Exhibit 10.1
POSTROCK ENERGY CORPORATION
MANAGEMENT INCENTIVE PROGRAM

I.   GENERAL

     PostRock Energy Corporation, a Delaware corporation (the “Company” or
“PostRock”), adopted the PostRock 2010 Long-Term Incentive Plan (the “Plan”) in
part to allow eligible employees of PostRock and its subsidiaries and
non-employee directors of PostRock to strengthen their commitment to the success
of PostRock, to stimulate their efforts on PostRock’s behalf and to assist
PostRock and its subsidiaries in attracting new employees and non-employee
directors and retaining existing employees and non-employee directors. The Plan
is also intended to optimize the profitability and growth of PostRock through
incentives which are consistent with PostRock’s goals, to provide incentives for
excellence in individual performance, and to promote teamwork. The Plan provides
for grants of certain equity-based awards and cash awards (“Cash Awards”).
     Pursuant to the Cash Awards’ feature of the Plan, the Board of Directors
has designated a group of employees who may be eligible to receive Cash Awards
under the Plan, established the applicable performance goals relating to such
Cash Awards and adopted this Management Incentive Program (“MIP”). Unless
otherwise defined herein, capitalized terms that are used herein shall have the
meanings assigned to such terms in the Plan. All provisions of the MIP and the
rights of the Grantee’s are subject in all respects to the provisions of the
Plan and the powers of the Board of Directors therein provided.

II.   DEFINITIONS

  A.   “Approval of the Board” or “Approved by the Board” means the initial
approval by the Compensation Committee and, except with respect to certain
approvals required by Section 162(m) of the Internal Revenue Code of 1986, as
amended (“Section 162(m)”) to be completed solely by the Compensation Committee,
the subsequent recommendation by the Compensation Committee to, and approval by,
the Board of Directors.     B.   “Base Salary” equals the base annual salary for
the Fiscal Year for which the Cash Award is calculated as established by the
Compensation Committee within the first 90 days of each Fiscal Year. Subsequent
increases in base salary during a performance period will not be taken into
account when determining the final Cash Award payment, if any, under the MIP.  
  C.   “Board of Directors” means the Board of Directors of the Company.     D.
  “Chief Executive Officer” means the Chief Executive Officer of the Company.

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  E.   “Compensation Committee” means the Compensation Committee of the Board of
Directors.     F.   “Fiscal Year” means the Company’s Fiscal Year beginning
January 1 and ending December 31.     G.   “Percentage of Goals Achieved” shall
be based on the weighted average of the performance criteria based on the
Company’s performance during 2010 as calculated in accordance with Schedule 2.  
  H.   “Performance Goals” for each Fiscal Year are the financial and
operational goal(s) established by the Board of Directors as applied to Grantees
in the position levels outlined in Schedule 3 hereto. Applicable Performance
Goals are set forth on Schedule 2 hereto and are based on or related to one or
more of those Performance Goals set forth in Section 10.2 of the Plan.

III.   EMPLOYEES COVERED BY THE PROGRAM

    Those employees listed on Schedule 3 and those employees who are
subsequently determined by the Chief Executive Officer and the Compensation
Committee to participate in the MIP (each such employee, a “Grantee”) shall be
eligible to participate in the MIP.

IV.   CASH AWARD

    A Grantee in the MIP may be entitled to a Cash Award calculated as
determined in accordance with the formula Approved by the Board as set forth
herein.

V.   PARTICIPANT BONUS COMPOSITION

    The composition of the bonuses for each Fiscal Year eligible to be paid
under the MIP will be determined and Approved by the Board. Although the Company
anticipates that all Cash Awards, if any, will be settled in cash, the Company
reserves the right to settle any Cash Awards in the form of Company Shares in
accordance with the Plan.

VI.   COMPUTATION AND DISBURSEMENT OF FUNDS

  A.   A Grantee in the MIP may be entitled to a Cash Award computed as the
product of (i) the Grantee’s Base Salary times (ii) the percentage listed for
such Grantee’s Level on Schedule 1 based on the Percentage of Goals Achieved.

  B.   No Cash Award will be paid if the “Percentage of Goals Achieved” is less
than 60%. No additional amounts will be paid in excess of those reflected on
Schedule 1 if the Percentage of Goals Achieved is more than 150%.

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  C.   Except as otherwise provided herein, no Cash Award may be paid to a
Grantee unless Grantee is employed by the Company or a subsidiary thereof on the
payment date for such Cash Award.     D.   As soon as practicable after the
close of the Fiscal Year, but no later than thirty (30) days after the Company’s
receipt of the annual audit, the Chief Financial Officer of the Company shall
calculate the financial and operational performance measures and the proposed
payout under the MIP based upon the achievement of the financial and operational
performance measures. The proposed payout shall be presented to the Chief
Executive Officer and, subject to the Chief Executive Officer’s or Compensation
Committee’s discretionary ability to reduce the amount or totally eliminate the
Cash Award, Approved by the Board. Neither the Chief Executive Officer nor the
Board of Directors shall have any ability to increase the amount of a Cash
Award.     E.   If a Cash Award is approved, payment of the Cash Award shall be
made as soon as practicable after, but in no later than sixty (60) days after,
the Company’s receipt of the annual audit, provided, however, that in all events
such Cash Award (if any) shall be paid during the Fiscal Year immediately
following the close of the Fiscal Year for which the payout relates.
Accordingly, Cash Awards for the 2010 Fiscal Year shall be paid during the 2011
Fiscal Year.     F.   As Approved by the Board, if, before payment of any Cash
Award, a Grantee (i) dies, (ii) becomes permanently disabled, (iii) enters
military service, (iv) takes an approved leave of absence, (v) is appointed or
elected to public office, or (vi) is terminated due to position elimination,
then, based on the actual level of goal achievement and provided that the
Percentage of Goals Achieved is above 60%:

  (a)   the Grantee may be entitled to a payment of the full amount of the Cash
Award if such separation occurs after the end of the Fiscal Year to which such
Cash Award relates; or     (b)   the Grantee may be entitled to a payment of a
partial amount of the Cash Award based on the number of days during the Fiscal
Year the Grantee performed services for the Company or a subsidiary thereof
divided by 365, if such separation occurred before the end of the Fiscal Year
for which such Cash Award relates; provided, however, that the Grantee must have
been an active employee for a minimum of 90 consecutive calendar days during
such Fiscal Year.

      The foregoing notwithstanding, any payment of any Cash Awards under this
Subsection F shall be made in accordance with the general payment provisions in
this Section VI (that is, during the Fiscal Year immediately following the
Fiscal Year for which the payout relates).

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  G.   Any payment made under the MIP will be made to the Grantee. In the event
of a Grantee’s death, any Cash Award payable will be paid to the Grantee’s
designated beneficiaries on file with the Company or, in the absence of such
designation, paid to the Grantee’s estate.

  H.   All Cash Awards shall be reduced by amounts required to be withheld for
any and all federal, state or local income or employment taxes at the time
payments are made.

VII.   CHANGES TO TARGET

    Except with respect to any “covered employee” (as that term is defined under
Section 162(m)) where a change to any performance measures, target and payout
ranges would cause the payment of a Cash Award not to be deductible under
Section 162(m), with the Approval of the Board, the Company may, at any time
prior to the final determination of awards, consider changes to the performance
measures, targets, and payout ranges used for incentive purposes, if, in the
judgment of the Company, such change(s) is/are desirable in the interests of
equitable treatment of the Grantees and the Company as a result of extraordinary
or non-recurring events, changes in applicable accounting rules or principles,
changes in the Company’s methods of accounting, changes in applicable law, or
changes due to consolidation, acquisitions, or reorganization. With the Approval
of the Board, the Chief Executive Officer may implement such changes(s) for
immediate incorporation into the MIP.

    Grantees hired, or who otherwise become eligible to participate hereunder
during the course of a Fiscal Year and who are employed through the end of such
Fiscal Year shall be eligible for a pro-rated award based on their Base Salary
during such Fiscal Year and length of eligible service prior to the end of the
Fiscal Year so long as the Grantee was in a bonus eligible position for at least
90 days.

VIII.   FORFEITURE OF BONUS

    Except as provided in Section VI, no Grantee who ceases to be an employee of
the Company or any subsidiary thereof before the payment date of a Cash Award
shall be entitled to any Cash Award under the MIP for such Fiscal Year unless
the Chief Executive Officer, in consultation with the Compensation Committee or
Board of Directors, determines otherwise.

IX.   NO EMPLOYMENT CONTRACT; FUTURE PLANS

    Participation in the MIP shall not confer upon any Grantee any right to
continue in the employ of the Company nor interfere in any way with the right of
the Company to terminate any Grantee’s employment at any time. The Company is
under no obligation to continue the MIP in future Fiscal Years.

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X.   AMENDMENT OR TERMINATION

    With the Approval of the Board, the Company may at any time, or from time to
time, (a) amend, alter or modify the provisions of the MIP and the Plan,
(b) terminate the MIP or the Plan, or (c) terminate the participation of a
Grantee or group of Grantees in the MIP or the Plan; provided, however, that in
the event of the termination of the MIP or the Plan or a termination of the
participation of a Grantee or group of Grantees, the Company shall provide
notification to the affected Grantees, as soon as practicable, outlining the
extent of the MIP or Plan termination or Grantee termination in the MIP and the
calculation of the partial awards, if any, to be granted to the affected
Grantee(s) for the portion of the Fiscal Year during which such Grantees
participated in the MIP, in a manner Approved by the Board and in which the
Company, in its sole judgment, determines to be equitable to such Grantees and
the Company. For the avoidance of doubt, the Company may, at any time, terminate
the MIP without having any obligation to make any full or partial payments to
any Grantee.

XI.   GENERAL PROVISIONS

  A.   No right under the MIP or the Plan shall be assignable, either
voluntarily or involuntarily, by way of encumbrance, pledge, attachment, level
or charge of any nature (except as may be required by state or federal law).

  B.   Nothing in the MIP or Plan shall require the Company to segregate or set
aside any funds or other property for the purpose of paying any portion of a
Cash Award. No Grantee, beneficiary or other person shall have any right, title
or interest in any amount awarded under the MIP or the Plan before the payment
date for the Cash Award, or in any property of the Company or its subsidiaries.

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