may determine.  Employee shall, at the request of
      the Company, submit to such medical examinations, supply such information,
      and execute such documents as may be required by the insurance company or
      companies to whom the Company has applied for such
      insurance.  Employee hereby represents that to his knowledge he
      is in excellent physical and mental
condition.

            

    

     

    
      	
              9.  

            	
              Notices.  For
      the purposes of this Agreement, notices and all other communications
      provided for in the Agreement shall be in writing and will be deemed to
      have been duly given when personally delivered, by facsimile transmission
      or sent by certified mail, return receipt requested, postage prepaid, or
      by expedited  (overnight) courier with established national
      reputation, shipping prepaid or billed to sender, in either case addressed
      to the respective addresses last 

            

    

     

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    
       

      
        	
                 

              	
                given
      by each party to the other  (provided that all notices to the
      Company must be directed to the attention of the Secretary of the Company
      ) or to such other address as either party may have
      furnished  to the other in
      writing  in  accordance  herewith.  All
      notices and communication will be deemed to have been received on the date
      of delivery thereof, or on the second day after deposit thereof with an
      expedited courier service, except that notice of change of address will be
      effective only upon receipt.

              

      

       

    

    
      
        	 	
                Company
      at:

              	 
      	
                Petroleum
      Development Corporation

              
	 	 
      	 
      	
                120
      Genesis Boulevard

              
	 	 
      	 
      	
                P.O.
      Box 26

              
	 	 
      	 
      	
                Bridgeport
      WV 26330

              
	 	 
      	 
      	 
      
	 	
                Employee
      at:

              	 
      	
                Eric
      R. Stearns

              
	 	 
      	 
      	
                753
      Brightridge Drive

              
	 	 
      	 
      	
                Bridgeport
      WV 26330

              

      

    

    

    
      	
              10.  

            	
              Successors.  This
      Agreement will be binding on the Company and any successor to any of its
      businesses or assets.  Without limiting the effect of the prior
      sentence, the Company shall use its best efforts to require any successor
      or assign (whether direct or indirect, by purchase, merger, consolidation
      or otherwise) to all or substantially all of the business and/or assets of
      the Company to expressly assume and agree to perform this Agreement in the
      same manner and to the same extent that the Company would be required to
      perform it if no such succession or assignment had taken place. As used in
      this Agreement, “Company” means the Company as hereinbefore defined and
      any successor or assign to its business and/or assets as aforesaid which
      assumes and agrees to perform this Agreement or which is otherwise
      obligated under this Agreement by the first sentence of this Section,
      entitled Successors, by operation of law or
  otherwise.

            

    

     

    
      	
              11.  

            	
              Binding
      Effect.  This Agreement will inure to the benefit of and
      be enforceable by Employee's personal and legal representatives,
      executors, administrators, successors, heirs, distributees, devisees and
      legatees.  If Employee should die while any amounts would still
      be payable to him hereunder if he had continued to live, all such amounts,
      unless otherwise provided herein, will be paid in accordance with the
      terms of this Agreement to Employee's
estate.

            

    

     

    
      	
              12.  

            	
              Integration,
      Modification and Waiver.  This Agreement constitutes the
      sole employment agreement between the parties, and any prior employment
      agreement, written or oral, is terminated.  No provision of this
      Agreement may be modified, waived or discharged unless such waiver,
      modification or discharge is agreed to in writing and signed by Employee
      and such officer of the Company as may be specifically designated by the
      Board.  No waiver by either party hereto at any time of any
      breach by the other party hereto of, or compliance with, any condition or
      provision of this Agreement to be performed by such other party will
      

            

    

     

    
       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                be
      deemed a waiver of similar or dissimilar provisions or conditions at the
      same or at any prior or subsequent
time.

              

      

       

    

    
      	
              13.  

            	
              Headings.  Headings
      used in this Agreement are for convenience only and may not be used to
      interpret or construe its
provisions.

            

    

     

    
      	
              14.  

            	
              Waiver of
      Breach.  The waiver of either the Company or Employee of
      a breach of any provision of this Agreement will not operate or be
      construed as a waiver of any subsequent breach by either the Company or
      Employee.

            

    

     

    
      	
              15.  

            	
              Amendments.  No
      amendments or variations of the terms and conditions of this Agreement
      will be valid unless the same is in writing and signed by all of the
      parties hereto.

            

    

     

    
      	
              16.  

            	
              Survival of
      Obligations.  The provisions of Section 6 of this
      Agreement will continue to be binding upon the Employee and Company in
      accordance with their terms, notwithstanding the termination of the
      Employee’s employment with the Company for any reason or the expiration of
      this Agreement.

            

    

     

    
      	
              17.  

            	
              Severability.  The
      invalidity or unenforceability of any provision of this Agreement, whether
      in whole or in part, shall not in any way affect the validity and/or
      enforceability of any other provision contained herein.  Any
      invalid or unenforceable provision shall be deemed severable to the extent
      of any such invalidity or unenforceability.  It is expressly
      understood and agreed that while the Company and Employee consider the
      restrictions contained in this Agreement reasonable for the purpose of
      preserving for the Company the good will, other proprietary rights and
      intangible business value of the Company, if a final judicial
      determination is made by a court having jurisdiction that the time or
      territory or any other restriction contained in this Agreement is an
      unreasonable or otherwise unenforceable restriction against Employee, the
      provisions of such clause will not be rendered void but will be deemed
      amended to apply as to maximum time and territory and to such other extent
      as such court may judicially determine or indicate to be
      reasonable.

            

    

     

    
      	
              18.  

            	
              Governing
      Law.  This Agreement will be construed and enforced
      pursuant to the laws of the State of West
  Virginia.

            

    

     

    
      	
              19.  

            	
              Arbitration.  Any
      controversy or claim arising out of or relating to this Agreement or any
      transactions provided for herein, or the breach thereof, other than a
      claim for injunctive relief, will be settled by arbitration in accordance
      with the commercial Arbitration Rules of the American Arbitration
      Association (the “Rules”) in effect at the time demand for arbitration is
      made by any party.  The evidentiary and procedural rules in such
      proceedings will be kept to the minimum level of formality that is
      consistent with the Rules.  The Company shall name one
      arbitrator, Employee shall name a second and the two arbitrators so chosen
      shall name a neutral, third arbitrator, who will serve as the sole
      arbitrator of the controversy or claim.  The third arbitrator
      will be experienced in the matters in

            

    

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    
       

      
        	
                 

              	
                dispute.  If
      the third and sole arbitrator is not agreed upon, the American Arbitration
      Association will name him or her.  Arbitration will occur in
      Bridgeport, West Virginia, or such other location agreed to by the Company
      and Employee.  The award made by the third arbitrator will be
      final and binding, and judgment may be entered in any court of law having
      competent jurisdiction. The award is subject to confirmation,
      modification, correction, or vacation only as explicitly provided in Title
      9 of the United States Code.  The prevailing party will be
      entitled to an award of pre- and post-award interest as well as reasonable
      attorneys' fees incurred in connection with the arbitration and any
      judicial proceedings related
thereto.

              

      

       

    

    
      	
              20.  

            	
              Executive Officer
      Status.  Employee acknowledges that he may be deemed to
      be an “executive officer” of the Company for purposes of the Securities
      Act of 1933, as amended (the “1933 Act”), and the Securities Exchange Act
      of 1934, as amended (the “1934 Act”) and, if so, he shall comply in all
      respects with all the rules and regulations under the 1933 Act and the
      1934 Act applicable to him in a timely and non-delinquent manner. In order
      to assist the Company in complying with its obligations under the 1933 Act
      and 1934 Act, Employee shall provide to the Company such information about
      Employee as the Company shall reasonably request including, but not
      limited to, information relating to personal history and
      stockholdings.  Employee shall immediately report to the General
      Counsel of the Company or other designated officer of the Company all
      changes in beneficial ownership of any shares of the Company Common Stock
      deemed to be beneficially owned by Employee and/or any members of
      Employee's immediate family.

            

    

     

    
      	
              21.  

            	
              Pronouns.  All
      pronouns and any variations thereof will be deemed to refer to the
      masculine, feminine, neuter, singular, or plural, as the identity of the
      person or entity may require. As used in this Agreement: (1) words of the
      masculine gender shall mean and include corresponding neuter words or
      words of the feminine gender, (2) words in the singular shall mean and
      include the plural and vice versa, and (3) the word “may” gives sole
      discretion without any obligation to take any
  action.

            

    

     

    
      	
              22.  

            	
              Counterparts.   This
      Agreement may be executed in one or more counterparts, each of which shall
      be deemed to be an original, but all of which together will constitute but
      one document.

            

    

     

    
      	
              23.  

            	
              Exhibits.  Any
      Exhibits attached hereto are incorporated herein by reference and are an
      integral part of this Agreement.

            

    

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    
 

    IN
WITNESS WHEREOF, the Company and the Employee have duly executed this Employment
Agreement as of the date first above written.

     

    
      
        
          	 	 
      	 
      	 
      	 
      	 
      
	 	
                  Company

                	 
      	 
      	 
      	
                  Executive

                
	 	 
      	
                   
      Petroleum Development Corporation

                	 
      	 
      	 
      
	 	 
      	 
      	 
      	 
      	 
      
	 	 
      	 
      	 
      	 
      	 
      
	 	
                  By:

                	
                  /s/
      Kimberly Wakim 

                	 
      	 
      	
                  /s/
      Eric R. Stearns

                
	 	 
      	
                  Kimberly
      Wakim

                	 
      	 
      	
                  Eric
      R. Stearns

                
	 	
                  Position:

                	
                  Chair
      of the

                	 
      	 
      	 
      
	 	 
      	
                  Compensation
      Committee

                	 
      	 
      	 
      

        

      

    

    

     

    19ex10_11.htm

    
      
        

      
Exhibit 10.11

       

      Employment
Agreement

       

      This
Employment Agreement (the “Agreement”) is made and entered into this 31st day of
December, 2008 by and between Petroleum Development Corporation, a Nevada
Corporation (the “Company”), and Gysle R. Shellum ( “Shellum”).

       

      WHEREAS,
the Company wishes to employ Shellum as Chief Financial Officer and to perform
the duties and services incident to such position for the Company, and Shellum
wishes to be so employed by the Company, all upon the terms and conditions set
forth in this Agreement;

       

      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.  

              	
                Effective Date and
      Term

              

      

       

      
        	
                a.  

              	
                Initial
      Term.  The effective date of this Agreement shall be
      November 11, 2008 (the “Effective Date”), and the initial term shall be
      for the period beginning on the Effective Date and ending December 31,
      2010.

              

      

       

      
        	
                b.  

              	
                Automatic
      Extensions.  The Term of this Agreement shall be extended
      for an additional 12 months beginning on December 31, 2009 and on each
      successive December 31 unless either party provides the other with at
      least thirty (30) days prior written notice, or unless the contract has
      been terminated by the parties in accordance with the provisions of
      Section 7 of this Agreement.  The period of time from the
      Effective Date until the Termination Date, as defined in Section 7.b.,
      shall be the “Term.”

              

      

       

      
        	
                2.  

              	
                Place of
      Employment

              

      

       

      The place
of employment shall be the Company’s offices in Denver, Colorado, unless Shellum
and the Company mutually agree to an alternative location.  Shellum
acknowledges that there may be substantial business travel associated with
Shellum’s position.

       

      
        	
                3.  

              	
                Position and
      Responsibilities

              

      

       

      
        	
                a.  

              	
                Position.  Shellum
      shall serve as Chief Financial Officer of the Company and shall initially
      report to the Chief Executive Officer of the Company (the “Chief Executive
      Officer”) and be under the general direction and control of the Chief
      Executive Officer.

              

      

       

      
        	
                b.  

              	
                Responsibilities.  Shellum
      shall have obligations, duties, authority and power to do such acts as are
      customarily done by a person holding the same or an equivalent position in
      corporations of similar size to the Company.  Shellum shall
      perform such managerial duties and

              

      

      
         

         

        
          
            
            

          

          
            1

            
              

            

          

          
            
            

          

        

         

        
          	
                     

                	
                  responsibilities
      for the Company as may be reasonably be assigned to him  and, at
      no additional compensation,  if requested, shall serve on the
      Board of Directors of the Company (the "Board") and in other such
      positions with any subsidiary corporation of the Company, or any
      partnership, limited liability company or other entity in which the
      Company has an interest (herein collectively called “Affiliates”),
      as  may from time to time be
  requested.

                

        

         

      

      
        	
                c.  

              	
                Dedication of
      Professional Services.  Shellum shall devote
      substantially all of Shellum’s business time, best efforts and attention
      to promote and advance the business of the Company and its Affiliates to
      perform diligently and faithfully all the duties, responsibilities and
      obligations of Shellum’s position with the Company.  Shellum
      shall not be employed in any other business activity, other than with the
      Company and its Affiliates, during the Term, whether or not such activity
      is pursued for gain, profit or other pecuniary advantage without approval
      by the Compensation Committee of the Board (the “Compensation Committee”);
      provided, however, that this restriction shall not be construed as
      preventing Shellum from investing Shellum’s personal assets in a business
      which does not compete with the Company or its Affiliates, where the form
      or manner of such investment will not require services of any significance
      on the part of Shellum in the operation of the affairs of the business in
      which such investment is made and in which Shellum’s participation is
      solely that of a passive investor.

              

      

       

      
        	
                d.  

              	
                Adherence to
      Standards.  Shellum shall comply with the written
      policies, standards, rules and regulations of the Company from time to
      time established for all employees or executive officers of the Company
      consistent with Shellum's position and level of
  authority.

              

      

       

      
        	
                e.  

              	
                Minimum Stock
      Ownership.  Shellum shall comply with the Company’s
      minimum stock ownership requirements for officers (other than the Chief
      Executive Officer); such requirements being that by the fifth anniversary
      of the date of hire and until Shellum’s Termination Date, Shellum shall
      maintain a minimum stock ownership equal to two times Shellum’s Base
      Salary, as defined in Section 4.a.

              

      

       

      
        	
                4.  

              	
                Compensation

              

      

       

      
        	
                a.  

              	
                Base
      Salary.  The Company shall pay Shellum an annual base
      salary of $235,000 (the “Base Salary”) commencing on the Effective Date
      and ending on the Termination Date.  The Base Salary shall be
      payable in accordance with the ordinary payroll practices of the
      Company.  The Base Salary shall be reviewed annually by the
      Compensation Committee and may be changed by the Compensation Committee in
      its sole discretion, taking into account the base salaries, aggregate
      annual cash compensation, and other compensation of individuals holding
      similar positions at other 

              

      

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        
          	
                   

                	
                  comparable
      companies, the performance of Shellum and the Company, and other relevant
      factors.

                

        

         

      

      
        	
                b.  

              	
                Performance
      Bonus.  Shellum shall be eligible to earn an annual
      performance bonus (the “Bonus”) during the Term based on criteria
      established by the Compensation Committee in its sole discretion each
      year, to be paid by March 15 of the following year. For 2009, the target
      bonus will be 50% of Shellum’s base salary, and the exceptional
      performance bonus will be 100% of such base
  salary.

              

      

       

      
        	
                c.  

              	
                Equity Compensation
      Grant.  As a long term incentive, on the Effective Date
      under the Company’s Long-Term Equity Compensation Plan, Shellum shall
      participate in any equity compensation program provided to all executive
      officers, based on criteria established by the Compensation Committee in
      its sole discretion each year.  Initially, Shellum will be
      granted a restricted stock award equal to 100% of Base Salary, to vest pro
      rata over 4 years; the valuation date for such award will be based on the
      closing price of the Company’s stock on November 28,
  2008.

              

      

       

      
        	
                d.  

              	
                Other
      Compensation.  Shellum shall continue to be eligible to
      participate in all other cash or stock compensation plans or programs
      maintained by the Company, as in effect from time to time, in which other
      senior executives of the Company are allowed to
    participate.

              

      

       

      
        	
                e.  

              	
                Recoupment of Certain
      Compensation.  If the Company has to restate all or a
      portion of its financial statements due to the material noncompliance of
      the Company with any financial reporting requirement under the securities
      laws, the Employee shall, for the affected years, reimburse the Company
      for any excess bonus paid to the Employee pursuant to Section
      4.b.  The reimbursements shall be equal to the difference
      between the bonus paid to him for the affected years and the bonus that
      would have been paid to the Employee had the financial results been
      properly reported.  Such reimbursement shall be paid to the
      Company within ninety days after the Company notifies the Employee of the
      amount owed to the Company.

              

      

       

      
        	
                5.  

              	
                Employee
      Benefits

              

      

       

      
        	
                a.  

              	
                Participation in
      Company Benefit Plans.  During the Term, the Company
      shall provide Shellum with coverage under all employee pension and welfare
      benefit programs, plans and practices commensurate with Shellum’s
      positions in the Company and to the extent permitted under the respective
      employee benefit plan.

              

      

       

      
        	
                b.  

              	
                Vacation.  Shellum
      will be entitled to four (4) weeks of paid vacation in each calendar year,
      to be taken at such times as is reasonably determined by Shellum to be
      consistent with Shellum’s responsibilities under
  this

              

      

      
         

        
          
            
            

          

          
            3

            
              

            

          

          
            
            

          

        

         

        
          	
                   

                	
                  Agreement
      and the Company’s vacation policy applicable to all
    employees.

                

        

         

      

      
        	
                c.  

              	
                Automobile.  During
      the Term, Shellum shall be entitled to an annual automobile allowance as
      approved by the Compensation Committee and updated from time to time at
      its discretion.

              

      

       

      
        	
                d.  

              	
                Relocation
      Expense.  Shellum shall  be entitled to
      relocation expense for his move to the Denver Colorado area, subject to
      the terms and conditions of the Company’s relocation policy.  In
      addition Shellum will be granted a $30,000 stipend to cover the
      anticipated commute schedule prior to such
  relocation.

              

      

       

      
        	
                6.  

              	
                Restrictive
      Covenants.

              

      

       

      
        	
                a.  

              	
                Confidential
      Information.  Shellum hereby acknowledges that in
      connection with Shellum’s employment by the Company, Shellum will be
      exposed to and may obtain certain Confidential Information (as defined
      below) (including, without limitation, procedures, memoranda, notes,
      records and customer and supplier lists whether such information has been
      or is made, developed or compiled by Shellum or otherwise has been or is
      made available to him) regarding the business and operations of the
      Company and its subsidiaries or affiliates.  Shellum further
      acknowledges that such Confidential Information is unique, valuable,
      considered trade secrets and deemed proprietary by the
      Company.  For purposes of the Agreement, “Confidential
      Information” includes, without limitation, any information heretofore or
      hereafter acquired, developed or used by any of the Company or their
      direct or indirect subsidiaries relating to Business Opportunities or
      Intellectual Property or other geological, geophysical, economic,
      financial or management aspects of the business, operations, properties or
      prospects of the Company or their direct or indirect subsidiaries, whether
      oral or in written form (including electronic).  Shellum agrees
      that all Confidential Information is and will remain the property of the
      Company or their direct or indirect subsidiaries, as the case may
      be.  Shellum further agrees, except for disclosures occurring in
      the good faith performance of Shellum’s duties for the Company or their
      direct or indirect subsidiaries, during the Term and for a period of three
      (3) years after the Termination Date, to hold in the strictest confidence
      all Confidential Information, and not to, directly or indirectly,
      duplicate, sell, use, lease, commercialize, disclose or otherwise divulge
      to any person or entity any portion of the Confidential Information or use
      any Confidential Information, directly or indirectly, for Shellum’s own
      benefit or profit or allow any person, entity or third party, other than
      the Company or their direct or indirect subsidiaries and authorized
      executives of the same, to use or otherwise gain access to any
      Confidential Information.  Shellum will have no obligation under
      this Agreement with respect to any information that becomes generally
      available to the public other than as a result of a
  

              

      

       

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      
        
          	
                   

                	
                  disclosure
      by Shellum or Shellum’s agent or other representative or becomes available
      to Shellum on a non-confidential basis from a source other than the
      Company or their direct or indirect subsidiaries.  Further,
      Shellum will have no obligation under this Agreement to keep confidential
      any of the Confidential Information to the extent that a disclosure of it
      is required by law or is consented to by the Company; provided, however,
      that if and when such a disclosure is required by law, Shellum promptly
      will provide the Company with notice of such requirement, so that the
      Company may seek an appropriate protective
  order.

                

        

         

      

       

      
        	
                b.  

              	
                Return of
      Property.  Shellum agrees to deliver promptly to the
      Company, upon termination of Shellum’s employment hereunder, or at any
      other time when the Company so requests, all documents and property
      relating to the business of the Company or their direct or indirect
      subsidiaries, including without limitation: all geological and geophysical
      reports and related data such as maps, charts, logs, seismographs, seismic
      records and other reports and related data, calculations, summaries,
      memoranda and opinions relating to the foregoing, production records,
      electric logs, core data, pressure data, lease files, well files and
      records, land files, abstracts, title opinions, title or curative matters,
      contract files, notes, records, drawings, manuals, correspondence,
      financial and accounting information, customer lists, statistical data and
      compilations, patents, copyrights, trademarks, trade names, inventions,
      formulae, methods, processes, agreements, contracts, manuals, electronic
      data,  or any documents,  whether written or digital
      and whether prepared or compiled by Shellum or furnished to Shellum during
      the Term, relating to the business of the Company or their direct or
      indirect subsidiaries and all copies thereof and therefrom; provided,
      however, that Shellum will be permitted to retain copies of any documents
      or materials of a personal nature or otherwise related to Shellum’s rights
      under this Agreement. The aforementioned materials include materials on
      Shellum’s personal computers, which materials shall be destroyed in a
      manner satisfactory to the Company.

              

      

       

      
        	
                c.  

              	
                Non-Compete
      Obligations.

              

      

       

      
        	
                (i)  

              	
                Non-Compete
      Obligations During Employment Term.  Shellum agrees that during
      the Term:

              

      

       

      
        	
                (A)  

              	
                Shellum
      will not, other than through the Company, engage or participate in any
      manner, whether directly or indirectly through any family member or as an
      employee, employer, consultant, agent, principal, partner, more than one
      percent shareholder, officer, director, licensor, lender, lessor or in any
      other individual or representative capacity, in any business or activity
      which is engaged in leasing, acquiring, exploring, producing, gathering or
      marketing hydrocarbons and related products; provided that the foregoing
      shall not

              

      

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      
        
          	
                   

                	
                  be
      deemed to restrain the participation by Shellum’s spouse in any capacity
      set forth above in any business or activity engaged in any such activity
      and provided further that the Company may, in good faith, take such
      reasonable action with respect to Shellum’s performance of Shellum’s
      duties, responsibilities and authorities as set forth in this Agreement as
      it deems necessary and appropriate to protect its legitimate business
      interests with respect to any actual or apparent conflict of interest
      reasonably arising from or out of the participation by Shellum’s spouse in
      any such competitive business or activity;
and

                

        

         

      

       

      
        	
                (B)  

              	
                all
      investments made by Shellum (whether in Shellum’s own name or in the name
      of any family members or other nominees or made by Shellum’s controlled
      affiliates), which relate to the leasing, acquisition, exploration,
      production, gathering or marketing of hydrocarbons and related products
      will be made solely through the Company; and Shellum will not (directly or
      indirectly through any family members or other persons), and will not
      permit any of Shellum’s controlled affiliates to: (1) invest or otherwise
      participate alongside the Company or its direct or indirect subsidiaries
      in any Business Opportunities, or (2) invest or otherwise participate in
      any business or activity relating to a Business Opportunity, regardless of
      whether any of the Company or its direct or indirect subsidiaries
      ultimately participates in such business or activity, in either case,
      except through the Company.  Notwithstanding the foregoing,
      nothing in this Section 6 shall be deemed to prohibit Shellum or any
      family member from owning, or otherwise having an interest in, less than
      one percent (1%) of any publicly-owned entity or three percent (3%) or
      less of any private equity fund or similar investment fund that invests in
      any business or activity engaged in any of the activities set forth above,
      provided that Shellum has no active role with respect to any investment by
      such fund in any entity.

              

      

       

      
        	
                (ii)  

              	
                Non-Compete
      Obligations After Termination Date.  Shellum agrees that
      Shellum will not engage or participate in any manner, whether directly or
      indirectly through any family member or other person or as an employee,
      employer, consultant, agent principal, partner, more than one percent
      shareholder, officer, director, licensor, lender, lessor or in any other
      individual or representative
capacity:

              

      

       

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      
        	
                (A)  

              	
                during
      the one-year period following the Termination Date, in any business or
      activity which is engaged in leasing, acquiring, exploring, producing,
      gathering or marketing hydrocarbons and related products within (1) any
      county or parish in which the Company owns any oil and gas interests or
      conducts operations on the Termination Date or in which the Company has
      owned any oil and gas interests or conducted operations at any time during
      the six months immediately preceding the Termination Date or
      (2)  any county or parish adjacent to any county or parish
      described in clause (1); and

              

      

       

      
        	
                (B)  

              	
                during
      the two-year period following the Termination Date, in any business or
      activity which is in direct competition with the business of the Company
      or its direct or indirect subsidiaries in the leasing, acquiring,
      exploring, producing, gathering or marketing of hydrocarbons and related
      products within the boundaries of, or within a two-mile radius of the
      boundaries of, any mineral property interest of any of the Company or its
      direct or indirect subsidiaries (including, without limitation, a mineral
      lease, overriding royalty interest, production payment, net profits
      interest, mineral fee interest or option or right to acquire any of the
      foregoing, or an area of mutual interest as designated pursuant to
      contractual agreements between the Company and any third party) or any
      other property on which any of the Company or its direct or indirect
      subsidiaries has an option, right, license or authority to conduct or
      direct exploratory activities, such as three-dimensional seismic
      acquisition or other seismic, geophysical and geochemical activities (but
      not including any preliminary geological mapping), as of the Termination
      Date or as of the end of the six-month period following such Termination
      Date; provided that, this subsection (ii) will not preclude Shellum from
      making investments in securities of oil and gas companies which are
      registered on a national stock exchange, if the aggregate amount owned by
      Shellum and all family members and affiliates does not exceed 5% of such
      company’s outstanding securities.

              

      

       

      
        	
                (iii)  

              	
                Notwithstanding
      the foregoing, nothing in this Section 6.c. shall be deemed to restrain
      the participation by Shellum’s spouse in any capacity set forth above in
      any business or activity described
above.

              

      

       

      
        	
                d.  

              	
                Non-Solicitation.  During
      the Term and for a period of twenty-four (24) months after the Termination
      Date, Shellum will not, whether for

              

      

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      
         

        
          	
                   

                	
                  Shellum’s
      own account or for the account of any other person (other than the Company
      or its direct or indirect subsidiaries), intentionally solicit, endeavor
      to entice away from the Company or its direct or indirect subsidiaries, or
      otherwise interfere with the relationship of the Company or its direct or
      indirect subsidiaries with, (i) any person who is employed by the Company
      or its direct or indirect subsidiaries (including any independent sales
      representatives or organizations), or (ii) any client or customer of the
      Company or its direct or indirect
subsidiaries.

                

        

         

      

      
        	
                e.  

              	
                Assignment of
      Developments.  Shellum assigns and agrees to assign
      without further compensation to the Company and its successors, assigns or
      designees, all of Shellum’s right, title and interest in and to all
      Business Opportunities and Intellectual Property (as those terms are
      defined below), and further acknowledges and agrees that all Business
      Opportunities and Intellectual Property constitute the exclusive property
      of the Company.

              

      

       

      For
purposes of this Agreement, “Business Opportunities” means all business ideas,
prospects, proposals or other opportunities pertaining to the lease,
acquisition, exploration, production, gathering or marketing of hydrocarbons and
related products and the exploration potential of geographical areas on which
hydrocarbon exploration prospects are located, which are developed by Shellum
during the Term, or originated by any third party and brought to the attention
of Shellum during the Term, together with information relating thereto
(including, without limitation, geological and seismic data and interpretations
thereof, whether in the form of maps, charts, logs, seismographs, calculations,
summaries, memoranda, opinions or other written or charted means).

       

      For
purposes of this Agreement, “Intellectual Property” shall mean all ideas,
inventions, discoveries, processes, designs, methods, substances, articles,
computer programs and improvements (including, without limitation, enhancements
to, or further interpretation or processing of, information that was in the
possession of Shellum prior to the date of this Agreement), whether or not
patentable or copyrightable, which do not fall within the definition of Business
Opportunities, which Shellum discovers, conceives, invents, creates or develops,
alone or with others, during the Term, if such discovery, conception, invention,
creation or development (i) occurs in the course of Shellum’s employment with
the Company, or (ii) occurs with the use of any of the time, materials or
facilities of the Company or its direct or indirect subsidiaries, or (iii) in
the good faith judgment of the Board, relates or pertains in any material way to
the purposes, activities or affairs of the Company or its direct or indirect
subsidiaries.

       

      
        	
                f.  

              	
                Injunctive
      Relief.  Shellum acknowledges that a breach of any of the
      covenants contained in this Section 6 may result in material, irreparable
      injury to the Company for which there is no adequate remedy at law, that
      

              

      

       

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      
        
          	
                   

                	
                  it
      will not be possible to measure damages for such injuries precisely and
      that, in the event of such a breach or threat of breach, the Company will
      be entitled to obtain a temporary restraining order and/or a preliminary
      or permanent injunction restraining Shellum from engaging in activities
      prohibited by this Section 6 or such other relief as may be required to
      specifically enforce any of the covenants in this Section 6.  To
      the extent that the Company seeks a temporary restraining order (but not a
      preliminary or permanent injunction), Shellum agrees that a temporary
      restraining order may be obtained ex
parte.

                

        

         

      

      
        	
                g.  

              	
                Adjustment of
      Covenants.  The parties consider the covenants and
      restrictions contained in this Section 6 to be
      reasonable.  However, if and when any such covenant or
      restriction is found to be void or unenforceable and would have been valid
      had some part of it been deleted or had its scope of application been
      modified, such covenant or restriction will be deemed to have been applied
      with such modification as would be necessary and consistent with the
      intent of the parties to have made it valid, enforceable and
      effective.

              

      

       

      
        	
                h.  

              	
                Forfeiture
      Provision.

              

      

       

      
        	
                (i)  

              	
                Detrimental
      Activities.  If Shellum engages in any activity that
      violates any covenant or restriction contained in this Section 6, in
      addition to any other remedy the Company may have at law or in equity, (A)
      Shellum will be entitled to no further payments or benefits from the
      Company under this Agreement or otherwise, except for any payments or
      benefits required to be made or provided under applicable law, (B) all
      unexercised stock options, restricted stock and other forms of equity
      compensation held by or credited to Shellum will terminate effective as of
      the date on which Shellum engages in that activity, unless terminated
      sooner by operation of another term or condition of this Agreement or
      other applicable plans and agreements, and (C) any exercise, payment or
      delivery pursuant to any equity compensation award that occurred within
      one year prior to the date on which Shellum engages in that activity may
      be rescinded within one year after the first date that a majority of the
      members of the Board first became aware that Shellum engaged in that
      activity.  In the event of any such rescission, Shellum will pay
      to the Company the amount of any gain realized or payment received as a
      result of the rescinded exercise, payment or delivery, in such manner and
      on such terms and conditions as may be
required.

              

      

       

      
        	
                (ii)  

              	
                Right of
      Set-Off.  Shellum consents to a deduction from any
      amounts the Company owes Shellum from time to time (including amounts owed
      as wages or other compensation, fringe benefits, or vacation pay, as well
      as any other amounts owed to Shellum by the

              

      

      
         

         

        
          
            
            

          

          
            9

            
              

            

          

          
            
            

          

        

         

        
          	
                   

                	
                  Company),
      to the extent of the amounts Shellum owes the Company under Section 6
      above.  Whether or not the Company elects to make any set-off in
      whole or in part, if the Company does not recover by means of set-off the
      full amount Shellum owes, calculated as set forth above, Shellum agrees to
      pay immediately the unpaid balance to the Company.  In the
      discretion of the Board, reasonable interest may be assessed on the
      amounts owed, calculated from the later of (A) the date Shellum engages in
      the prohibited activity and (B) the applicable date of exercise, payment
      or delivery.

                

        

         

      

      
        	
                7.  

              	
                Termination of the
      Agreement

              

      

       

      
        	
                a.  

              	
                Notice of
      Termination.  Either Shellum or the Board may terminate
      this Agreement at any time and in Shellum’s or their sole discretion upon
      no less than thirty (30) days written Notice of Termination to the other
      party.  "Notice of Termination" shall mean a written notice
      which shall indicate the specified termination provision in this Agreement
      relied upon (Section 7.c., Section 7.d., Section 7.e., Section 7.f.,
      Section 7.g. or Section 7.h.) and shall set forth in reasonable detail the
      facts and circumstances claimed to provide a basis for termination of
      Shellum's employment under the provision so indicated; provided, however,
      no such purported termination shall be effective without such Notice of
      Termination; provided further, however, any purported termination by the
      Company or by Shellum shall be communicated by a Notice of Termination to
      the other party hereto in accordance with  Section 8 (“Notices”)
      of this Agreement.

              

      

       

      
        	
                b.  

              	
                Termination
      Date.  The “Termination Date” shall mean the date
      specified in the Notice of Termination. The Termination Date shall not be
      less than thirty (30) days after the date such Notice of Termination is
      given.

              

      

       

      
        	
                c.  

              	
                Termination by the
      Company for Just Cause.

              

      

       

      
        	
                (i)  

              	
                The
      Company may terminate Shellum for “Just Cause” (as defined in Section
      7.c.ii), provided that the Company
shall:

              

      

       

      
        	
                (A)  

              	
                Give
      Shellum Notice of Termination as specified in Section 7.a.,
      and

              

      

       

      
        	
                (B)  

              	
                Pay
      Shellum, within thirty (30) days after this Termination Date, Shellum’s
      Base Salary through the Termination Date at the rate in effect at the time
      the Notice of Termination is given plus a good faith estimate by the
      Company of any unpaid Bonus (in full for any completed annual period and
      prorated for months completed in the current annual period), incentive,
      deferred, retirement or other compensation, and provide any other
      benefits, which have

              

      

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      
         

        
          	
                   

                	
                  been
      earned or become payable as of the Termination Date, pursuant to the terms
      of this or any other agreement, or compensation or benefit plan, but which
      have not yet been paid or provided.

                

        

         

      

      
        	
                (ii)  

              	
                For
      purposes of this Agreement “Just Cause” shall be a reasonable
      determination of the Board that
Shellum:

              

      

       

      
        	
                (A)  

              	
                Failed
      to substantially perform Shellum’s duties with the Company (other than a
      failure resulting from Shellum’s incapacity due to physical or mental
      illness) after a written demand for substantial performance has been
      delivered to him by the Board, which demand specifically identifies the
      manner in which the Board believes Shellum has not substantially performed
      Shellum’s duties, and Shellum has failed to cure such deficiency within
      thirty (30) days of the receipt of such
notice;

              

      

       

      
        	
                (B)  

              	
                Has
      engaged in conduct the consequences of which are materially adverse to the
      Company, monetarily or otherwise;

              

      

       

      
        	
                (C)  

              	
                Has
      pleaded guilty to or been convicted of a felony or a crime involving moral
      turpitude or dishonesty; or

              

      

       

      
        	
                (D)  

              	
                Has
      materially breached the terms of this
Agreement.

              

      

       

      
        	
                (E)  

              	
                Following
      a Change in Control, Subsection (A) above shall be deleted from this
      definition of “Just Cause”.

              

      

       

      
        	
                d.  

              	
                Termination by the
      Company Without Just Cause.  In the event the Company
      terminates this Agreement prior to its expiration (including extensions as
      provided in Section 1.b) for any reason other than for Just Cause or the
      death or Disability (as defined in Section 7.e.) of Shellum, the Company
      shall:

              

      

       

      
        	
                (i)  

              	
                Pay
      to Shellum within thirty (30) days after the Termination Date a lump sum
      severance payment equal to two times the sum
of:

              

      

       

      
        	
                (A)  

              	
                Shellum’s
      highest Base Salary during the previous two years of employment
      immediately preceding the Termination Date,
plus

              

      

       

      
        	
                (B)  

              	
                the
      highest Bonus paid to Shellum during the same two-year
    period,

              

      

       

      
        	
                (ii)  

              	
                Pay
      to Shellum any unpaid expense reimbursement upon presentation by Shellum
      of an accounting of such expenses in

              

      

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      
         

        
          	
                   

                	
                  accordance
      with normal Company practices, but no later than March 15 of the year
      following the year of termination,

                

        

         

      

      
        	
                (iii)  

              	
                Vest
      any unvested Company stock options or restricted stock (excluding LTIP
      shares under the Company’s Long-Term Incentive
  Plan),

              

      

       

      
        	
                (iv)  

              	
                Make
      any other payments or provide any benefits earned under this or any other
      employment agreement or plan, including the Company’s Long-Term Incentive
      Plan (including LTIP shares under the Company’s Long-Term Incentive Plan),
      and

              

      

       

      
        	
                (v)  

              	
                Continue
      coverage of Shellum and any dependents covered at the time of termination
      under the Company’s group health plans at the Company’s cost throughout
      the period of time that Shellum is eligible for federal COBRA health
      continuation coverage.

              

      

       

      
        	
                e.  

              	
                Termination in the
      Event of Death or Disability.  This Agreement shall
      terminate in the event of the death of Shellum or may be terminated by the
      Company in the event of a Disability (as hereinafter defined) of Shellum
      upon proper notification to Shellum (or Shellum’s estate in the event of
      Shellum’s death), provided the Company shall pay to Shellum (or to the
      estate of Shellum in the event of termination due to the death of Shellum)
      the Base Salary described in Section 4.a. of this Agreement which would
      have been earned for six (6) months after the Termination
      Date.  The benefits provided under this Section 7.e. shall be no
      less favorable to Shellum in terms of amounts, deductibles and costs to
      him, if any, than such benefits provided by the Company to him and shall
      not be interpreted so as to limit any benefits to which Shellum, as a
      terminated employee of the Company, or Shellum’s family may be entitled
      under the Company’s life insurance, medical, hospitalization or disability
      plans following Shellum’s Termination Date or under applicable law, and
      any other benefits or payments earned by Shellum under Shellum’s or any
      other agreement or plan.  “Disability” means the inability of
      Shellum to engage in any substantial gainful activity by reason of any
      medically determinable physical or mental impairment that can be expected
      to result in death or can be expected to last for a continuous period of
      not less than twelve (12) months, as provided in Internal Revenue Code
      Section 409A(a)(2)(C) and Treas. Reg. § 1.409A-3(i)(4).  All
      amounts payable under this Section 7.e. shall be paid in a lump-sum as
      soon as practicable, but in no event later than two-and-one-half (2-1/2)
      months following the close of the calendar year in which the death or
      Disability occurred.

              

      

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      
        	
                f.  

              	
                Termination by Shellum
      for Good Reason.

              

      

       

      
        	
                (i)  

              	
                In
      the event Shellum terminate this Agreement for Good Reason (as defined in
      Section 7.f.ii), provided such Shellum’s termination occurs within ninety
      days of the Good Reason, the Company
shall:

              

      

       

      
        	
                (A)  

              	
                Pay
      to Shellum within thirty (30) days after the Termination  Date,
      a lump sum severance payment equal to two times the sum
  of:

              

      

       

      
        	
                a.  

              	
                Shellum’s
      highest Base Salary during the previous two years of employment
      immediately preceding the Termination Date,
plus

              

      

       

      
        	
                b.  

              	
                the
      highest Bonus paid to Shellum during the same two-year
    period,

              

      

       

      
        	
                (B)  

              	
                Pay
      to Shellum any unpaid expense reimbursement upon presentation by Shellum
      of an accounting of such expenses in accordance with normal Company
      practices, but no later than March 15 of the year following the year of
      termination,

              

      

       

      
        	
                (C)  

              	
                Vest
      any unvested Company stock options or restricted stock (excluding LTIP
      shares under the Company’s Long-Term Incentive
  Plan),

              

      

       

      
        	
                (D)  

              	
                Make
      any other payments or provide any benefits earned under this or any other
      employment agreement or plan, including the Company’s Long-Term Incentive
      Plan (including LTIP shares under the Company’s Long-Term Incentive Plan),
      and

              

      

       

      
        	
                (E)  

              	
                Continue
      coverage of Shellum and any dependents covered at the time of termination
      under the Company’s group health plans at the Company’s cost throughout
      the period of time that Shellum is eligible for federal COBRA health
      continuation coverage.

              

      

       

      
        	
                (ii)  

              	
                "Good
      Reason" shall mean the occurrence of any of the following events without
      Shellum's prior express written
consent:

              

      

       

      
        	
                (A)  

              	
                A
      material diminution in Shellum’s Base
Salary;

              

      

       

      
        	
                (B)  

              	
                A  material
      diminution in reward opportunities under the annual
  Bonus;

              

      

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      
        	
                (C)  

              	
                Any
      other action or inaction that constitutes a material breach by the Company
      of this Agreement.

              

      

       

      Shellum
must provide notice to the Company of the condition described in paragraphs
(A)-(C) of this section within ninety (90) days, upon the notice of which the
Company will have a period of thirty (30) days during which it may remedy the
condition and not be required to pay the amount.

       

      
        	
                g.  

              	
                Termination by Shellum
      for other than Good Reason.  Shellum may terminate this
      Agreement for other than Good Reason upon proper Notice of Termination as
      provided in Section 7.a.  In such event the Company shall pay to
      Shellum:

              

      

       

      
        	
                (i)  

              	
                Within
      thirty (30) days after Shellum’s Termination Date, in a lump-sum, the
      compensation provided in Section 4 at the rate in effect at the time of
      the Notice of Termination. If Shellum’s termination occurs prior to the
      end of the year, Shellum shall not be entitled to any Bonus for the
      year;

              

      

       

      
        	
                (ii)  

              	
                Any
      incentive, deferred or other compensation which has been earned or has
      become payable pursuant to the terms of this or any other agreement or
      compensation or benefit plan as of the Termination Date, but which has not
      yet been paid, provided such payments shall be made under the schedule
      originally contemplated in the agreement under which they were granted,
      but if no such payment schedule is provided, the payments shall be made no
      later than March 15 of the year following the year of
      termination;

              

      

       

      
        	
                (iii)  

              	
                Any
      unpaid expense reimbursement upon presentation by Shellum of an accounting
      of such expenses in accordance with normal Company practices, but not
      later than March 15 of the year following the year of termination;
      and

              

      

       

      
        	
                (iv)  

              	
                Any
      other payments for benefits earned under this Agreement, which shall in no
      event be paid later than March 15 of the year following the year of
      termination.

              

      

       

      
        	
                h.  

              	
                Termination  following
      Change of Control.

              

      

       

      
        	
                (i)  

              	
                If
      either (1) the Company terminates Shellum’s employment within two years
      following a Change of Control of the Company (as defined in Section
      7.h.ii.) or (2)  Shellum gives notice to the Company of
      termination of this Agreement during the thirty (30) day period beginning
      one hundred twenty  (120) days immediately following a Change in
      Control, then the Company shall:

              

      

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      
        	
                (A)  

              	
                Pay
      to Shellum within thirty (30) days after the Termination Date, a lump sum
      severance payment equal to three  times the sum
    of:

              

      

       

      
        	
                a.  

              	
                Shellum’s
      highest Base Salary during the  previous two years of employment
      immediately preceding the Termination Date,
plus

              

      

       

      
        	
                b.  

              	
                the
      highest Bonus paid to Shellum during the  same two-year
      period.

              

      

       

      
        	
                (B)  

              	
                Pay
      to Shellum any unpaid expense reimbursement upon presentation by Shellum
      of an accounting of such expenses in accordance with normal Company
      practices, but no later than March 15 of the year following the year of
      termination,

              

      

       

      
        	
                (C)  

              	
                Vest
      any unvested Company stock options or restricted stock (excluding LTIP
      shares under the Company’s Long-Term Incentive
  Plan),

              

      

       

      
        	
                (D)  

              	
                Make
      any other payments or provide any benefits earned under this or any other
      employment agreement or plan, including the Company’s Long-Term Incentive
      Plan (including LTIP shares under the Company’s Long-Term Incentive Plan),
      and

              

      

       

      
        	
                (E)  

              	
                Continue
      coverage of Shellum and any dependents covered at the time of termination
      under the Company’s group health plans at the Company’s cost throughout
      the period of time that Shellum is eligible for federal COBRA health
      continuation coverage.

              

      

       

      
        	
                (ii)  

              	
                "Change
      of Control" of the Company shall occur on the earliest of the following
      events:

              

      

       

      
        	
                (A)  

              	
                Change in
      Ownership: A change in ownership of the Company occurs on the date
      that any one person, or more than one person acting as a group, acquires
      ownership of stock of the Company that, together with stock held by such
      person or group, constitutes more than 50% of the total fair market value
      or total voting power of the stock of the Company, excluding the
      acquisition of additional stock by a person or more than one person acting
      as a group who is considered to own more than 50% of the total fair market
      value or total voting power of the stock of the
  Company.

              

      

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      
        	
                (B)  

              	
                Change in Effective
      Control: A change in effective control of the Company occurs on the
      date that either:

              

      

       

      
        	
                a.  

              	
                Any
      one person, or more than one person acting as a group, acquires (or has
      acquired during the l2-month period ending on the date of the most recent
      acquisition by such person or persons) ownership of stock of the Company
      possessing 35% or more of the total voting power of the stock of the
      Company; or

              

      

       

      
        	
                b.  

              	
                A
      majority of the members of the Board of Directors of the Company (the
      “Board”) is replaced during any l2-month period by directors whose
      appointment or election is not endorsed by a majority of the members of
      the board of directors prior to the date of the appointment or election;
      provided, that this paragraph (b) shall apply only to the Company if no
      other corporation is a majority
shareholder.

              

      

       

      
        	
                (C)  

              	
                Change in Ownership of
      Substantial Assets: A change in the ownership of a substantial
      portion of the Company's assets occurs on the date that any one person, or
      more than one person acting as a group, acquires (or has acquired during
      the l2-month period ending on the date of the most recent acquisition by
      such person or persons) assets from the Company that have a total gross
      fair market value equal to or more than 40% of the total gross fair market
      value of the assets of the Company immediately prior to such acquisition
      or acquisitions. For this purpose, “gross fair market value” means the
      value of the assets of the Company, or the value of the assets being
      disposed of, determined without regard to any liabilities associated with
      such assets.

              

      

       

      It is the
intent that this definition be construed consistent with the definition of
“Change of Control” as defined under Internal Revenue Code Section 409A and the
applicable Treasury Regulations, as amended from time to time.

       

      
        	
                i.  

              	
                Internal Revenue Code
      Section 409A Compliance.

              

      

       

      Except
with respect to amounts paid pursuant to a schedule in a plan or arrangement
outside of this Agreement, it is intended that amounts payable under this
Section 7 not be considered non-qualified deferred compensation subject to
Internal Revenue Code Section 409A.  Shellum is a Specified Employee
under Internal Revenue Code Section 409A, 

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      therefore,
to the extent such amounts are considered non-qualified deferred compensation
payable upon a separation from service under Internal Revenue Code Section 409A,
payment of those amounts so deferred under Internal Revenue Code Section 409A
may not be made until at least six (6) months following Shellum’s separation
from service of the Company (or, if earlier, the date of death of
Shellum).

       

      
        	
                j.  

              	
                Release.  Prior
      to the payment by the Company of the amounts due under subsections (d),
      (f) or (h) above, Employee shall execute the release attached hereto as
      Exhibit A.

              

      

       

      
        	
                8.  

              	
                Notices. For
      the purposes of this Agreement, notices and all other communications
      provided for in the Agreement shall be in writing and shall be deemed to
      have been duly given when personally delivered, by facsimile transmission
      or sent by certified mail, return receipt requested, postage prepaid, or
      by expedited  (overnight) courier with established national
      reputation, shipping prepaid or billed to sender, in either case addressed
      to the respective addresses last given by each party to the
      other  (provided that all notices to the Company shall be
      directed to the attention of the Secretary of the Company ) or to such
      other address as either party may have furnished  to the other
      in
      writing  in  accordance  herewith.  All
      notices and communication shall be deemed to have been received on the
      date of delivery thereof, or on the second day after deposit thereof with
      an expedited courier service, except that notice of change of address
      shall be effective only upon
receipt.

              

      

       

      
        
          
            	 	
                    Company
      at:

                  	 
      	
                    Petroleum
      Development Corporation

                  
	 	 
      	 
      	
                    120
      Genesis Boulevard

                  
	 	 
      	 
      	
                    P.O.
      Box 26

                  
	 	 
      	 
      	
                    Bridgeport
      WV 26330

                  
	 	 
      	 
      	 
      
	 	
                    Shellum
      at:

                  	 
      	
                    Gysle
      R. Shellum

                  
	 	 
      	 
      	
                    6708
      Robin Willow Court

                  
	 	 
      	 
      	
                    Dallas,
      Texas 75248

                  

          

        

      

      

      
        	
                9.  

              	
                Life
      Insurance.  The Company may, at any time after the
      execution of this Agreement, maintain any outstanding life insurance
      policies and apply for and procure as owner and for its own benefit new
      life insurance on Shellum, in such amounts and in such form or forms as
      the Company may determine.  Shellum shall, at the request of the
      Company, submit to such medical examinations, supply such information, and
      execute such documents as may be required by the insurance company or
      companies to whom the Company has applied for such
      insurance.  Shellum hereby represents that to Shellum’s
      knowledge Shellum is in excellent physical and mental
      condition.

              

      

       

      
        	
                10.  

              	
                Successors.
      This Agreement shall be binding on the Company and any successor to any of
      its businesses or assets.  Without limiting the effect of the
      prior sentence, the Company shall use its best efforts to require any
      successor or assign 

              

      

       

      
         

        
          
            
            

          

          
            17

            
              

            

          

          
            
            

          

        

         

        
          	
                   

                	
                  (whether
      direct or indirect, by purchase, merger, consolidation or otherwise) to
      all or substantially all of the business and/or assets of the Company to
      expressly assume and agree to perform this Agreement in the same manner
      and to the same extent that the Company would be required to perform it if
      no such succession or assignment had taken place. As used in this
      Agreement, "Company" shall mean the Company as hereinbefore defined and
      any successor or assign to its business and/or assets as aforesaid which
      assumes and agrees to perform this Agreement or which is otherwise
      obligated under this Agreement by the first sentence of this Section,
      entitled Successors, by operation of law or
  otherwise.

                

        

         

      

      
        	
                11.  

              	
                Binding
      Effect.  This Agreement shall inure to the benefit of and
      be enforceable by Shellum's personal and legal representatives, executors,
      administrators, successors, heirs, distributees, devisees and
      legatees.  If Shellum should die while any amounts would still
      be payable to him hereunder if Shellum had continued to live, all such
      amounts, unless otherwise provided herein, shall be paid in accordance
      with the terms of this Agreement to Shellum's
  estate.

              

      

       

      
        	
                12.  

              	
                Integration,
      Modification and Waiver.  This Agreement constitutes the
      sole employment agreement between the parties, and any prior employment
      agreement, written or oral, is terminated.  No provision of this
      Agreement may be modified, waived or discharged unless such waiver,
      modification or discharge is agreed to in writing and signed by Shellum
      and such officer of the Company as may be specifically designated by the
      Board.  No waiver by either party hereto at any time of any
      breach by the other party hereto of, or compliance with, any condition or
      provision of this Agreement to be performed by such other party shall be
      deemed a waiver of similar or dissimilar provisions or conditions at the
      same or at any prior or subsequent
time.

              

      

       

      
        	
                13.  

              	
                Headings.  Headings
      used in this Agreement are for convenience only and shall not be used to
      interpret or construe its
provisions.

              

      

       

      
        	
                14.  

              	
                Waiver of
      Breach.  The waiver of either the Company or Shellum of a
      breach of any provision of this Agreement shall not operate or be
      construed as a waiver of any subsequent breach by either the Company or
      Shellum.

              

      

       

      
        	
                15.  

              	
                Amendments.  No
      amendments or variations of the terms and conditions of this Agreement
      shall be valid unless the same is in writing and signed by all of the
      parties hereto.

              

      

       

      
        	
                16.  

              	
                Survival of
      Obligations.  The provisions of Section 6 of this
      Agreement shall continue to be binding upon Shellum and Company in
      accordance with their terms, notwithstanding the termination of Shellum’s
      employment with the Company for any reason or the expiration of this
      Agreement.

              

      

       

      
        	
                17.  

              	
                Severability.  The
      invalidity or unenforceability of any provision of this Agreement, whether
      in whole or in part, shall not in any way affect the validity and/or
      enforceability of any other provision contained herein.  Any
      invalid or 

              

      

       

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

      
         

        
          	
                   

                	
                  unenforceable
      provision shall be deemed severable to the extent of any such invalidity
      or unenforceability.  It is expressly understood and agreed that
      while the Company and Shellum consider the restrictions contained in this
      Agreement reasonable for the purpose of preserving for the Company the
      good will, other proprietary rights and intangible business value of the
      Company, if a final judicial determination is made by a court having
      jurisdiction that the time or territory or any other restriction contained
      in this Agreement is an unreasonable or otherwise unenforceable
      restriction against Shellum, the provisions of such clause shall not be
      rendered void but shall be deemed amended to apply as to maximum time and
      territory and to such other extent as such court may judicially determine
      or indicate to be reasonable.

                

        

         

      

      
        	
                18.  

              	
                Governing
      Law.  This Agreement shall be construed and enforced
      pursuant to the laws of the Commonwealth of Pennsylvania, without giving
      effect to its conflict of laws.

              

      

       

      
        	
                19.  

              	
                Executive Officer
      Status.  Shellum acknowledges that Shellum may be deemed
      to be an "executive officer" of the Company for purposes of the Securities
      Act of 1933, as amended (the "1933 Act"), and the Securities Exchange Act
      of 1934, as amended (the "1934 Act") and, if so, Shellum shall comply in
      all respects with all the rules and regulations under the 1933 Act and the
      1934 Act applicable to him in a timely and non-delinquent manner. In order
      to assist the Company in complying with its obligations under the 1933 Act
      and 1934 Act, Shellum shall provide to the Company such information about
      Shellum as the Company shall reasonably request including, but not limited
      to, information relating to personal history and
      stockholdings.  Shellum shall immediately report to the General
      Counsel of the Company or other designated officer of the Company all
      changes in beneficial ownership of any shares of the Company Common Stock
      deemed to be beneficially owned by Shellum and/or any members of Shellum's
      immediate family.

              

      

       

      
        	
                20.  

              	
                Pronouns.  All
      pronouns and any variations thereof shall be deemed to refer to the
      masculine, feminine, neuter, singular, or plural, as the identity of the
      person or entity may require. As used in this Agreement: (1) words of the
      masculine gender shall mean and include corresponding neuter words or
      words of the feminine gender, (2) words in the singular shall mean and
      include the plural and vice versa, and (3) the word "may" gives sole
      discretion without any obligation to take any
  action.

              

      

       

      
        	
                21.  

              	
                Counterparts.  This
      Agreement may be executed in one or more counterparts, each of which shall
      be deemed to be an original, but all of which together shall constitute
      but one document.

              

      

       

      
        	
                22.  

              	
                Exhibits.  Any
      Exhibits attached hereto are incorporated herein by reference and are an
      integral part of this Agreement.

              

      

       

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      
        	
                23.  

              	
                Withholding of
      Taxes. The Company will withhold from any amounts payable under the
      Agreement, all federal, state, local or other taxes as legally will be
      required to be withheld.

              

      

       

      
        	
                24.  

              	
                Consent to
      Jurisdiction and Service of
Process.

              

      

       

      
        	
                a.  

              	
                Section
      6  Disputes.  In the event of any dispute,
      controversy or claim between the Company and Shellum arising out of or
      relating to the interpretation, application or enforcement of the
      provisions of Section 6, the Company and Shellum agree and consent to the
      personal jurisdiction of the state and local courts of Allegheny County,
      Pennsylvania and/or the United States District Court for the Western
      District of Pennsylvania for resolution of the dispute, controversy or
      claim, and that those courts, and only those courts, will have
      jurisdiction to determine any dispute, controversy or claim related to,
      arising under or in connection with Section 6 of this Agreement. The
      Company and Shellum also agree that those courts are convenient forums for
      the parties to any such dispute, controversy or claim and for any
      potential witnesses and that process issued out of any such court or in
      accordance with the rules of practice of that court may be served by mail
      or other forms of substituted service to the Company at the address of its
      principal executive offices and to Shellum at him last known address as
      reflected in the Company’s records.

              

      

       

      
        	
                b.  

              	
                Disputes Other Than
      Under Section 6.  In the event of any dispute relating to
      this Agreement, other than a dispute relating solely to Section 6, the
      parties will use their best efforts to settle the dispute, claim,
      question, or disagreement. To this effect, they will consult and negotiate
      with each other in good faith and, recognizing their mutual interests,
      attempt to reach a just and equitable solution satisfactory to both
      parties. If such a dispute cannot be settled through negotiation, the
      parties agree first to try in good faith to settle the dispute by
      mediation administered by the American Arbitration Association under its
      Commercial Mediation Rules before resorting to arbitration, litigation, or
      some other dispute resolution procedure. If the parties do not reach such
      solution through negotiation or mediation within a period of sixty (60)
      days, then, upon notice by either party to the other, all disputes,
      claims, questions, or differences will be finally settled by arbitration
      administered by the American Arbitration Association in accordance with
      the provisions of its Commercial Arbitration Rules. The arbitrator will be
      selected by agreement of the parties or, if they do not agree on an
      arbitrator within thirty (30) days after either party has notified the
      other of him or its desire to have the question settled by arbitration,
      then the arbitrator will be selected pursuant to the procedures of the
      American Arbitration Association (the “AAA”) in Pittsburgh, Pennsylvania.
      The determination reached in such arbitration will be final and binding on
      all parties. Enforcement of the determination by such arbitrator may be
      sought in any court of competent jurisdiction. Unless otherwise agreed by
      the parties, any such arbitration will take
  place

              

      

       

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      
        
          	
                   

                	
                  in
      Pittsburgh, Pennsylvania, and will be conducted in accordance with the
      Commercial Arbitration Rules of the
AAA.

                

        

         

      

       

      IN WITNESS WHEREOF, the Company and
Shellum have duly executed this Agreement as of the date first above
written.

       

      

       

      
        
          
            
              	 	 
      	 
      	 
      	 
      	 
      
	 	 
      	
                      Petroleum
      Development Corporation

                    	 
      	 
      	
                      Gysle
      R. Shellum

                    
	 	 
      	 
      	 
      	 
      	 
      
	 	 
      	 
      	 
      	 
      	 
      
	 	 
      	 
      	 
      	 
      	 
      
	 	
                      By:

                    	
                      /s/
      Kimberly Wakim 

                    	 
      	 
      	
                      /s/
      Gysle R. Shellum

                    
	 	 
      	
                      Kimberly
      Wakim

                    	 
      	 
      	
                      Gysle
      R. Shellum

                    
	 	
                      Position:

                    	
                      Chair
      of the

                    	 
      	 
      	 
      
	 	 
      	
                      Compensation
      Committee

                    	 
      	 
      	 
      

            

          

        

      

      

       

      
        
          
            DM3\885727.2

          

           

        

        
          21

          
            

          

        

        
           

        

      

      EXHIBIT
A

       

      GENERAL RELEASE OF
CLAIMS

       

      This
General Release ("Release") is entered into as of this ____ day of _________,
2008, by and between Petroleum Development Corporation (the “Company”), and
__________________, an employee of the Company (the “Employee”) (collectively,
the “Parties”).

       

      WHEREAS,
Employee and the Company are parties to an Employment Agreement (the
"Agreement") dated _________________, 2008, governing the terms and conditions
applicable if Employee’s employment is terminated for various
reasons;

       

      WHEREAS,
pursuant to the terms of the Agreement, the Company has agreed to provide
Employee certain benefits and payments under the terms and conditions specified
therein, provided that Employee has executed and not revoked a general release
of claims in favor of the Company;

       

      WHEREAS,
Employee’s employment with the Company is being terminated effective [enter
date]; and

       

      WHEREAS,
the Parties wish to terminate their relationship amicably and to resolve, fully
and finally, all actual and potential claims and disputes relating to Employee’s
employment with and termination from the Company and all other relationships
between Employee and the Company, up to and including the date of execution of
this Release.

       

      NOW,
THEREFORE, in consideration of these Recitals and the promises and mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are expressly acknowledged, the Parties,
intending to be legally bound, agree as follows:

       

      
        	
                1.  

              	
                Termination of
      Employment.  Employee’s employment with the Company shall
      terminate on [enter date] (the "Termination
  Date").

              

      

       

      
        	
                2.  

              	
                Severance
      Benefits.  Pursuant to the terms of the Agreement, and in
      consideration of Employee’s release of claims and the other covenants and
      agreements contained herein and therein, and provided that Employee has
      signed this Release and delivered it to the Company and has not exercised
      any revocation rights as provided in Section 6 below, the Company shall
      provide the severance benefits described in Section 7 of the Agreement
      (the "Benefits") in the time and manner provided therein; provided,
      however, that the Company's obligations will be excused if Employee
      breaches any of the provisions of the Agreement including, without
      limitation, Sections 7, 8 and 9 hereof.  Employee acknowledges
      and agrees that the Benefits constitute consideration beyond that which,
      but for the mutual covenants set forth in this Release and the covenants
      contained in the Agreement, the Company otherwise would not be obligated
      to provide, nor would Employee otherwise be entitled to
      receive.

              

      

       

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      
        	
                3.  

              	
                Effective
      Date.  Provided that it has not been revoked pursuant to
      Section 6 hereof, this Release will become effective on the eighth (8th)
      day after the date of its execution by Employee (the "Effective
      Date").

              

      

       

      
        	
                4.  

              	
                Effect of
      Revocation.  Employee acknowledges and agrees that if
      Employee revokes this Release pursuant to Section 6 hereof, Employee will
      have no right to receive the
Benefits.

              

      

       

      
        	
                5.  

              	
                General
      Release.  In consideration of the Company’s obligations,
      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 his 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
      Colorado 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.

              

      

       

      
        	
                6.  

              	
                Review and Revocation
      Period.  Employee acknowledges that the Company has
      advised Employee that Employee may consult with an attorney of Employee’s
      own choosing (and at Employee’s expense) prior to signing this Release and
      that Employee has been given at least twenty-one (21) days during which to
      consider the provisions of this Release, although Employee may sign and
      return it sooner. Employee further acknowledges that Employee has been
      advised by the Company that after executing this Release, Employee will
      have seven (7) days to revoke this Release, and that this Release shall
      not become effective or enforceable until such seven (7) day revocation
      period has expired.  Employee acknowledges and agrees that if
      Employee wishes to revoke this Release, Employee must do so in writing,
      and that such revocation must be signed by Employee and received by the
      Chairman of the Board of the Company (or the Chairman of the Compensation
      Committee) no later than 5:00 p.m. Eastern Time on the seventh (7th) day
      after Employee has executed this Release. Employee acknowledges and agrees
      that, in the event that Employee revokes this Release, Employee will have
      no right to receive any benefits hereunder, including the Benefits.
      Employee represents that Employee has read this Release and understands
      its terms and enters into this Release freely, voluntarily and without
      coercion.

              

      

       

      
        	
                7.  

              	
                Confidentiality,
      Non-Compete and Non-Solicitation.  Employee reaffirms his
      commitments in Sections 6.a., 6.c. and 6.d. of the
    Agreement.

              

      

       

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      
        	
                8.  

              	
                Cooperation in
      Litigation.  At the Company's reasonable request,
      Employee shall use his good faith efforts to cooperate with the Company,
      its Affiliates, and each of its and their respective attorneys or other
      legal representatives ("Attorneys") in connection with any claim,
      litigation or judicial or arbitral proceeding which is material to the
      Company and is now pending or may hereinafter be brought against the
      Released Parties by any third party; provided, that, Employee’s
      cooperation is essential to the Company's case.  Employee’s duty
      of cooperation will include, but not be limited to (a) meeting with the
      Company's and/or its Affiliates' Attorneys by telephone or in person at
      mutually convenient times and places in order to state truthfully
      Employee’s knowledge of matters at issue and recollection of events; (b)
      appearing at the Company's, its Affiliates' and/or their Attorneys'
      request (and, to the extent possible, at a time convenient to Employee
      that does not conflict with the needs or requirements of Employee’s
      then-current employer) as a witness at depositions or trials, without
      necessity of a subpoena, in order to state truthfully Employee’s knowledge
      of matters at issue; and (c) signing at the Company's, its Affiliates'
      and/or their Attorneys' request declarations or affidavits that truthfully
      state matters of which Employee has knowledge.  The Company
      shall reimburse Employee for the reasonable expenses incurred by him in
      the course of his cooperation hereunder and shall pay to Employee per diem
      compensation in an amount equal to the daily prorated portion of the
      Employee’s base salary immediately prior to the Termination
      Date.  The obligations set forth in this Section 8 shall survive
      any termination or revocation of this
Release.

              

      

       

      
        	
                9.  

              	
                Non-Admission of
      Liability.  Nothing in this Release will be construed as
      an admission of liability by Employee or the Released Parties; rather,
      Employee and the Released Parties are resolving all matters arising out of
      the employer-employee relationship between Employee and the Company and
      all other relationships between Employee and the Released
      Parties.

              

      

       

      
        	
                10.  

              	
                Binding
      Effect.  This Release will be binding upon the Parties
      and their respective heirs, administrators, representatives, executors,
      successors and assigns, and will inure to the benefit of the Parties and
      their respective heirs, administrators, representatives, executors,
      successors and assigns.

              

      

       

      
        	
                11.  

              	
                Governing
      Law.  This Release will be governed by and construed and
      enforced in accordance with the laws of the Commonwealth of Pennsylvania
      applicable to agreements negotiated, entered into and wholly to be
      performed therein.

              

      

       

      
        	
                12.  

              	
                Severability.  Each
      of the respective rights and obligations of the Parties hereunder will be
      deemed independent and may be enforced independently irrespective of any
      of the other rights and obligations set forth herein.  If any
      provision of this Release should be held illegal or invalid, such
      illegality or invalidity will not affect in any way other provisions
      hereof, all of which will continue, nevertheless, in full force and
      effect.

              

      

       

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      
        	
                13.  

              	
                Counterparts.  This
      Release may be signed in counterparts and each counterpart will be deemed
      to be an original but together all such counterparts will be deemed a
      single agreement.

              

      

       

      
        	
                14.  

              	
                Entire Agreement;
      Modification.  This Release constitutes the entire
      understanding between the Parties with respect to the subject matter
      hereof and may not be modified without the express written consent of both
      Parties.  This Release supersedes all prior written and/or oral
      and all contemporaneous oral agreements, understandings and negotiations
      regarding its subject matter.  This Release may not be modified
      or canceled in any manner except by a writing signed by both
      Parties.

              

      

       

      
        	
                15.  

              	
                Acceptance.  Employee
      may confirm his acceptance of the terms and conditions of this Release by
      signing and returning two (2) original copies of this Release to the
      Chairman of the Board of the Company, no later than 5:00 p.m. Eastern Time
      twenty-one (21) days after Employee’s receipt of notice of
      termination.

              

      

       

      EMPLOYEE
ACKNOWLEDGES AND REPRESENTS THAT EMPLOYEE HAS FULLY AND CAREFULLY READ THIS
RELEASE PRIOR TO SIGNING IT AND UNDERSTANDS ITS TERMS. EMPLOYEE FURTHER
ACKNOWLEDGES AND AGREES THAT EMPLOYEE HAS BEEN, OR HAS HAD THE OPPORTUNITY TO
BE, ADVISED BY INDEPENDENT LEGAL COUNSEL OF EMPLOYEE’S OWN CHOICE AS TO THE
LEGAL EFFECT AND MEANING OF EACH OF THE TERMS AND CONDITIONS OF THIS RELEASE,
AND IS ENTERING INTO THIS RELEASE FREELY AND VOLUNTARILY AND NOT IN RELIANCE ON
ANY PROMISES OR REPRESENTATIONS OTHER THAN AS SET FORTH IN THIS
RELEASE.

       

      IN WITNESS WHEREOF, the Company and the
Employee have duly executed this Release as of the date first above
written.

       

      
        
          
            	 	 
      	 
      	 
      	 
      	 
      
	 	
                    Company

                  	 
      	 
      	 
      	
                    [Full
      Name]

                  
	 	 
      	
                    Petroleum
      Development Corporation

                  	 
      	 
      	 
      
	 	 
      	 
      	 
      	 
      	 
      
	 	 
      	 
      	 
      	 
      	 
      
	 	
                    By:

                  	 
      	 
      	 
      	 
      
	 	 
      	
                    [Full
      Name]

                  	 
      	 
      	
                    Gysle
      R. Shellum

                  
	 	
                    Position:

                  	
                    Chair
      of the

                  	 
      	 
      	 
      
	 	 
      	
                    Compensation
      Committee

                  	 
      	 
      	 
      

          

        

      

      
 

      

        25

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