Exhibit 10.32

EXECUTION

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

Among

POSTROCK ENERGY SERVICES CORPORATION,

as a Borrower,

POSTROCK MIDCONTINENT PRODUCTION, LLC,

as a Borrower,

CITIBANK, N.A.,

as Administrative Agent and Collateral Agent

and

The Lenders Party Hereto

$200,000,000 SENIOR SECURED REVOLVING CREDIT FACILITY

CITIBANK, N.A.,

As Lead Arranger and Sole Bookrunner

Dated as of December 20, 2012

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TABLE OF CONTENTS

 

     Page  

ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS

     2   

1.01. Defined Terms

     2   

1.02. Other Interpretive Provisions

     24   

1.03. Accounting Terms

     24   

1.04. Rounding

     24   

1.05. References to Agreements, Persons and Laws; Rules of Construction

     25   

ARTICLE II. THE REVOLVING COMMITMENTS AND BORROWINGS

     25   

2.01. Revolving Loans

     25   

2.02. Borrowing Base

     25   

2.03. Borrowings, Conversions and Continuations of Loans

     28   

2.04. Prepayments

     29   

2.05. Reduction or Termination of Revolving Commitments

     31   

2.06. Repayment of Revolving Loans.

     31   

2.07. Interest

     31   

2.08. Fees

     32   

2.09. Computation of Interest and Fees

     32   

2.10. Evidence of Debt

     33   

2.11. Payments Generally

     33   

2.12. Sharing of Payments

     35   

2.13. Pari Passu Lien Securing Lender Hedging Obligations and Banking Service
Obligations

     36   

2.14. Letters of Credit

     36   

ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY

     43   

3.01. Taxes

     43   

3.02. Illegality

     45   

3.03. Inability to Determine Rates

     45   

3.04. Increased Cost and Reduced Return; Capital Adequacy; Reserves on
Eurodollar Rate Loans

     46   

3.05. Compensation for Losses

     46   

3.06. Matters Applicable to all Requests for Compensation

     47   

3.07. Survival

     47   

3.08. Mitigation Obligations

     47   

ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSION

     47   

4.01. Conditions Precedent to Initial Credit Extension

     47   

4.02. Conditions to all Credit Extensions

     50   

ARTICLE V. REPRESENTATIONS AND WARRANTIES

     51   

5.01. Existence; Qualification and Power; Compliance with Laws

     51   

5.02. Authorization; No Contravention

     52   

5.03. Governmental Authorization

     52   

5.04. Binding Effect

     52   

5.05. Financial Statements; No Material Adverse Effect

     52   

5.06. Litigation

     53   

5.07. No Default

     53   

 

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5.08. Title; Liens; Priority of Liens.

     53   

5.09. Environmental Compliance

     53   

5.10. Insurance

     54   

5.11. Taxes

     54   

5.12. ERISA Compliance

     54   

5.13. Subsidiaries and other Investments

     55   

5.14. Margin Regulations; Investment Company Act; Use of Proceeds

     55   

5.15. Disclosure; No Material Misstatements

     55   

5.16. Location of Business and Offices

     55   

5.17. Compliance with Laws

     56   

5.18. Third Party Approvals

     56   

5.19. Solvency

     56   

5.20. Oil and Gas Leases

     56   

5.21. Oil and Gas Contracts

     56   

5.22. Producing Wells

     57   

5.23. Purchasers of Production

     57   

5.24. Swap Contracts

     57   

ARTICLE VI. AFFIRMATIVE COVENANTS

     57   

6.01. Financial Statements

     57   

6.02. Certificates; Other Information

     58   

6.03. Notices

     59   

6.04. Payment of Obligations

     59   

6.05. Preservation of Existence, Etc.

     59   

6.06. Maintenance of Assets and Business

     60   

6.07. Maintenance of Insurance

     60   

6.08. Compliance with Laws and Contractual Obligations

     60   

6.09. Books and Records

     61   

6.10. Inspection Rights

     61   

6.11. Compliance with ERISA

     61   

6.12. Use of Proceeds

     61   

6.13. Material Agreements

     62   

6.14. Guaranties; New Subsidiaries’ Collateral Documents

     62   

6.15. Further Assurances; Additional Collateral; In Lieu Letters

     62   

6.16. Title Defects

     63   

6.17. Leases

     64   

6.18. Operation of Borrowing Base Oil and Gas Properties

     64   

6.19. Change of Purchasers of Production

     64   

6.20. Fiscal Year

     64   

6.21. Liens on Oil and Gas Properties; Title Information

     64   

ARTICLE VII. NEGATIVE COVENANTS

     65   

7.01. Liens

     65   

7.02. Investments

     68   

7.03. Hedging Agreements

     69   

7.04. Indebtedness

     70   

7.05. Lease Obligations

     71   

7.06. Fundamental Changes

     72   

7.07. Dispositions

     72   

7.08. Restricted Payments; Distributions and Redemptions

     73   

7.09. ERISA

     73   

 

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7.10. Nature of Business; Risk Management

     73   

7.11. Transactions with Affiliates

     73   

7.12. Burdensome Agreements

     74   

7.13. Reserved

     74   

7.14. Material Agreements

     74   

7.15. Pooling or Unitization

     74   

7.16. Financial Covenants

     74   

7.17. Certain Other Limitations on Parent

     75   

ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES

     76   

8.01. Events of Default

     76   

8.02. Remedies Upon Event of Default

     78   

8.03. Application of Funds

     79   

ARTICLE IX. ADMINISTRATIVE AGENT

     79   

9.01. Appointment and Authorization of Agents; Lender Hedging Agreements

     79   

9.02. Delegation of Duties

     80   

9.03. Default; Collateral

     80   

9.04. Liability of Agents

     81   

9.05. Reliance by Administrative Agent

     82   

9.06. Notice of Default

     82   

9.07. Credit Decision; Disclosure of Information by Administrative Agent

     83   

9.08. Indemnification of Agents

     83   

9.09. Administrative Agent in its Individual Capacity

     84   

9.10. Successor Administrative Agent and Collateral Agent

     84   

9.11. Other Agents

     85   

9.12. Administrative Agent May File Proofs of Claim

     85   

9.13. Hedging Agreements

     85   

9.14. Banking Services

     86   

ARTICLE X. MISCELLANEOUS

     86   

10.01. Amendments, Release of Collateral, Etc.

     86   

10.02. Notices and Other Communications; Facsimile Copies

     88   

10.03. No Waiver; Cumulative Remedies

     89   

10.04. Attorney Costs; Expenses and Taxes

     89   

10.05. Indemnification

     90   

10.06. Payments Set Aside

     91   

10.07. Successors and Assigns

     91   

10.08. Confidentiality

     94   

10.09. Set-off

     94   

10.10. Interest Rate Limitation

     95   

10.11. Counterparts

     95   

10.12. Integration

     95   

10.13. Survival of Representations and Warranties

     96   

10.14. Severability

     96   

10.15. Replacement of Lenders

     96   

10.16. Defaulting Lender

     97   

10.17. Governing Law

     99   

10.18. Waiver of Right to Trial by Jury, Etc.

     99   

10.19. Release.

     100   

10.20. Time of the Essence

     100   

 

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10.21. Resignation of Administrative Agent, Collateral Agent and L/C Issuer;
Appointment of Successor Administrative Agent, Collateral Agent and L/C Issuer;
Assignment.

     100   

10.22. Amendment and Restatement; Release of Constellation Equity

     101   

10.23. Termination of Revolving Commitments Under Original Credit Agreement

     102   

10.24. No Novation, Etc.

     102   

10.25. Joint and Several Liability

     102   

10.26. ENTIRE AGREEMENT

     104   

SCHEDULES

 

2.01    Revolving Commitments 5.06    Litigation 5.12    ERISA 5.13   
Subsidiaries and Equity Investments 5.21    Take-or Pay and Gas Balancing
Obligations 5.23    Purchasers of Production 5.24    Swap Contracts 7.01   
Existing Liens 7.04    Indebtedness 7.11    Transactions with Affiliates 10.02
   Addresses for Notices to Borrower, Guarantors and Administrative Agent

EXHIBITS

Exhibit: Form of:

 

A-1    Borrowing Notice A-2    Conversion/Continuation Notice A-3    Repayment
Notice B    Revolving Note C    Compliance Certificate pursuant to Section
6.01(a) D    Assignment and Assumption

 

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THIRD AMENDED AND RESTATED CREDIT AGREEMENT

THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
December 20, 2012, among POSTROCK ENERGY SERVICES CORPORATION, a Delaware
corporation (“PESC”), POSTROCK MIDCONTINENT PRODUCTION, LLC, a Delaware limited
liability company (“MidContinent”; and together with PESC, collectively, the
“Borrowers” and individually a “Borrower”), CITIBANK, N.A., individually and as
successor Administrative Agent and Collateral Agent (in such capacities the
“Successor Administrative Agent”, “Administrative Agent” and “Collateral
Agent”), and as successor L/C Issuer, ROYAL BANK OF CANADA, as prior
administrative agent, collateral agent and L/C Issuer (in such capacities, the
“Original Administrative Agent”, “Original Collateral Agent” and “Original L/C
Issuer”), and each of the New Lenders (herein defined) that is a signatory
hereto or which becomes a signatory hereto pursuant to Section 10.07.

PRELIMINARY STATEMENTS

(1) The Borrowers, Royal Bank of Canada, individually as Original Administrative
Agent, Original Collateral Agent and Original L/C Issuer, together with the
lenders party thereto entered into that certain Second Amended and Restated
Credit Agreement dated as of September 21, 2010, providing for a $225,000,000
revolving line of credit, and such Credit Agreement was amended by a First
Amendment dated May 31, 2012 but effective as of June 1, 2012 and a Second
Amendment dated as of July 20, 2012 (as amended, the “Original Credit
Agreement”).

(2) Pursuant to the provisions of Section 10.07 of the Original Credit
Agreement, of even date herewith a Master Assignment and Assumption Agreement
(the “Master Note Assignment”) was entered into whereby each of Royal Bank of
Canada, KeyBank National Association, Wells Fargo Bank, N.A., Comerica Bank,
Société Générale, U.S. Bank National Association, Amegy Bank National
Association, RB International Finance (USA) LLC, SunTrust Bank, Compass Bank,
Citibank, N.A., BOKF, N.A., d/b/a Bank of Oklahoma, N.A. and NZC Guggenheim
Master Fund Ltd. (collectively, the “Exiting Lenders”) assigned all of their
rights and obligations under the Original Credit Agreement (including all of
their respective commitments and loans and participations in letters of credit
thereunder and all liens and security interests granted as security for
indebtedness under the Original Credit Agreement) to Citibank, N.A., Lender #2,
Lender #3, Lender #4, Lender #5 and Lender #6 (collectively, the “New Lenders”)
and the New Lenders (i) paid the Exiting Lenders (through the Original
Administrative Agent) the outstanding amount owed the Exiting Lenders as of the
date of such assignment, (ii) assumed all of the Exiting Lenders’ rights and
obligations under the Original Credit Agreement (including all of the Exiting
Lenders’ respective commitments and loans and participations in letters of
credit thereunder) and became entitled to their pro rata share of all liens and
security interests granted as security for indebtedness under the Original
Credit Agreement, and (iii) became lenders (if not already a lender) under the
Original Credit Agreement.

(3) The Original Administrative Agent accepted and recorded such assignments and
the Borrowers also consented to such assignments and the Original Administrative
Agent waived, and hereby waives, the $3,500 processing and recordation fee for
each assignment provided for in Section 10.07 of the Original Credit Agreement.

(4) The Borrowers have requested certain amendments to the Original Credit
Agreement which include, among other things, (i) the replacement of Royal Bank
of Canada as administrative agent and collateral agent by Citibank, N.A. and
(ii) the extension of the Maturity Date, and (A) the New Lenders have agreed to
amend and restate in its entirety the Original Credit Agreement on the terms and
conditions set forth herein, to renew and rearrange the indebtedness outstanding
under the Original Credit

 

PostRock Energy Services Corp.

PostRock MidContinent Production, LLC

Credit Agreement

 

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Agreement (but not to repay or pay off such indebtedness) and to extend the
Maturity Date, (B) Royal Bank of Canada, by its execution hereof has agreed to
resign, and hereby resigns, as administrative agent and collateral agent
pursuant to Section 9.10 of the Original Credit Agreement (and by their
execution hereof, the Lenders and Borrowers waive the 30 days’ notice of
resignation requirement) and Citibank, N.A., pursuant to Section 9.10 of the
Original Credit Agreement, by its execution hereof has agreed to become, and
hereby becomes, the successor administrative agent and collateral agent and
hereby succeeds to all the rights, powers and duties of the Original
Administrative Agent (and by their execution hereof, the Lenders and Borrowers
hereby consent to and approve the appointment of Citibank, N.A. as successor
administrative agent and collateral agent) and (C) Royal Bank of Canada, by its
execution hereof has agreed to resign, and hereby resigns, as L/C Issuer
pursuant to Section 10.07(h) of the Original Credit Agreement (and by their
execution hereof, the Lenders and Borrowers waive the 30 days’ notice of
resignation requirement) and Borrowers hereby appoint Citibank, N.A., pursuant
to Section 10.07(h) of the Original Credit Agreement, to be the successor L/C
Issuer and Citibank, N.A., by its execution hereof, has agreed to become, and
hereby becomes, the successor L/C Issuer and hereby succeeds to all the rights,
powers and duties of the resigning L/C Issuer.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto hereby agree that the Original Credit Agreement is
amended and restated in its entirety to read as follows:

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

1.01. Defined Terms. As used in this Agreement, the terms defined in the
introductory paragraph and the Preliminary Statements hereof shall have the
meanings therein indicated and the following terms shall have the meanings set
forth below:

Acquisition means any transaction or series of related transactions for the
purpose of, or resulting in, directly or indirectly, (a) the acquisition by a
Loan Party of all or substantially all of the assets located in the United
States of a Person or of any business or division of a Person; (b) the
acquisition by a Loan Party of more than 50% of any class of Voting Stock (or
similar ownership interests) of any Domestic Person; or (c) a merger,
consolidation, amalgamation, or other combination by a Loan Party with another
Person if a Loan Party is the surviving entity, provided that, (i) in any merger
involving a Borrower, such Borrower must be the surviving entity (unless the
surviving entity is a Borrower); and (ii) in any merger involving a Wholly-Owned
Subsidiary and another Subsidiary, a Wholly-Owned Subsidiary shall be the
survivor.

Administrative Agent means Citibank in its capacity as administrative agent and
collateral agent under any of the Loan Documents, successor to Royal Bank of
Canada, as administrative agent and collateral agent under the Original Credit
Agreement, or any successor administrative agent and collateral agent.

Administrative Agent’s Office means the Administrative Agent’s address as set
forth on Schedule 10.02, or such other address as the Administrative Agent may
from time to time notify to the Borrowers and the Lenders.

Administrative Details Form means the Administrative Details Reply Form
furnished by a Lender to the Administrative Agent in connection with this
Agreement.

 

PostRock Energy Services Corp.

PostRock MidContinent Production, LLC

Credit Agreement

 

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Affiliate means, as to any Person, any other Person directly or indirectly
controlling, controlled by, or under direct or indirect common control with,
such Person. A Person shall be deemed to be controlled by any other Person if
such other Person possesses, directly or indirectly, power to direct or cause
the direction of the management and policies of such Person whether by contract
or otherwise.

Agent-Related Persons means the Administrative Agent (including any successor
administrative agent), the Collateral Agent (including any successor collateral
agent) and their respective Affiliates (including the officers, directors,
employees, agents and attorneys-in-fact of such Person).

Aggregate Revolving Commitment means collectively the Revolving Commitments of
all the Lenders.

Agreement means this Third Amended and Restated Credit Agreement, which amends
and restates in its entirety the Original Credit Agreement, as amended, and as
this Agreement may be further amended, modified, supplemented or restated from
time to time in accordance with the terms hereof.

Applicable Rate means, from time to time, the following percentages per annum,
based upon the Utilization Percentage:

 

Pricing
Level

  

Utilization Percentage

   Eurodollar
Rate     Base Rate     Letters of
Credit     Commitment
Fee   1    < 50%      2.50 %      1.50 %      2.50 %      0.50 %  2    ³ 50% but
< 75%      2.75 %      1.75 %      2.75 %      0.50 %  3    ³ 75% but < 90%     
3.00 %      2.00 %      3.00 %      0.50 %  4    ³90%      3.25 %      2.25 %   
  3.25 %      0.50 % 

Any increase or decrease in the Applicable Rate resulting from a change in the
Utilization Percentage shall become effective on the date such change occurs.

Approved Fund means any Fund that is administered or managed by a Lender, an
Affiliate of a Lender, or an entity or an Affiliate of an entity that
administers or manages a Lender.

Approved Hedge Counterparty means BP Energy Company, successor by assignment to
BP Corporation North America, Inc., which had entered into an Approved Hedge
Counterparty Swap Contract, or any of its Affiliates that enters into (A) a
novation agreement or similar arrangement with an Approved Hedge Counterparty or
with any Lender or Lender Hedge Provider and is substituted as a counterparty
for such Lender or Lender Hedge Provider under any Lender Hedging Agreement or
(B) an Approved Hedge Counterparty Swap Contract.

Approved Hedge Counterparty Swap Contract means (i) any Lender Hedging Agreement
to which any Approved Hedge Counterparty has become a party by novation or
otherwise and succeeded to the rights and obligations of a Lender or Lender
Hedge Provider and (ii) any Swap Contract entered into by any Approved Hedge
Counterparty with a Loan Party.

Arranger means Citibank.

Assignment and Assumption means an Assignment and Assumption substantially in
the form of Exhibit D.

 

PostRock Energy Services Corp.

PostRock MidContinent Production, LLC

Credit Agreement

 

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Attorney Costs means and includes the reasonable fees and disbursements of any
law firm or other external counsel.

Attributable Indebtedness means, on any date, (a) in respect of any Capital
Lease of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a capital lease.

Authorizations means all filings, recordings, and registrations with, and all
validations or exemptions, approvals, orders, authorizations, consents,
franchises, licenses, certificates, and permits from, any Governmental
Authority.

Banking Services means each and any of the following bank services when and if
provided to the Loan Parties by any Lender or Affiliate of a Lender:
(a) commercial credit cards; (b) stored value cards; and (c) treasury management
services (including, without limitation, controlled disbursement, automated
clearinghouse transactions, return items, overdrafts and interstate depository
network services).

Banking Service Obligations means any and all obligations of the Loan Parties,
whether absolute or contingent and howsoever created, arising, evidenced or
acquired (including all renewals, extensions and modifications thereof and
substitutions therefor) in connection with Banking Services.

Base Rate means for any day a fluctuating rate per annum equal to the greatest
of (a) the Federal Funds Rate plus one-half of one percent (0.5%), (b) the Prime
Rate for such day, and (c) the Eurodollar Rate for a one-month Interest Period
on such day (or if such day is not a Business Day, the immediately preceding
Business Day) plus one and one-quarter percent (1.25%); provided that, for the
avoidance of doubt, the Eurodollar Rate for any day shall be based on the rate
appearing on the Reuters Screen LIBOR01 Page (or on any successor or substitute
page of such service, or any successor to or substitute for such service) at
approximately 11:00 a.m. (London time) on such day. Any change in the Base Rate
due to a change in the Prime Rate, Federal Funds Rate or the Eurodollar Rate
shall be effective automatically and without notice to Borrower or any Lender on
the effective date of such change in the Prime Rate, Federal Funds Rate or
Eurodollar Rate, respectively.

Base Rate Loan means a Revolving Loan that bears interest based on the Base
Rate.

Basis Points means for one Basis Point, 1/100th of 1%.

Board means the Board of Governors of the Federal Reserve System of the United
States.

Borrower and Borrowers have the meanings specified in the introductory paragraph
hereto.

Borrower Affiliate means Parent’s and each Borrower’s respective Subsidiaries
other than the Excluded Subsidiaries.

Borrowing means a borrowing consisting of simultaneous Revolving Loans of the
same Type and having the same Interest Period made by each of the Lenders
pursuant to Section 2.01.

Borrowing Base means the maximum loan amount that may be supported by the
Borrowing Base Oil and Gas Properties, as determined by the Administrative Agent
and approved by the Lenders or Required Lenders (as applicable) from time to
time in accordance with Section 2.02 of this Agreement.

 

PostRock Energy Services Corp.

PostRock MidContinent Production, LLC

Credit Agreement

 

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Borrowing Base Deficiency means the Total Outstandings at any time exceed the
lesser of Aggregate Revolving Commitments then in effect and the Borrowing Base
then in effect.

Borrowing Base Oil and Gas Properties means those Oil and Gas Properties of the
Borrowers and each of the other Loan Parties that are subject to the Liens
created by the Collateral Documents.

Borrowing Base Value means, with respect to any Oil and Gas Properties, the
value attributed to such Oil and Gas Properties in the most recent Borrowing
Base redetermination, as the loan amount that may be supported by the Borrowing
Base for such Oil and Gas Properties, as determined by the Administrative Agent
and approved by the Lenders or Required Lenders (as applicable) from time to
time in accordance with Section 2.02 of this Agreement.

Borrowing Notice means a notice of (a) a Borrowing, (b) a conversion of
Revolving Loans from one Type to the other, or (c) a continuation of Revolving
Loans as the same Type, pursuant to Section 2.03(a), which, if in writing, shall
be substantially in the form of Exhibit A-1 or A-2, as applicable.

Business Day means any day other than a Saturday, Sunday, or other day on which
commercial banks are authorized to close under the Laws of Texas, or are in fact
closed and, if such day relates to any Eurodollar Rate Loan or the calculation
of the Eurodollar Rate, means any such day on which dealings in Dollar deposits
are conducted by and between banks in the applicable offshore Dollar interbank
market.

Capital Expenditure means all expenditures which, in accordance with GAAP (and
including for maintenance and growth), would be required to be capitalized and
shown on the consolidating balance sheet of Parent with reference to the
Borrowers and their consolidated Subsidiaries, including expenditures in respect
of Capital Leases, but excluding expenditures made in connection with the
replacement, substitution or restoration of assets to the extent financed
(a) from insurance proceeds (or other similar recoveries) paid on account of the
loss of or damage to the assets being replaced or restored or (b) with awards of
compensation arising from the taking by eminent domain or condemnation of the
assets being replaced. Capital Expenditures shall include, without limitation,
expenditures made in connection with acquisitions (whether for cash or equity),
drilling, gathering lines, and the maintenance or expansion of acreage position.

Capital Lease means any capital lease or sublease which should be capitalized on
a balance sheet in accordance with GAAP.

Cash Collateralize means to pledge and deposit with or deliver to the
Administrative Agent or Collateral Agent, for the benefit of the L/C Issuer and
the Lenders and their Affiliates, as collateral for the L/C Obligations, cash
and deposit account balances pursuant to documentation in form and substance
satisfactory to the Administrative Agent and the L/C Issuer (which documents
hereby are consented to by the Lenders).

Cash Equivalents means:

(a) United States Dollars;

(b) direct general obligations or obligations fully and unconditionally
guaranteed as to the timely payment of principal and interest by, the United
States or any agency or instrumentality thereof having remaining maturities of
not more than thirteen (13) months, but excluding any such securities whose
terms do not provide for payment of a fixed dollar amount upon maturity or call
for redemptions;

 

PostRock Energy Services Corp.

PostRock MidContinent Production, LLC

Credit Agreement

 

5

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(c) certificates of deposit and eurodollar-time deposits with remaining
maturities of thirteen (13) months or less, bankers acceptances with remaining
maturities not exceeding one hundred eighty (180) days, overnight bank deposits
and other similar short term instruments, in each case with any domestic
commercial bank having capital and surplus in excess of $250,000,000 and having
a rating of at least “A2” by Moody’s or at least “A” by S&P;

(d) repurchase obligations with a remaining term of not more than thirteen
(13) months for underlying securities of the types described in clauses (b) and
(c) above entered into with any financial institution meeting the qualifications
in clause (c) above;

(e) commercial paper (having remaining maturities of not more than two hundred
seventy (270) days) of any Person rated “P-1” or better by Moody’s or “A-1” or
the equivalent by S&P;

(f) money market funds that (i) comply with the criteria set forth in SEC
Rule 2a-7 under the Investment Company Act of 1940, as amended, (ii) are rated
AAA by S&P or Aaa by Moody’s and (iii) have portfolio assets of at least
$5,000,000,000; and

(g) money market mutual or similar funds having assets in excess of
$100,000,000, at least 95% of the assets of which are comprised of assets
specified in clause (a) through (f) above, except that with respect to the
maturities of the assets included in such funds the requirements of clauses
(a) through (f) shall not be applied to the individual assets included in such
funds but to the weighted-average maturity of all assets included in such funds.

CEPM means Constellation Energy Partners Management, LLC, a Delaware limited
liability company and direct Subsidiary of Parent. CEPM is the only Excluded
Subsidiary as of the Closing Date.

Change in Law means (a) the adoption or taking effect of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule,
regulation or treaty or in the administration, interpretation, implementation or
application thereof by any Governmental Authority after the date of this
Agreement or (c) compliance by any Lender or the L/C Issuer (or, for purposes of
Section 3.04(b), by any Lending Office of such Lender or by such Lender’s or the
L/C Issuer’s holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement; provided that notwithstanding anything
herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer
Protection Act and all requests, rules, guidelines or directives thereunder or
issued in connection therewith and (y) all requests, rules, guidelines or
directives concerning capital adequacy promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States financial regulatory authorities, in
each case pursuant to Basel III, shall in each case be deemed to be a “Change in
Law,” regardless of the date enacted, adopted or issued.

Change of Control means (i) Parent shall fail to own, directly or indirectly, or
fail to have voting control over, 100% of the equity interest of Borrowers or
(ii) a Parent Change of Control shall occur.

Citibank means Citibank, N.A.

Closing Date means the first date all the conditions precedent in Section 4.01
and Section 4.02 are satisfied or waived (or, in the case of Sections 4.01(e)
and (f) waived by the Person entitled to receive the applicable payment).

Code means the Internal Revenue Code of 1986.

 

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Collateral means all property and interests in property and proceeds thereof now
owned or hereafter acquired by any Loan Party in or upon which a Lien now or
hereafter exists in favor of the Secured Parties, or the Administrative Agent or
Collateral Agent on behalf of the Secured Parties, including, but not limited to
the Borrowing Base Oil and Gas Properties and associated gathering systems and
pipelines and substantially all of the personal property (including stock and
other equity interests) of the Loan Parties whether under this Agreement, the
Collateral Documents, or under any other document executed by any Loan Party and
delivered to the Administrative Agent, Collateral Agent or any Secured Party.
For the avoidance of doubt, Collateral does not include the Equity Interest in
the Excluded Subsidiaries owned directly or indirectly by Parent, the
Constellation Equity owned by CEPM, or any other assets owned by CEPM, any
Excluded Assets or the Three Little Pipes.

Collateral Agent means Citibank in its capacity as collateral agent under any of
the Loan Documents, or any successor collateral agent.

Collateral Documents means (a) each Guaranty, Security Agreement and Mortgage,
and all other security agreements, deeds of trust, mortgages, chattel mortgages,
assignments, pledges, guaranties, extension agreements and other similar
agreements or instruments executed by any Loan Party, for the benefit of the
Secured Parties now or hereafter delivered to the Secured Parties, the
Administrative Agent or the Collateral Agent pursuant to or in connection with
the transactions contemplated hereby, and all financing statements (or
comparable documents now or hereafter filed in accordance with the Uniform
Commercial Code or comparable Law) against any Loan Party, as debtor in favor of
the Secured Parties, the Administrative Agent or the Collateral Agent for the
benefit of the Secured Parties, as secured party, to secure or guarantee the
payment of any part of the Obligations or the performance of any other duties
and obligations of Borrowers under the Loan Documents, whenever made or
delivered and (b) any amendments, supplements, modifications, renewals,
replacements, consolidations, substitutions, restatements, continuations, and
extensions of any of the foregoing.

Compensation Period has the meaning set forth in Section 2.11(e)(ii).

Compliance Certificate means a certificate substantially in the form of Exhibit
C.

Consolidated EBITDAX means, for any period, for the Parent on a consolidated
basis (excluding the Excluded Subsidiaries), an amount equal to the sum of
(a) Consolidated Net Income, (b) Consolidated Interest Charges, (c) the amount
of taxes, based on or measured by income, used or included in the determination
of such Consolidated Net Income, (d) the amount of depreciation, depletion and
amortization expense deducted in determining such Consolidated Net Income,
(e) merger and acquisition costs required to be expensed under FAS 141(R),
(f) expenses associated with the exploration of Oil and Gas Properties and
impairment expenses, and (g) other non-cash charges and expenses, including,
without limitation, non-cash charges and expenses relating to Swap Contracts or
resulting from accounting convention changes, of the Parent on a consolidated
basis, all determined in accordance with GAAP.

Consolidated Funded Debt means, as of any date of determination, for the Parent
and its Subsidiaries on a consolidated basis (excluding the Excluded
Subsidiaries), the sum of (a) the outstanding principal amount of all
obligations and liabilities, whether current or long-term, for borrowed money
(including Obligations hereunder, but excluding all reimbursement obligations
relating to outstanding but undrawn letters of credit), (b) Attributable
Indebtedness pertaining to Capital Leases, (c) Attributable Indebtedness
pertaining to Synthetic Lease Obligations, and (d) without duplication, all
Guaranty Obligations with respect to Indebtedness of the type specified in
subsections (a) through (c) above.

 

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Consolidated Interest Charges means, for any period, for the Parent and its
Subsidiaries (excluding the Excluded Subsidiaries) on a consolidated basis, the
excess of (I) the sum of (a) all interest, premium payments, fees, charges and
related expenses of the Parent and its Subsidiaries in connection with
Indebtedness (net of interest rate Swap Contract settlements) (including
capitalized interest), in each case to the extent treated as interest in
accordance with GAAP, and (b) the portion of rent expense of the Parent and its
Subsidiaries (excluding the Excluded Subsidiaries) with respect to such period
under Capital Leases that is treated as interest in accordance with GAAP over
(II) all interest income for such period.

Consolidated Net Income means, for any period, for the Parent on a consolidated
basis, the net income or net loss of Parent and its Subsidiaries (excluding the
Excluded Subsidiaries) from continuing operations, provided that there shall be
excluded from such net income (to the extent otherwise included therein):
(a) the income (or loss) of any entity other than a Subsidiary in which Parent
or one of its Subsidiaries (other than the Excluded Subsidiaries) has an
ownership interest, except to the extent that any such income has been actually
received by Parent or such Subsidiary in the form of cash dividends or similar
cash distributions; (b) the income of the Excluded Subsidiaries, except to the
extent that any such income has been actually received by Parent in the form of
cash dividends or similar cash distributions; (c) net extraordinary gains and
losses (other than, in the case of losses, losses resulting from charges against
net income to establish or increase reserves for potential environmental
liabilities and reserve for exposure under rate cases), (d) any gains or losses
attributable to non-cash write-ups or write-downs of assets, (e) proceeds of any
insurance on property, plant or equipment other than business interruption
insurance, (f) any gain or loss net of taxes on the sale, retirement or other
disposition of assets (including the capital stock or other equity ownership of
any other Person, but excluding the sale of inventories in the ordinary course
of business), and (g) the cumulative effect of a change in accounting
principles, net of taxes.

Constellation Equity means collectively (i) 485,065 Class A Units and
(ii) 5,918,894 Class B Common Units in Constellation Energy Partners LLC, a
Delaware limited liability company, owned by CEPM.

Contractual Obligation means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.

Credit Extension means each of the following: (a) a Borrowing and (b) an L/C
Credit Extension.

Debtor Relief Laws means the Bankruptcy Code of the United States, and all other
liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

Default means any event that, with the giving of any notice, the passage of
time, or both, would be an Event of Default.

Default Rate means an interest rate equal to (a) the Base Rate plus (b) the
Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2% per annum;
provided, however, that with respect to a Eurodollar Rate Loan, the Default Rate
shall be an interest rate equal to the interest rate (including any Applicable
Rate) otherwise applicable to such Eurodollar Rate Loan plus 2% per annum, in
each case to the fullest extent permitted by applicable Laws.

Defaulting Lender means any Lender that (a) has failed to fund any portion of
the Revolving Loans or participations in L/C Obligations required to be funded
by it under this Agreement within one Business Day of the date required to be
funded by it under this Agreement, (b) has otherwise failed to pay

 

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over to Administrative Agent or any other Lender any other amount required to be
paid by it under this Agreement within one Business Day of the date when due,
unless the subject of a good faith dispute, (c) has notified the Borrowers, the
Administrative Agent or any Lender that it does not intend to comply with its
funding obligations or has made a public statement to that effect with respect
to its funding obligations hereunder or generally under other agreements in
which it commits to extend credit; (d) has failed, within three Business Days
after request by the Administrative Agent, to confirm in a manner satisfactory
to the Administrative Agent that it will comply with its funding obligations
hereunder; or (e) has, or has a direct or indirect parent company that has,
(i) become the subject of a proceeding under any Debtor Relief Law, (ii) had a
receiver, conservator, trustee, administrator, assignee for the benefit of
creditors or similar Person charged with reorganization or liquidation of its
business or a custodian appointed for it, or (iii) taken any action in
furtherance of, or indicated its consent to, approval of or acquiescence in any
such proceeding or appointment; provided that a Lender shall not be a Defaulting
Lender solely by virtue of the ownership or acquisition of any equity interest
in that Lender or any direct or indirect parent company thereof by a
Governmental Authority.

Disposition or Dispose means the sale (excluding the sale of inventory in the
ordinary course of business), transfer, license or other disposition (including
any sale and leaseback transaction) of any property (including stock,
partnership and other equity interests) by any Person of property owned by such
Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith. For the avoidance of doubt, a Restricted Payment is not a
Disposition.

Dollar and $ means lawful money of the United States.

Domestic Person means any corporation, general partnership, limited partnership,
limited liability partnership, or limited liability company that is organized
under the laws of the United States or any state thereof or the District of
Columbia.

Eastern means PostRock Eastern Production LLC, a Delaware limited liability
company.

Eligible Assignee means (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund, and (d) any other Person (other than a natural Person) approved
by the Administrative Agent and, unless a Default or an Event of Default has
occurred and is continuing, the Borrowers (neither the Administrative Agent’s
nor the Borrowers’ approval to be unreasonably withheld, conditioned or
delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall
not include White Deer Energy, any Borrower, Parent, or any of their respective
Affiliates or Subsidiaries.

Environmental Law means any applicable Law that relates to (a) the condition or
protection of air, groundwater, surface water, soil, or other environmental
media, (b) the environment, including natural resources or any activity which
affects the environment, (c) the regulation of any Hazardous Substances,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. §9601 et seq.) (“CERCLA”), the Clean
Air Act (42 U.S.C. § 7401 et seq.), the Federal Water Pollution Control Act, as
amended by the Clean Water Act (33 U.S.C. § 1251 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et seq.), the
Emergency Planning and Community Right to Know Act of 1986 (42 U.S.C. § 1100 1
et seq.), the Hazardous Materials Transportation Act (49 U.S.C. § 1801 et seq.),
the National Environmental Policy Act of 1969 (42 U.S.C. § 4321 et seq.), the
Oil Pollution Act (33 U.S.C. § 2701 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. § 6901 et seq.), the Rivers and Harbors Act (33 U.S.C.
§401 et seq.), the Safe Drinking Water Act (42 U.S.C. § 201 and § 300f et seq.),
the Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984 (42
U.S.C. § 6901 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et
seq.), and analogous state and local Laws, as any of the foregoing may have been
and may be amended or supplemented from time to time, and any analogous enacted
or adopted Law, or (d) the Release or threatened Release of Hazardous
Substances.

 

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ERISA means the Employee Retirement Income Security Act of 1974 and any
regulations issued pursuant thereto.

ERISA Affiliate means any trade or business (whether or not incorporated) under
common control with the Borrowers within the meaning of Section 414(b) or (c) of
the Code (and Sections 414(m) and (o) of the Code for purposes of provisions of
this Agreement relating to obligations imposed under Section 412 of the Code).

ERISA Event means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrowers or any ERISA Affiliate from a Pension Plan subject
to Section 4063 of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of
operations that is treated as such a withdrawal under Section 4062(e) of ERISA;
(c) a complete or partial withdrawal by the Borrowers or any ERISA Affiliate
from a Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the treatment
of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or
the commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer Plan;
or (f) the imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the Borrowers
or any ERISA Affiliate.

Eurodollar Rate means for any Interest Period with respect to any Eurodollar
Rate Loan, a rate per annum described below:

(a) the rate per annum equal to the rate determined by the Administrative Agent
to be the offered rate that appears on the Reuters Screen LIBOR01 Page (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service) that displays an average British Bankers
Association Interest Settlement Rate for deposits in Dollars (for delivery on
the first day of such Interest Period) with a term equivalent to such Interest
Period, determined as of approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period, or

(b) if the rate referenced in the preceding subsection (a) is not available, the
rate per annum determined by the Administrative Agent as the rate of interest
(rounded upward to the next 1/100th of 1%) at which deposits in Dollars for
delivery on the first day of such Interest Period in same day funds in the
approximate amount of the Eurodollar Rate Loan being made, continued or
converted by the Administrative Agent and with a term equivalent to such
Interest Period would be offered by the Administrative Agent’s London Branch to
major banks in the offshore Dollar market at their request at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period.

Eurodollar Rate Loan means a Revolving Loan that bears interest at a rate based
on the Eurodollar Rate.

Event of Default means any of the events or circumstances specified in
Section 8.01.

 

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Evergreen Letter of Credit has the meaning specified in Section 2.14(b)(iii).

Excluded Assets means any contracts, agreements or permits as to which the
granting of a security interest in same would cause a default, termination or
penalty thereunder or under any applicable requirement of a Governmental
Authority.

Excluded Subsidiaries means CEPM and any Subsidiary of CEPM.

Excluded Taxes means any of the following taxes imposed on or with respect to a
Lender or the Administrative Agent or required to be withheld or deducted from a
payment to a Lender or the Administrative Agent, (a) taxes imposed on or
measured by net income (however denominated), franchise taxes, and branch
profits taxes, in each case, (i) imposed as a result of such Lender or the
Administrative Agent being organized under the laws of, or having its principal
office or, in the case of any Lender, its applicable lending office located in,
the jurisdiction imposing such tax (or any political subdivision thereof) or
(ii) imposed as a result of a present or former connection between such Lender
or the Administrative Agent and the jurisdiction imposing such tax (other than
connections arising solely from such Lender or the Administrative Agent having
executed, delivered, become a party to, performed its obligations under,
received payments under, received or perfected a security interest under,
engaged in any other transaction pursuant to or enforced any Loan Document, or
sold or assigned an interest in any Borrowing or Loan Document), (b) in the case
of a Lender, U.S. federal withholding taxes imposed on amounts payable to or for
the account of such Lender with respect to an applicable interest in a Borrowing
pursuant to a law in effect on the date on which (i) such Lender acquires such
interest in the Borrowing (other than pursuant to an assignment request by the
Borrower under Section 10.15) or (ii) such Lender changes its lending office,
except in each case to the extent that, amounts with respect to such taxes were
payable either to such Lender’s assignor immediately before such Lender became a
party hereto or to such Lender immediately before it changed its lending office,
(c) taxes attributable to such Lender’s or the Administrative Agent’s failure to
comply with Section 3.01(f) and (d) any U.S. federal withholding taxes imposed
under FATCA.

Exiting Lenders has the meaning specified in Preliminary Statement (2) hereof.

FATCA means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with) and any current or future
regulations or official interpretations thereof.

Fee Letter means the letter agreement, dated November 14, 2012, among the
Borrowers and the Arranger.

Federal Funds Rate means, for any day, the rate per annum (rounded upwards to
the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers on such day, as published by the Federal Reserve Bank
on the Business Day next succeeding such day; provided that (a) if such day is
not a Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate charged to the Administrative Agent on such day on such
transactions as determined by the Administrative Agent.

Foreign Lender means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrowers are resident for tax
purposes. For purposes of this definition, the United States, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.

 

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Fund means any Person (other than a natural person) that is (or will be) engaged
in making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in the ordinary course of its business.

GAAP means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board and the Public Company Accounting
Oversights Board or such other principles as may be approved by a significant
segment of the accounting profession, that are applicable to the circumstances
as of the date of determination, consistently applied. If at any time any change
in GAAP would affect the computation of any financial ratio or requirement set
forth in any Loan Document, and either the Borrowers or the Required Lenders
shall so request, the Administrative Agent, the Lenders and the Borrowers shall
negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such change in GAAP (subject to the approval
of the Required Lenders); provided that, until so amended, (a) such ratio or
requirement shall continue to be computed in accordance with GAAP prior to such
change therein and (b) the Borrowers shall provide to the Administrative Agent
and the Lenders financial statements and other documents required under this
Agreement or as reasonably requested hereunder setting forth a reconciliation
between calculations of such ratio or requirement made before and after giving
effect to such change in GAAP.

Governmental Authority means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other legal
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

Guarantors means Parent, Eastern, PR Holdco, STP and every present and future
domestic direct and indirect Subsidiary of the Parent (excluding the Excluded
Subsidiaries), each of which undertakes to be liable for all or any part of the
Obligations by execution of a Guaranty or an amended and restated Guaranty.

Guaranty means a Guaranty or amended and restated Guaranty now or hereafter made
by any Guarantor in favor of the Administrative Agent on behalf of the Lenders,
including the Parent Guaranty, each in form and substance acceptable to the
Administrative Agent.

Guaranty Obligation means, as to any Person, (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other payment obligation of another Person (the
“primary obligor”) in any manner, whether directly or indirectly, and including
any obligation of such Person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other payment obligation, (ii) to purchase or lease property, securities or
services for the purpose of assuring the obligee in respect of such Indebtedness
or other payment obligation of the payment of such Indebtedness or other payment
obligation, (iii) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or other payment obligation,
or (iv) entered into for the purpose of assuring in any other manner the
obligees in respect of such Indebtedness or other payment obligation of the
payment thereof or to protect such obligees against loss in respect thereof (in
whole or in part), or (b) any Lien on any assets of such Person securing any
Indebtedness or other payment obligation of any other Person, whether or not
such Indebtedness or other payment obligation is assumed by such Person;
provided, however, that the term “Guaranty Obligation” shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guaranty Obligation shall be deemed to be the lesser
of (a) an amount equal to the stated or determinable outstanding amount of the
related primary obligation

 

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and (b) the maximum amount for which such guaranteeing Person may be liable
pursuant to the terms of the instrument embodying such Guaranty Obligation,
unless the outstanding amount of such primary obligation and the maximum amount
for which such guaranteeing Person may be liable are not stated or determinable,
in which case the amount of such Guaranty Obligation shall be the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith.

Hazardous Substance means any substance that poses a threat to, or is regulated
to protect, human health, safety, public welfare, or the environment, including
without limitation: (a) any “hazardous substance,” “pollutant” or “contaminant,”
and any “petroleum” or “natural gas liquids” as those terms are defined or used
under Section 101 of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ( 42 U.S.C. §§ 9601 et seq.) (CERCLA),
(b) “solid waste” as defined by the federal Solid Waste Disposal Act (42 U. S.C.
§ § 6901 et seq.), (c) asbestos or a material containing asbestos, (d) any
material that contains lead or lead-based paint, (e) any item or equipment that
contains or is contaminated by polychlorinated biphenyls, (f) any radioactive
material, (g) urea formaldehyde, (h) putrescible materials, (i) infectious
materials, (j) toxic microorganisms, including mold, or (k) any substance the
presence or Release of which requires reporting, investigation or remediation
under any Environmental Law.

Honor Date has the meaning set forth in Section 2.14(c)(i).

Hydrocarbons means crude oil, condensate, natural gas, natural gas liquids, coal
bed methane and other hydrocarbons and all products refined or separated
therefrom.

Indebtedness means, as to any Person at a particular time, all of the following:

(a) all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;

(b) the face amount of all letters of credit (including standby and commercial),
banker’s acceptances, surety bonds, and similar instruments issued for the
account of such Person, and, without duplication, all drafts drawn and unpaid
thereunder;

(c) whether or not so included as liabilities in accordance with GAAP, all
obligations of such Person to pay the deferred purchase price of property or
services, other than trade accounts payable in the ordinary course of business
not overdue by more than 90 days, and Indebtedness of others (excluding prepaid
interest thereon) secured by a Lien on property owned or being purchased by such
Person, whether or not such Indebtedness shall have been assumed by such Person
or is limited in recourse;

(d) all obligations of such Person under conditional sales or other title
retention agreements relating to property acquired by such Person;

(e) Capital Leases and Synthetic Lease Obligations of such Person; and

(f) all Guaranty Obligations of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture in which such Person is a
general partner, unless such Indebtedness is expressly made non-recourse to such
Person except for customary exceptions acceptable to the Required Lenders. The
amount of any Capital Lease or Synthetic Lease Obligation as of any date shall
be deemed to be the amount of Attributable Indebtedness in respect thereof as of
such date. In addition, the determination of Indebtedness of the Borrowers
and/or their Subsidiaries shall be made on a consolidated basis without taking
into account any Indebtedness owed by any such Person to any other such Person.

 

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Indemnified Liabilities has the meaning set forth in Section 10.05.

Indemnitees has the meaning set forth in Section 10.05.

Intercreditor Agreement means that certain Second Amended and Restated
Intercreditor and Collateral Agency Agreement, dated as of September 21, 2010,
among Borrowers, Royal Bank of Canada, as Original Administrative Agent for the
Lenders under the Original Credit Agreement, various other Persons, and Royal
Bank of Canada, as collateral agent as amended from time to time, which at all
times shall provide that (i) no Approved Hedge Counterparty has any voting
rights under any Loan Document as a result of the existence of obligations owed
to it under any Approved Hedge Counterparty Swap Contract and (ii) each Approved
Hedge Counterparty has a pro rata vote in connection with any action or proposed
action to enforce any Lien upon any Collateral.

Interest Coverage Ratio means, for the Parent on a consolidated basis, for any
four quarter period and as of any determination date, as calculated based on the
quarterly Compliance Certificate most recently delivered pursuant to
Section 6.02(a) for the Borrowers, the ratio of (a) Consolidated EBITDAX for
such trailing four quarter period ending on the determination date to
(b) Consolidated Interest Charges for such four quarter period.

Interest Payment Date means, (a) as to any Revolving Loan other than a Base Rate
Loan, the last day of each Interest Period applicable to such Revolving Loan;
provided, however, that if any Interest Period for a Eurodollar Rate Loan
exceeds three months, the respective dates that fall every three months after
the beginning of such Interest Period shall also be Interest Payment Dates; and
(b) as to any Base Rate Loan, the last Business Day of each March, June,
September and December and the Maturity Date.

Interest Period means, as to each Eurodollar Rate Loan, the period commencing on
the date such Eurodollar Rate Loan is disbursed or converted to or continued as
a Eurodollar Rate Loan and ending on the date one, two, three or six months
thereafter, as selected by the Borrowers in its Borrowing Notice; provided that:

(i) any Interest Period that would otherwise end on a day that is not a Business
Day shall be extended to the next succeeding Business Day unless such Business
Day falls in another calendar month, in which case such Interest Period shall
end on the next preceding Business Day;

(ii) any Interest Period pertaining to a Eurodollar Rate Loan that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the end of
such Interest Period; and

(iii) no Interest Period shall extend beyond the Maturity Date.

Investment means, as to any Person, any acquisition or investment by such
Person, whether by means of (a) the purchase or other acquisition of capital
stock or other securities of another Person, (b) a loan, advance or capital
contribution to, guaranty of Indebtedness of, or purchase or other acquisition
of any other Indebtedness or equity participation or interest in, another
Person, including any partnership or joint venture interest in such other
Person, or (c) the purchase or other acquisition (in one transaction or a series
of transactions) of assets of another Person that constitute a business unit.
For the avoidance of doubt, a Person will not be deemed to have acquired an
Investment hereunder by the mere fact of such

 

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Person’s acquisition of the capital stock of a Wholly-Owned Subsidiary formed by
such Person. For purposes of covenant compliance, the amount of any Investment
shall be the amount actually invested, without adjustment for subsequent
increases or decreases in the value of such Investment, less all returns of
principal or equity thereon, and shall, if made by the transfer or exchange of
property other than cash be deemed to have been made in an amount equal to the
fair market value of such property.

IRS means the United States Internal Revenue Service.

ISDA means the International Swaps and Derivatives Association, Inc

Law means (i) any applicable statute, permit, ordinance, treaty, rule or
regulation of any Governmental Authority, (ii) any applicable court decision,
judgment, order, decree, injunction or ruling, and (iii) any applicable
regulatory bulletin or guidance, or examination order or recommendation of a
Governmental Authority.

L/C Advance means, with respect to each Lender, such Lender’s participation in
any L/C Borrowing in accordance with its Pro Rata Share.

L/C Borrowing means an extension of credit resulting from a drawing under any
Letter of Credit which has not been reimbursed on the date when made or
refinanced as a Borrowing.

L/C Credit Extension means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the renewal or increase of
the amount thereof.

L/C Issuer means Citibank in its capacity as issuer of Letters of Credit
hereunder, successor to Royal Bank of Canada, as letter of credit issuer under
the Original Credit Agreement, and any successor issuer of Letters of Credit
hereunder which is a Lender or an Affiliate of a Lender acceptable to Borrowers
and Administrative Agent.

L/C Obligations means, as at any date of determination, the aggregate undrawn
face amount of all outstanding Letters of Credit plus the aggregate of all
Unreimbursed Amounts, including all L/C Borrowings.

Leases means oil and gas leases and all oil, gas and mineral leases constituting
any part of the Borrowing Base Oil and Gas Properties.

Lender means each New Lender and, as the context requires, includes the L/C
Issuer, together with each Eligible Assignee that becomes a party hereto
pursuant to an Assignment and Assumption pursuant to Section 10.07, but shall in
no circumstance include a Lender that has assigned all its rights and
obligations hereunder.

Lender Hedge Provider means with respect to any Swap Contract of a Borrower, any
Person party thereto that was a Lender or an Affiliate of a Lender at the time
such Swap Contract was entered into.

Lender Hedging Agreement means (i) a Swap Contract between a Borrower and a
Lender or Lender Hedge Provider and (ii) an Approved Hedge Counterparty Swap
Contract.

Lending Office means, as to any Lender, the office or offices of such Lender set
forth on its Administrative Details Form, or such other office or offices as a
Lender may from time to time notify the Borrowers and the Administrative Agent.

 

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Letter of Credit means any standby letter of credit issued hereunder.

Letter of Credit Application means an application and agreement for the issuance
or amendment of a letter of credit in the form from time to time in use by the
L/C Issuer.

Letter of Credit Expiration Date means the fifth Business Day prior to the
Maturity Date.

Letter of Credit Sublimit means at any time an amount equal to 10% of the
Borrowing Base then in effect.

Leverage Ratio means, for the Parent on a consolidated basis, the ratio, as
calculated based on the quarterly Compliance Certificate most recently delivered
pursuant to Section 6.02(a), of (a) Consolidated Funded Debt as of the
determination date to (b) Consolidated EBITDAX for the four (4) fiscal quarters
ending on the applicable determination date.

Lien means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference, priority or other
security interest or preferential arrangement of any kind or nature whatsoever
to secure or provide for payment of any obligation of any Person (including any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the Uniform Commercial Code or comparable Laws
of any jurisdiction, other than any financing statement filed as a notice
filing), including the interest of a purchaser of accounts receivable.

Loan Documents means this Agreement, each Revolving Note, each of the Collateral
Documents, each Borrowing Notice, each Compliance Certificate, the Guaranties,
each Letter of Credit Application, and each other agreement, document or
instrument delivered by any Loan Party or any of their respective Subsidiaries
from time to time in connection with this Agreement and the Revolving Notes;
provided, however, that in no event shall any Lender Hedging Agreement or any
agreement in respect of Banking Service Obligations constitute a Loan Document
hereunder.

Loan Party means Parent, each of the Borrowers, each Subsidiary Guarantor, and
each other entity that is an Affiliate of the Borrowers that executes one or
more Loan Documents. For the avoidance of doubt, the term “Loan Party” does not
include the Excluded Subsidiaries.

Marketable Title means good and indefeasible title, free and clear of all Liens
other than Permitted Liens.

Master Note Assignment has the meaning specified in Preliminary Statement
(2) hereof.

Material Acquisition means any acquisition of Oil and Gas Properties or series
of related acquisitions of Oil and Gas Properties that involves the payment of
consideration (including, without limitation, the issuance of equity) by any
Borrower and its Subsidiaries in excess of five percent (5%) of the then current
Borrowing Base.

Material Adverse Effect means: (a) a material adverse change in, or a material
adverse effect upon, the business, assets, liabilities (actual or contingent),
operations or financial condition of the Loan Parties taken as a whole; (b) a
material adverse effect on the ability of any Loan Party to perform its
obligations under the Loan Documents to which it is a party; (c) a material
adverse effect upon the legality, validity, binding effect or enforceability
against a Borrower or any other Loan Party of any Loan Documents; or (d) a
material adverse change in, or a material adverse effect upon, the Borrowing
Base Oil and Gas Properties, taken as a whole, excluding changes in commodity
prices.

 

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Material Agreements means the Organization Documents of each Loan Party and any
agreement or agreements entered into in replacement or substitution of any of
the foregoing.

Material Disposition means any sale, transfer or other disposition of Borrowing
Base Oil and Gas Properties or series of related sales, transfers or other
dispositions of Borrowing Base Oil and Gas Properties that yields gross proceeds
to the Borrowers or their respective Subsidiaries in excess of five percent
(5%) of the then current Borrowing Base.

Maturity Date means the earliest of (a) December 20, 2016, (b) the date of any
refinancing of the credit facility set forth in this Agreement; or (c) the
effective date of any other termination, cancellation, or acceleration of the
Aggregate Revolving Commitment under this Agreement.

Maximum Amount and Maximum Rate respectively mean, for each Lender, the maximum
non-usurious amount and the maximum non-usurious rate of interest which, under
applicable Law, such Lender is permitted to contract for, charge, take, reserve,
or receive on the Obligations.

Midstream Businesses means gathering, transportation, fractionation, processing,
marketing, and storage of natural gas, crude oil, natural gas liquids and other
liquid and gaseous hydrocarbons and businesses closely related to the foregoing.

Moody’s means Moody’s Investors Service, Inc.

Mortgaged Properties means collectively all the Mortgaged Property as defined in
the Mortgages and Mortgaged Property individually means any one of such
Mortgaged Properties.

Mortgages means the mortgages, deeds of trust, or similar instruments executed
by any of the Loan Parties in favor of Administrative Agent or Collateral Agent,
for the benefit of the Secured Parties, including the Mortgages creating a first
lien on the Borrowing Base Oil and Gas Properties and associated gathering
systems and pipelines and all supplements, assignments, amendments, and
restatements thereto (or any agreement in substitution therefor, and Mortgage
means each of such Mortgages).

Multiemployer Plan means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Borrowers or any ERISA Affiliate makes
or is obligated to make contributions, or during the preceding three calendar
years, has made or been obligated to make contributions.

New Lenders has the meaning specified in Preliminary Statement (2) hereof.

Nonrenewal Notice Date has the meaning specified in Section 2.14(b)(iii).

Obligations means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document, whether
direct or indirect (including those acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter arising and
including interest that accrues after the commencement by or against any Loan
Party of any proceeding under any Debtor Relief Laws naming such Person as the
debtor in such proceeding. In addition, all references to the “Obligations” in
the Collateral Documents and in Sections 2.11, 2.13, 10.01(e) and 10.09 and
Articles VI and VII of this Agreement shall, in addition to the foregoing, also
include all Banking Service Obligations and all present and future indebtedness,
liabilities, and obligations (and all

 

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renewals and extensions thereof or any part thereof) now or hereafter owed to
any Lender Hedge Provider arising pursuant to any Lender Hedging Agreement and
all present and future indebtedness, liabilities, and obligations (and all
renewals and extensions thereof or any part thereof) now or hereafter owed to an
Approved Hedge Counterparty arising pursuant to any Approved Hedge Counterparty
Swap Contract.

Obligor means the Borrowers and any other Person (other than the Administrative
Agent, Collateral Agent, L/C Issuer or any Lender) obligated under any Loan
Document.

Oil and Gas Properties means fee, leasehold or other interests in or under
mineral estates or Hydrocarbon leases with respect to properties situated in the
United States, including overriding royalty and royalty interests, leasehold
estate interests, net profits interests, production payment interests and
mineral fee interests, together with contracts executed in connection therewith
and all tenements, hereditaments, appurtenances and properties, real or
personal, appertaining, belonging, affixed or incidental thereto.

Organization Documents means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws; (b) with respect to any
limited liability company, the certificate of formation and operating agreement;
and (c) with respect to any partnership, joint venture, trust or other form of
business entity, the partnership, joint venture or other applicable agreement of
formation and any agreement, instrument, filing or notice with respect thereto
filed in connection with its formation with the secretary of state or other
department in the state of its formation, in each case as amended from time to
time.

Original Administrative Agent has the meaning specified in Preliminary Statement
(1) hereof.

Original Credit Agreement has the meaning specified in Preliminary Statement
(1) hereof.

Other Taxes has the meaning specified in Section 3.01(b).

Outstanding Amount on any date (i) with respect to Revolving Loans, means the
aggregate principal amount thereof after giving effect to any Borrowings and
prepayments or repayments occurring on such date, (ii) with respect to any L/C
Obligations, the amount of such L/C Obligations on such date after giving effect
to any L/C Credit Extension occurring on such date and any other changes in the
aggregate amount of the L/C Obligations as of such date, including as a result
of any reimbursements of outstanding unpaid drawings under any Letters of Credit
or any reductions in the maximum amount available for drawing under Letters of
Credit taking effect on such date, and (iii) for purposes of Section 2.11(d)
with respect to Obligations under a Lender Hedging Agreement, means the amount
then due and payable under such Lender Hedging Agreement and (iv) with respect
to Banking Service Obligations, means the amount then due and payable in
connection with the provision of Banking Services.

Parent means PostRock Energy Corporation, a Delaware corporation.

Parent Change of Control means any Person or two or more Persons acting in
concert (other than White Deer Energy or its Affiliates) acquires beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of more than 50% of the
outstanding shares of, and warrants relating to, Voting Stock of Parent;
provided, however, that a merger of Parent into another entity in which the
other entity is the survivor shall not be deemed a Parent Change of Control, if
Parent’s stockholders of record as constituted immediately prior to such
acquisition hold more than 50% of the outstanding shares of, and warrants
relating to, Voting Stock of the surviving entity; and provided further however,
that in no event will the issuance of new equity by Parent constitute a Parent
Change of Control.

 

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Parent Guaranty means the Second Amended and Restated Guaranty, dated as of the
Closing Date, executed by Parent for the benefit of the Lenders, as its terms
and conditions may be hereafter amended.

Parent Series A Preferred Stock means Parent’s 12% Series A Cumulative
Redeemable Preferred Stock issued to White Deer Energy, as its terms and
conditions may be hereafter amended.

Participant has the meaning specified in Section 10.07(d).

PBGC means the Pension Benefit Guaranty Corporation.

Pension Plan means any “employee pension benefit plan” (as such term is defined
in Section 3(2)(A) of ERISA), other than a Multiemployer Plan, that is subject
to Title IV of ERISA and is sponsored or maintained by the Borrowers or any
ERISA Affiliate or to which the Borrowers or any ERISA Affiliate contributes or
has an obligation to contribute, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any time during
the immediately preceding five plan years.

Permitted Acquisition means any Acquisition by a Loan Party resulting in
ownership of assets the substantial portion of which are located inside the
United States, or of equity interests in a Domestic Person or a non-Domestic
Person whose material business operations and assets are located in the U.S.;
provided, however, that the following requirements have been satisfied:

(i) if such Acquisition results in a Borrower’s ownership of a Subsidiary, the
Borrower shall have complied with the requirements of Sections 6.14 and 6.15 as
of the date of such Acquisition or, if later, the date specified in Sections
6.14 and 6.15;

(ii) with respect to Acquisitions involving acquisitions of an equity interest,
such Acquisition shall have been approved or consented to by the board of
directors or similar governing entity of the Person being acquired;

(iii) as of the closing of such Acquisition and after giving pro form effect to
such Acquisition, the Interest Coverage Ratio shall be greater than 3.0 to 1.0
and the Leverage Ratio shall be less than or equal to 3.5 to 1.0, in each case
as calculated in accordance with Section 7.16(e); and

(iv) as of the closing of such Acquisition no Default or Event of Default shall
exist or occur as a result of, and after giving effect to, such Acquisition.

Permitted Liens means Liens permitted under Section 7.01 as described in such
Section.

Person means any individual, trustee, corporation, general partnership, limited
partnership, limited liability company, joint stock company, trust,
unincorporated organization, bank, business association, firm, joint venture or
Governmental Authority.

Plan means any “employee benefit plan” (as such term is defined in Section 3(3)
of ERISA) established by the Borrower or any ERISA Affiliate.

PR Holdco means PostRock Holdco, LLC, a Kansas limited liability company and
Wholly-Owned Subsidiary of PESC.

 

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Prime Rate means for any day, the rate of interest in effect for such day as
publicly announced from time to time by the Administrative Agent as its “prime
rate.” Such rate is a rate set by the Administrative Agent based upon various
factors including the Administrative Agent’s costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such announced rate.

Pro Rata Share means with respect to each Lender, at any time, a fraction
(expressed as a percentage, carried out to the ninth decimal place), the
numerator of which is the amount of the Revolving Commitment of such Lender at
such time and the denominator of which is the amount of the Aggregate Revolving
Commitments at such time; provided that if the Revolving Commitment of each
Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit
Extensions have been terminated pursuant to Section 8.02, then the Pro Rata
Share of each Lender shall be determined based on the Pro Rata Share of such
Lender immediately prior to such termination and after giving effect to any
subsequent assignments made pursuant to Section 10.07. The initial Pro Rata
Share of each Lender is set out opposite the name of such Lender on Schedule
2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a
party hereto, as applicable.

Proved Developed Producing Reserves means Proved Reserves which are categorized
as both “Developed” and “Producing” in the Definitions for Oil and Gas reserves
promulgated by the Society of Petroleum Engineers (or any generally recognized
successor) as in effect at the time in question.

Proved Reserves means Proved Reserves as defined in the Definitions for Oil and
Gas reserves promulgated by the Society of Petroleum Engineers (or any generally
recognized successor) as in effect at the time in question.

PV9 means the present worth of future net income, discounted to present value at
the simple interest rate of nine percent (9%) per year.

RBC Cash Collateral Agreement means collectively (i) that certain Pledge
Agreement Deposit Accounts and Deposit Balances dated on or about the Closing
Date between PMP and RBC, (ii) that certain Deposit Account Agreement and
Signature Card dated on or about the Closing Date between PMP and RBC, and
(iii) that certain Deposit Account Agreement Terms and Conditions dated on or
about the Closing Date, pursuant to which PMP will cash collateralize the RBC
Letters of Credit.

RBC Letters of Credit means the following letters of credit in the face amount
of [$1,400,000] issued by RBC, as Original L/C Issuer, under the Original Credit
Agreement which are outstanding as of the Closing Date and which will be cash
collateralized pursuant to the RBC Cash Collateral Agreement.

Register has the meaning set forth in Section 10.07(c).

Related Parties means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person’s Affiliate.

Release means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, disposal, deposit,
dispersal, migrating, or other movement into the air, ground, or surface water,
or soil.

Repayment Notice means a notice of repayment of a Borrowing pursuant to
Section 2.04(a), which, if in writing, shall be substantially in the form of
Exhibit A-3.

 

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Reportable Event means any of the events set forth in Section 4043(c) of ERISA,
other than events for which the 30 day notice period has been waived.

Request for Credit Extension means (a) with respect to a Borrowing, conversion
or continuation of Revolving Loans, a Borrowing Notice, and (b) with respect to
an L/C Extension, a Letter of Credit Application.

Required Lenders means, as of any date of determination, Lenders having more
than 66+2/3% of the Aggregate Revolving Commitments or, if the Revolving
Commitment of each Lender to make Revolving Loans and the obligation of the L/C
Issuer to make L/C Credit Extensions have been terminated pursuant to
Section 8.02, Lenders holding in the aggregate more than 66+2/3% of the Total
Outstandings (with the aggregate amount of each Lender’s risk participation and
funded participation in L/C Obligations being deemed “held” by such Lender for
purposes of this definition); provided that the Revolving Commitment of, and the
portion of the Total Outstandings held or deemed held by, any Defaulting Lender
shall be excluded for purposes of making a determination of Required Lenders.

Reserve Report means a report acceptable to the Administrative Agent, using
economic parameters (including but not limited to Hydrocarbon prices, escalation
rates, discount rate assumption and other economic assumptions) acceptable to
the Administrative Agent, regarding the Proved Reserves attributable to the
Borrowing Base Oil and Gas Properties, and incorporating the present cost of
appropriate plugging and abandonment obligations to be incurred in the future,
taking into account any plugging and abandonment fund required to be accrued or
established by Borrowers out of cash flow from the Borrowing Base Oil and Gas
Properties covered by such report with respect to such future obligations.

Responsible Officer means the president, chief executive officer, executive vice
president, senior vice president, vice president, chief financial officer,
controller, treasurer or assistant treasurer of a Person. To the extent any
Person does not have a Responsible Officer, as defined herein, a Responsible
Officer of such Person’s parent may be substituted therefor. Any document
delivered hereunder that is signed by a Responsible Officer of a Loan Party
shall be conclusively presumed to have been authorized by all necessary
corporate, partnership, limited liability company, and/or other action on the
part of such Loan Party and such Responsible Officer shall be conclusively
presumed to have acted on behalf of such Loan Party.

Restricted Payment by a Person means any dividend or other distribution (whether
in cash, securities or other property) with respect to any equity interest in
such Person, or any payment (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
equity interest or of any option, warrant or other right to acquire any such
equity interest.

Revolving Commitment means, as to each Lender, its obligation to (a) make
Revolving Loans to Borrower pursuant to Section 2.01, and (b) purchase
participations in L/C Obligations, in an aggregate principal amount at any one
time outstanding not to exceed the lesser of (i) the amount set out opposite
such Lender’s name on Schedule 2.01, or in the Assignment and Assumption
pursuant to which such Lender becomes a party hereto, as applicable, as such
amount may be adjusted from time to time in accordance with this Agreement and
(ii) such Lender’s Pro Rata Share of the Borrowing Base then in effect.

Revolving Loan means an extension of revolving credit by a Lender to the
Borrowers pursuant to Section 2.01.

 

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Revolving Note means a revolving promissory note of the Borrowers in
substantially the form of Exhibit B, evidencing the obligation of Borrowers to
repay the Revolving Loans and all renewals and extensions of all or any part
thereof and “Revolving Notes” collectively means all of such promissory notes.

Rights means rights, remedies, powers, privileges, and benefits.

S&P means Standard & Poor’s Rating Services, a division of The McGraw-Hill
Companies, Inc.

Secured Parties means the Lenders party to this Agreement, the Lender Hedge
Providers party to a Lender Hedging Agreement and any Approved Hedge
Counterparty party to an Approved Hedge Counterparty Swap Contract.

Security Agreements means, collectively, the security agreements, or similar
instruments, executed by any of the Loan Parties in favor of the Administrative
Agent or the Collateral Agent for the benefit of the Secured Parties, creating a
first lien on all assets securing the Obligations, in form and substance
acceptable to the Administrative Agent, and all supplements, assignments,
amendments, and amendments and restatements thereto (or any agreement in
substitution therefor), and “Security Agreement” means each of such Security
Agreements.

STP means STP Newco, Inc., an Oklahoma corporation.

Subsidiary of a Person means a corporation, partnership, joint venture, limited
liability company or other business entity of which a majority of the shares of
securities or other interests having ordinary voting power for the election of
directors or other governing body (other than securities or interests having
such power only by reason of the happening of a contingency) are at the time
beneficially owned, or the management of which is otherwise controlled,
directly, or indirectly through one or more intermediaries, or both, by such
Person. Unless otherwise specified, all references herein to a “Subsidiary” or
to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrowers.

Subsidiary Guarantor means any Subsidiary of the Parent (other than the
Borrowers) or of the Borrowers that executes a Subsidiary Guaranty.

Subsidiary Guaranty means any Guaranty made by a Subsidiary of Parent or of any
of the Borrowers in favor of the Administrative Agent on behalf of the Lenders,
in form and substance acceptable to the Administrative Agent.

Successor Administrative Agent has the meaning specified in Section 10.22(a).

Swap Contract means (a) any and all interest rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index
swaps or options, bond or bond price or bond index swaps or options or forward
bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions, cross-currency
rate swap transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.

 

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Swap Termination Value means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s).

Synthetic Lease Obligation means the monetary obligation of a Person under (a) a
so-called synthetic or tax retention lease, or (b) an agreement for the use or
possession of property creating obligations that do not appear on the balance
sheet of such Person but which are depreciated for tax purposes by such Person.

Taxes has the meaning set forth in Section 3.01(a).

Three Little Pipes means the three (3) small ancillary pipelines identified as
the Augusta System, the OCF System and the Quindaro System, located in Kansas,
owned by MidContinent.

Total Outstandings means the aggregate Outstanding Amount of all Revolving Loans
and all L/C Obligations.

Type means, with respect to a Revolving Loan, its character as a Base Rate Loan
or a Eurodollar Rate Loan.

Unfunded Pension Liability means the excess of a Pension Plan’s benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan’s assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.

United States or U.S. means the United States of America, its fifty states and
the District of Columbia.

Unreimbursed Amount has the meaning set forth in Section 2.14(c)(i).

Utilization Percentage means, on any day, the ratio, stated as a percentage of
the aggregate principal amount of the Total Outstandings to the Aggregate
Revolving Commitments.

Voting Stock means the capital stock (or equivalent thereof) of any class or
kind, of a Person, the holders of which are entitled to vote for the election of
directors, managers, or other voting members of the governing body of such
Person.

White Deer Energy means any one or more of White Deer Energy L.P., a Cayman
Islands exempted limited partnership, White Deer Energy TE L.P., and White Deer
Energy FI L.P.

Wholly-Owned when used in connection with a Person means any Subsidiary of such
Person of which all of the issued and outstanding equity interests (except
shares required as directors’ qualifying shares) shall be owned by such Person
or one or more of its Wholly-Owned Subsidiaries.

 

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1.02. Other Interpretive Provisions.

(a) The meanings of defined terms are equally applicable to the singular and
plural forms of the defined terms.

(b) (i) The words “herein” and “hereunder” and words of similar import when used
in any Loan Document shall refer to such Loan Document as a whole and not to any
particular provision thereof.

(ii) Unless otherwise specified herein, Article, Section, Exhibit and Schedule
references are to this Agreement.

(iii) The term “including” is by way of example and not limitation.

(iv) The term “documents” includes any and all instruments, documents,
agreements, certificates, notices, reports, financial statements and other
writings, however evidenced.

(c) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including.”

(d) Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document.

1.03. Accounting Terms. All accounting terms not specifically or completely
defined herein shall be construed in conformity with, and all financial data
required to be submitted pursuant to this Agreement shall be prepared in
conformity with, GAAP applied on a consistent basis, as in effect from time to
time, applied in a manner consistent with that used in preparing the audited
financial statements, except as otherwise specifically prescribed herein. In the
event that any “Accounting Change” (as defined below) shall occur and such
change results in a change in the method of calculation of financial covenants,
standards or terms in this Agreement, then the Borrowers and the Administrative
Agent agree to enter into negotiations in order to amend such provisions of this
Agreement so as to equitably reflect such Accounting Change with the desired
result that the criteria for evaluating the consolidated financial condition of
Parent shall be the same after such Accounting Change as if such Accounting
Change had not been made. Until such time as such an amendment shall have been
executed and delivered by the Borrowers, the Administrative Agent and the
Required Lenders, all financial covenants, standards and terms in this Agreement
shall continue to be calculated or construed as if such Accounting Change had
not occurred. “Accounting Change” refers to any change in accounting principles
required by the promulgation of any rule, regulation, pronouncement or opinion
by the Financial Accounting Standards Board of the American Institute of
Certified Public Accountants or, if applicable, the SEC. Notwithstanding
anything to the contrary in this Agreement or any other Loan Document, for
purposes of calculations made pursuant to the terms of this Agreement or any
other Loan Document, leases classified as operating leases in accordance with
GAAP will be treated in a manner consistent with the treatment of such leases
under GAAP as in effect on December 31, 2011, notwithstanding any modifications
or interpretive changes thereto that may occur thereafter.

1.04. Rounding. Any financial ratios required to be maintained by the Borrowers
pursuant to this Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than the
number of places by which such ratio is expressed herein and rounding the result
up or down to the nearest number (with a rounding-up if there is no nearest
number).

 

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1.05. References to Agreements, Persons and Laws; Rules of Construction. Unless
otherwise expressly provided herein, (a) references to agreements (including the
Loan Documents) and other contractual instruments shall be deemed to include all
subsequent amendments, restatements, extensions, supplements and other
modifications thereto, but only to the extent that such amendments,
restatements, extensions, supplements and other modifications are not prohibited
by any Loan Document; and (b) references to any Law shall include all statutory
and regulatory provisions consolidating, amending, replacing, supplementing or
interpreting such Law; and (c) any reference herein to any Person shall be
construed to include such Person’s successors and assigns (subject to the
restrictions contained in the Loan Documents). No provision of this Agreement or
any other Loan Document shall be interpreted or construed against any Person
solely because such Person or its legal representatives drafted such provision.

ARTICLE II.

THE REVOLVING COMMITMENTS AND BORROWINGS

2.01. Revolving Loans. Subject to and in reliance upon the terms, conditions,
representations, and warranties in the Loan Documents, each Lender severally,
but not jointly, agrees to make revolving loans (each such revolving loan a
“Revolving Loan”) to Borrowers from time to time on any Business Day during the
period from the Closing Date to the Maturity Date, in an aggregate amount not to
exceed at any time outstanding the amount of such Lender’s Revolving Commitment
as set forth on Schedule 2.01; provided that, after giving effect to any
Borrowing, (a) the Total Outstandings shall not exceed the lesser of
(i) Aggregate Revolving Commitments and (ii) the Borrowing Base, and (b) the
aggregate Outstanding Amount of the Revolving Loans of any Lender, plus such
Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations shall
not exceed such Lender’s Revolving Commitment. Within the limits of each
Lender’s Revolving Commitment, and subject to the other terms and conditions
hereof, Borrowers may borrow under this Section 2.01, prepay under Section 2.04,
and reborrow under this Section 2.01. Revolving Loans may be Base Rate Loans or
Eurodollar Rate Loans, as further provided herein.

2.02. Borrowing Base.

(a) The Borrowing Base in effect as of the date of this Agreement is $90,000,000
and without the consent of all Lenders shall not exceed such amount and each
Lender may exercise its sole and absolute discretion in determining whether to
agree to any increase above $90,000,000. The Borrowing Base in existence at any
time may not be increased without the consent of one hundred percent (100%) of
the Lenders.

(b) The first redetermined Borrowing Base will be based upon a Reserve Report
dated effective as of December 31, 2012 which shall set out the Proved Reserves
attributable to the Borrowing Base Oil and Gas Properties. This Reserve Report
shall be prepared by Cawley & Gillespie & Associates, Inc. or other independent
reservoir engineers reasonably acceptable to Administrative Agent and shall
include a reconciliation from the December 31, 2011 Reserve Report. This Reserve
Report shall be delivered to the Administrative Agent on or before March 31,
2013. The Administrative Agent shall make a determination of the first
redetermined Borrowing Base and submit the first redetermined

 

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Borrowing Base to the Lenders for approval, with such first redetermined
Borrowing Base to become effective on May 1, 2013, and, in the case of an
increase in the Borrowing Base, upon approval of all Lenders and the L/C Issuer,
and in the case of maintaining or decreasing the Borrowing Base, upon approval
of the Administrative Agent and the Required Lenders and in any case with the
subsequent written notification from the Administrative Agent to the Borrowers.
Administrative Agent shall announce the first redetermined Borrowing Base on or
about May 1, 2013 (but no later than May 15, 2013). Such redetermined Borrowing
Base, subject to the other provisions of this Agreement, shall be the Borrowing
Base until the effective date of the next redetermination of the Borrowing Base
as set out in Section 2.02(c).

(c) After the first redetermination of the Borrowing Base to become effective
May 1, 2013, the Borrowing Base shall thereafter be redetermined from time to
time pursuant to the provisions of this Section 2.02(c) relative to the Proved
Reserves attributable to the Borrowing Base Oil and Gas Properties. On or before
each March 31 and September 30 thereafter until the Maturity Date, commencing
September 30, 2013, the Borrowers shall furnish to the Administrative Agent a
Reserve Report, which shall set out, as of each preceding December 31 or
June 30, as applicable, the Proved Reserves attributable to the Borrowing Base
Oil and Gas Properties. Each June 30 Reserve Report may be prepared by one of
the Borrowers’ own internal petroleum engineers, shall be certified by the
President or other Responsible Officer of such Borrower, and shall be internally
generated and prepared on a roll forward basis from the prior Reserve Report.
Each Reserve Report relating to the Proved Reserves attributable to the
Borrowing Base Oil and Gas Properties as of December 31 shall be prepared by
Cawley Gillespie & Associates, Inc. or other independent reservoir engineers
acceptable to Administrative Agent. Each Reserve Report as of June 30 shall
include a reconciliation from the prior December 31 Reserve Report. Upon receipt
of each such Reserve Report commencing with the Reserve Report as of
December 31, 2012 delivered on or before March 31, 2013, the Administrative
Agent shall make a determination of the Borrowing Base which shall become
effective on or about May 1 or November 1 of each year, and, in the case of an
increase in the Borrowing Base, upon approval of all Lenders and the L/C Issuer,
and in the case of maintaining or decreasing the Borrowing Base, upon approval
of the Administrative Agent and the Required Lenders and in any case with the
subsequent written notification from the Administrative Agent to the Borrowers.
Administrative Agent shall announce the redetermined Borrowing Base on or about
November 1 (but no later than November 15) with respect to the June 30 Reserve
Report (delivered in September) and on or about May 1 of each year (but no later
than May 15 of each year) with respect to the December 31 Reserve Report
(delivered in March). Such redetermined Borrowing Base, subject to the other
provisions of this Agreement, shall be the Borrowing Base until the effective
date of the next redetermination of the Borrowing Base as set out in this
Section 2.02.

(d) During each successive period between scheduled redeterminations of the
Borrowing Base, the Administrative Agent shall have the right to initiate, and
shall initiate at the request of Required Lenders, one (1) unscheduled
redetermination of the Borrowing Base by requesting in writing that the
Borrowers provide an unscheduled internally generated Reserve Report regarding
the Proved Reserves attributable to the Borrowing Base Oil and Gas Properties
with an effective date not more than sixty (60) days prior to the Borrowers’
delivery of such Reserve Report to the Administrative Agent, and such Reserve
Report shall be delivered to the Administrative Agent within thirty (30) days
after the Borrowers’ receipt of such written request; provided, however, that
there shall not be any more than two (2) unscheduled redeterminations of the
Borrowing Base under this Section 2.02(d) during any twelve (12) month period.

(e) In addition to the redetermination provided for in Section 2.02(d), upon
(i) a Material Disposition or any material (in the judgment of the
Administrative Agent or the Required Lenders) defect in title, or failure of
title to, five percent (5%) or more of the PV9 of the Borrowing Base Oil and Gas
Properties, or (ii) any Swap Contracts being amended, modified, terminated or
unwound and after taking

 

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into account the effect of any such amendment, modification, termination or
unwinding and the effect of any new Swap Contracts entered into, the Borrowing
Base would be reduced by five percent (5%) or more of the PV9 of the Borrowing
Base Oil and Gas Properties, the Administrative Agent may, and upon the request
of the Required Lenders shall, redetermine the Borrowing Base by requesting in
writing that the Borrowers provide an unscheduled internally generated Reserve
Report regarding the Proved Reserves attributable to the Borrowing Base Oil and
Gas Properties with an effective date not more than sixty (60) days prior to the
Borrowers’ delivery of such Reserve Report to the Administrative Agent, and such
Reserve Report shall be delivered to the Administrative Agent within thirty
(30) days after the Borrowers’ receipt of such written request.

(f) Reserved.

(g) During each period between scheduled redeterminations of the Borrowing Base,
the Borrowers shall have the right to request, by written notice to the
Administrative Agent, one (1) unscheduled redetermination of the Borrowing Base,
subject to contemporaneously providing to the Administrative Agent a Reserve
Report with an effective date not more than sixty days prior to the date of such
notice; provided, however, that there shall not be any more than two
(2) unscheduled redeterminations of the Borrowing Base under this
Section 2.02(g) during any twelve (12) month period.

(h) In addition to the redetermination provided for in Section 2.02(e), upon a
Material Acquisition, the Borrowers may, from time to time upon written notice
to the Administrative Agent, propose to add Oil and Gas Properties to the
Borrowing Base Oil and Gas Properties and other Collateral to the Borrowing
Base. Any such proposal to add Oil and Gas Properties to the Borrowing Base Oil
and Gas Properties shall be accompanied by a Reserve Report applicable to such
properties that conforms to the requirements of Section 2.02, and evidence
sufficient to establish that the Borrowers or the other applicable Loan Party
has Marketable Title to such Oil and Gas Properties or other Collateral, and any
such addition shall become effective at such time as: (a) the Administrative
Agent, with the approval of all the Lenders, has made a determination of the
amount by which the Borrowing Base would be increased as the result of such
addition and (b) the conditions set out in Article IV hereof, to the extent they
are applicable to such additional Oil and Gas Properties or other Collateral of
the Borrowers, have been satisfied. In determining the increase in the Borrowing
Base pursuant to this Section, the Administrative Agent and the Lenders shall
apply the parameters and other credit factors set out in this Section 2.02.

(i) If in connection with a redetermination of the Borrowing Base maintaining or
decreasing the Borrowing Base, the Required Lenders cannot otherwise agree on
the new Borrowing Base, then the Borrowing Base shall be the highest amount on
which Required Lenders and Administrative Agent can agree as the Borrowing Base.
However, the amount of the Borrowing Base shall never be increased at any time
without the unanimous consent of all the Lenders, notwithstanding anything else
herein to the contrary.

(j) The Borrowing Base shall represent the Required Lenders’ approval (except
where unanimous consent is required) of the Administrative Agent’s
determination, in accordance with their customary oil and gas lending practices,
of the maximum Credit Extensions that may be supported by the Borrowing Base Oil
and Gas Properties and the Borrowers acknowledge, for purposes of this
Agreement, such determination by the Administrative Agent as being the maximum
Credit Extensions that may be supported by the Borrowing Base Oil and Gas
Properties. In making any redetermination of the Borrowing Base, the
Administrative Agent and the Lenders shall apply the parameters and other credit
factors consistently applied then generally being utilized by the Administrative
Agent and each such Lender, respectively, for Borrowing Base redeterminations
for their petroleum industry customers, including economic pricing parameters,
methodology, assumptions and customary procedures and

 

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standards. The Borrowers, Lenders and the Administrative Agent acknowledge that
(i) due to the uncertainties of the oil and gas extraction process, the
Borrowing Base Oil and Gas Properties are not subject to evaluation with a high
degree of accuracy and are subject to potential rapid deterioration in value,
(ii) for this reason and the difficulties and expenses involved in liquidating
and collecting against the Borrowing Base Oil and Gas Properties, the
Administrative Agent’s determination of the maximum Credit Extensions with
respect to the Borrowing Base Oil and Gas Properties contains an equity cushion,
which equity cushion is acknowledged by the Borrowers as essential for the
adequate protection of the Lenders, and (iii) decisions regarding the Borrowing
Base shall be made by the Lenders in their sole discretion.

2.03. Borrowings, Conversions and Continuations of Loans.

(a) Each Borrowing, each conversion of Revolving Loans from one Type to the
other, and each continuation of Revolving Loans as the same Type shall be made
upon Borrowers’ irrevocable notice to the Administrative Agent, which may be
given by telephone. Each such notice must be received by the Administrative
Agent not later than noon, Dallas time, (i) three Business Days prior to the
requested date of any Borrowing of, conversion to or continuation of Eurodollar
Rate Loans, and (ii) one Business Day prior to the conversion of Eurodollar Rate
Loans to Base Rate Loans, or the requested date of any Borrowing of Base Rate
Loans. Each such telephonic notice must be confirmed promptly by delivery to the
Administrative Agent of a written Borrowing Notice, appropriately completed and
signed by a Responsible Officer of each Borrower. Each Borrowing of, conversion
to, or continuation of, Eurodollar Rate Loans shall be in a principal amount of
$1,000,000 or a whole multiple of $1,000,000 in excess thereof. Each Borrowing
of or conversion to Base Rate Loans shall be in a principal amount of $500,000
or a whole multiple of $500,000 in excess thereof; provided that any Base Rate
Loan may be in an aggregate amount that is equal to the entire unused balance of
the Aggregate Revolving Commitment or that is required to finance the
Unreimbursed Amount as provided in Section 2.14(c)(i). Each Borrowing Notice
(whether telephonic or written) shall specify (i) whether a Borrower is
requesting a Borrowing, a conversion of Revolving Loans from one Type to the
other, or a continuation of Revolving Loans as the same Type, (ii) the requested
date of the Borrowing, conversion or continuation, as the case may be (which
shall be a Business Day), (iii) the principal amount of Revolving Loans to be
borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to
which existing Revolving Loans are to be converted, and (v) if applicable, the
duration of the Interest Period with respect thereto. If Borrowers fail to
specify a Type of Revolving Loan in a Borrowing Notice or if Borrowers fail to
give a timely notice requesting a conversion or continuation, then the
applicable Revolving Loans shall be made or continued as, or converted to, Base
Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective
as of the last day of the Interest Period then in effect with respect to the
applicable Eurodollar Rate Loans. If Borrowers request a Borrowing of,
conversion to, or continuation of, Eurodollar Rate Loans in any such Borrowing
Notice, but fail to specify an Interest Period, they will be deemed to have
specified an Interest Period of one month.

(b) Following receipt of a Borrowing Notice, the Administrative Agent shall
promptly notify each Lender of its Pro Rata Share of the applicable Borrowing,
and if no timely notice of a conversion or continuation is provided by the
Borrowers, the Administrative Agent shall notify each Lender of the details of
any automatic conversion to Base Rate Loans described in the preceding
subsection. In the case of a Borrowing, each Lender shall make the amount of its
Revolving Loan available to the Administrative Agent in immediately available
funds at the Administrative Agent’s Office not later than noon, Dallas time, on
the Business Day specified in the applicable Borrowing Notice. Upon satisfaction
of the applicable conditions set forth in Sections 4.01 and 4.02, as applicable,
the Administrative Agent shall make all funds so received available to a
Borrower in like funds as received by the Administrative Agent

 

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either by (i) crediting the account of such Borrower on the books of the
Administrative Agent with the amount of such funds or (ii) wire transfer of such
funds, in each case in accordance with instructions provided to the
Administrative Agent by such Borrower; provided, however, that if, on the date
of the Borrowing there are L/C Borrowings outstanding, then the proceeds of such
Borrowing shall be applied, first, to the payment in full of any such L/C
Borrowings, and second, to such Borrower as provided above.

(c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued
or converted only on the last day of the Interest Period for such Eurodollar
Rate Loan. During the existence of an Event of Default, no Revolving Loans may
be requested as, converted to or continued as Eurodollar Rate Loans without the
consent of the Required Lenders, and the Required Lenders may demand that any or
all of the then outstanding Eurodollar Rate Loans be converted immediately to
Base Rate Loans. The Administrative Agent shall promptly notify the Borrowers
and the Lenders of the interest rate applicable to any Eurodollar Rate Loan upon
determination of such interest rate. The determination of the Eurodollar Rate by
the Administrative Agent shall be conclusive in the absence of manifest error.

(d) After giving effect to all Borrowings, all conversions of Revolving Loans
from one Type to the other, and all continuations of Revolving Loans as the same
Type, there shall not be more than six (6) Interest Periods in effect at any
given time with respect to Revolving Loans.

2.04. Prepayments.

(a) Optional Prepayments. The Borrowers may, upon delivery of a Repayment Notice
to the Administrative Agent, at any time or from time to time voluntarily prepay
in whole or in part Revolving Loans outstanding under this Agreement without
premium or penalty; provided that (i) such notice must be received by the
Administrative Agent not later than noon, Dallas time, (A) three Business Days
prior to any date of prepayment of Eurodollar Rate Loans, and (B) the date of
prepayment of Base Rate Loans; (ii) any prepayment of Eurodollar Rate Loans
shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000
in excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a
principal amount of $1,000,000 or a whole multiple of $1,000,000 in excess
thereof. Each such notice shall specify the date and amount of such prepayment
and the Type(s) of Revolving Loans to be prepaid. The Administrative Agent will
promptly notify each Lender of its receipt of each such notice, and of such
Lender’s Pro Rata Share of such prepayment. If such notice is given by
Borrowers, Borrowers shall make such prepayment and the payment amount specified
in such notice shall be due and payable on the date specified therein. Any
prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued
interest thereon, together with any additional amounts required pursuant to
Section 3.05. Each such prepayment shall be applied to the Revolving Loans of
the Lenders in accordance with their respective Pro Rata Shares.

Unless a Default, Event of Default or Borrowing Base Deficiency has occurred and
is continuing or would arise as a result thereof, any payment or prepayment of
the Revolving Loans may be reborrowed by Borrowers, subject to the terms and
conditions hereof.

(b) Mandatory Prepayments. If for any reason (including a redetermination of the
Borrowing Base) a Borrowing Base Deficiency exists (other than as a result of a
Credit Extension having been mistakenly or impermissibly made which causes the
Total Outstandings to exceed the lesser of (A) Aggregate Revolving Commitments
and (B) the Borrowing Base, in which case any Borrowing Base Deficiency is
required to be cured by prepayment on the Business Day after the Borrowers are
advised of the Borrowing Base Deficiency), the Borrowers shall, within thirty
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Borrowing Base Deficiency by the Administrative Agent, indicate in writing the
Borrowers’ election to do one or more of the following to eliminate such
Borrowing Base Deficiency:

(i) prepay Revolving Loans and/or Cash Collateralize the L/C Obligations in an
aggregate amount equal to such Borrowing Base Deficiency on or before the
thirtieth (30th) day after being notified of the Borrowing Base Deficiency;

(ii) prepay Revolving Loans and/or Cash Collateralize the L/C Obligations in an
aggregate amount equal to such Borrowing Base Deficiency in six (6) equal
monthly installments beginning on or before the thirtieth (30th) day after being
notified of the Borrowing Base Deficiency; and

(iii) within sixty (60) days after being notified of such Borrowing Base
Deficiency, add to the Borrowing Base Oil and Gas Properties additional Oil and
Gas Properties of the Borrowers or another Loan Party sufficient in value, as
determined pursuant to Section 2.02, or add other Collateral in value and
quantity satisfactory to the Lenders in their sole discretion to increase the
Borrowing Base to equal or exceed the Total Outstandings.

(c) Mandatory Prepayments of Borrowing Base Oil and Gas Properties. An amount
equal to Borrowing Base Value of any Oil and Gas Properties sold in a Material
Disposition shall be prepaid on the Revolving Loans (or be used to Cash
Collateralize Letters of Credit, if no Revolving Loans are outstanding) by the
selling Loan Party. On any date on which a Loan Party makes a Material
Disposition of any of the Borrowing Base Oil and Gas Properties, the Borrowing
Base shall be automatically reduced by the Borrowing Base Value of the
properties so Disposed. Following any such prepayment and reduction of the
Borrowing Base, any Borrower shall have the right to request a Borrowing Base
redetermination (which right shall be in addition to any Borrower’s right to
request a redetermination of the Borrowing Base pursuant to Section 2.02(g)).
(For clarification, a prepayment of the Revolving Loans may be reborrowed, if,
after a Borrowing Base redetermination or automatic reduction (if required
hereunder), there is sufficient Borrowing Base to permit such reborrowing).

(d) Certain Other Mandatory Prepayments.

(i) 100% of the net cash proceeds received by any Loan Party from all (A) asset
sales not otherwise covered by Section 2.04(c), excluding (1) sales of assets or
equity of the Excluded Subsidiaries and (2) proceeds from any sale of assets
that does not exceed an amount equal to five percent (5%) of the Borrowing Base
then in effect, (B) insurance proceeds and (C) condemnation recoveries;

(ii) 100% of the net cash proceeds of the issuance or incurrence of any
Indebtedness by any Loan Party not otherwise permitted;

(iii) 100% of the net cash proceeds from any issuance of equity securities of,
or from any capital contribution (from any Person making a capital contribution
other than a Loan Party) to, any Loan Party; provided however, that if the
proceeds of such equity issuance or capital contribution, as applicable, are
used to make a Permitted Acquisition, no mandatory prepayment shall be required
to be made and further provided, that if (A) no Default or Event of Default has
occurred and is then continuing, (B) after giving pro forma effect to such
equity issuance or capital contribution, as applicable, the Leverage Ratio is
not greater than 3.00 to 1.00 both immediately before and after giving effect to
such event (computed after giving pro forma effect to such issuance or
contribution) and (c) both immediately before and after giving effect to such
proposed equity issuance or capital contribution, as applicable, the Total
Outstandings are not more than eighty–five (85%) of the Borrowing Base as of
such date, then no mandatory prepayments shall be required to be made.

 

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(e) Change of Control. Upon a Change of Control, the Borrowers shall repay to
the Lenders the aggregate principal amount of Revolving Loans outstanding,
together with all accrued and unpaid interest and fees and Cash Collateralize
the L/C Obligations contemporaneously with such Change of Control.

(f) Prepayments: Interest/Consequential Loss. All prepayments under this
Section 2.04 shall be made together with accrued interest to the date of such
prepayment on the principal amount prepaid and any amounts due under
Section 3.05.

2.05. Reduction or Termination of Revolving Commitments. The Borrowers may, upon
notice to the Administrative Agent, terminate the Aggregate Revolving Commitment
or permanently reduce the Aggregate Revolving Commitment to an amount not less
than the sum of the Outstanding Amount of the then existing (i) unpaid principal
balance of the Revolving Loans and (ii) L/C Obligations; provided that (i) any
such notice shall be received by the Administrative Agent not later than noon,
three Business Days prior to (or if all the outstanding Borrowings are Base Rate
Loans, no later than noon on) the date of termination or reduction, and (ii) any
such partial reduction shall be in an aggregate amount of $1,000,000 or any
whole multiple of $1,000,000 in excess thereof. The Administrative Agent shall
promptly notify the Lenders of any such notice of reduction or termination. Once
reduced in accordance with this Section, the Aggregate Revolving Commitment may
not be increased. Any reduction of the Aggregate Revolving Commitment shall be
applied to the Revolving Commitment of each Lender according to its Pro Rata
Share. Except in connection with a termination or reduction of the entire
Aggregate Revolving Commitment, all commitment fees on the portion of the
Aggregate Revolving Commitment so terminated which have accrued to the effective
date of any termination of the Aggregate Revolving Commitment shall at
Administrative Agent’s option either be paid on the effective date of such
termination or on the date when such commitment fee would otherwise be due.

2.06. Repayment of Revolving Loans. The Borrowers shall repay to the Lenders on
the Maturity Date the aggregate principal amount of Revolving Loans outstanding
on such date, together with all accrued and unpaid interest and fees.

2.07. Interest. (a) Subject to the provisions of subsection (b) below, (i) each
Eurodollar Rate Loan shall bear interest on the outstanding principal amount
thereof for each Interest Period at a rate per annum equal to the Eurodollar
Rate for such Interest Period plus the Applicable Rate and (ii) each Base Rate
Loan shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the Base Rate plus the
Applicable Rate.

(b) If any amount payable by the Borrowers under any Loan Document is not paid
when due (after the expiration of any applicable grace periods), whether at
stated maturity by acceleration or otherwise, such amount shall thereafter bear
interest at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Law, including, for
example any Borrowing Base Deficiency existing beyond the applicable time
periods permissible under Section 2.04. Furthermore, while any Event of Default
exists or after acceleration (i) the Borrowers shall pay interest on the
principal amount of all outstanding Obligations at a fluctuating interest rate
per annum at all times equal to the Default Rate to the fullest extent permitted
by applicable Law, and (ii) accrued and unpaid interest on past due amounts
(including interest on past due interest, to the extent allowed by Law) shall be
due and payable upon demand.

 

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(c) Interest on each Revolving Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance with
the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.

(d) If the designated rate applicable to any Borrowing exceeds the Maximum Rate,
the rate of interest on such Borrowing shall be limited to the Maximum Rate, but
any subsequent reductions in such designated rate shall not reduce the rate of
interest thereon below the Maximum Rate until the total amount of interest
accrued thereon equals the amount of interest which would have accrued thereon
if such designated rate had at all times been in effect. In the event that at
maturity (stated or by acceleration), or at final payment of the Outstanding
Amount of any Revolving Loans or L/C Obligations, the total amount of interest
paid or accrued is less than the amount of interest which would have accrued if
such designated rates had at all times been in effect, then, at such time and to
the extent permitted by Law, the Borrowers shall pay an amount equal to the
difference between (a) the lesser of the amount of interest which would have
accrued if such designated rates had at all times been in effect and the amount
of interest which would have accrued if the Maximum Rate had at all times been
in effect, and (b) the amount of interest actually paid or accrued on such
Outstanding Amount.

2.08. Fees (a). Commitment Fee. The Borrowers shall pay to the Administrative
Agent for the account of each Lender (other than a Defaulting Lender) in
accordance with its Pro Rata Share, a commitment fee equal to the “Commitment
Fee” specified in the definition of the term Applicable Rate times the actual
daily amount by which the lesser of (i) the Aggregate Revolving Commitment
(subject to reduction pursuant to Sections 2.04 and 2.05) and (ii) the Borrowing
Base exceeds the sum of (1) the Outstanding Amount of Revolving Loans plus
(2) the Outstanding Amount of L/C Obligations. The commitment fee shall accrue
at all times from the Closing Date until the Maturity Date (except as to any
Defaulting Lender, during any period in which a Lender is a Defaulting Lender)
and shall be due and payable quarterly in arrears on the last Business Day of
each March, June, September and December, commencing with the first such date to
occur after the Closing Date, and on the Maturity Date. The commitment fee shall
accrue at all times (except as respects a Defaulting Lender), including at any
time during which one or more of the conditions in Article IV is not met.

2.09. Computation of Interest and Fees. Computation of interest on Base Rate
Loans shall be calculated on the basis of a year of 365 or 366 days, as the case
may be, and the actual number of days elapsed. Computation of all other types of
interest (including interest on Eurodollar Rate Loans) and all fees (including
fees specified under the heading “Letter of Credit” in the definition of
Applicable Rate) shall be calculated on the basis of a year of 360 days and the
actual number of days elapsed, which results in a higher yield to the payee
thereof than a method based on a year of 365 or 366 days. Interest shall accrue
on each Revolving Loan for the day on which the Revolving Loan is made, and
shall not accrue on a Revolving Loan, or any portion thereof, for the day on
which the Revolving Loan or such portion is paid; provided that any Revolving
Loan that is repaid on the same day on which it is made shall bear interest for
one day.

 

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2.10. Evidence of Debt. (a) The Credit Extensions made by each Lender shall be
evidenced by one or more accounts or records maintained by such Lender and by
the Administrative Agent in the ordinary course of business. The accounts or
records maintained by the Administrative Agent and each Lender shall be
conclusive absent manifest error of the amount of the Revolving Loans made by
the Lenders to the Borrowers and the interest and payments thereon. Any failure
so to record or any error in doing so shall not, however, limit or otherwise
affect the obligation of the Borrowers hereunder to pay any amount owing with
respect to the Revolving Loans or the L/C Obligations. In the event of any
conflict between the accounts and records maintained by any Lender and the
accounts and records of the Administrative Agent in respect of such matters, the
accounts and records of such Lender shall control absent manifest error. Upon
the request of any Lender made through the Administrative Agent, such Lender’s
Revolving Loans may be evidenced by one or more Revolving Notes. Each Lender may
attach schedules to its Revolving Note(s) and endorse thereon the date, Type (if
applicable), amount and maturity of the applicable Revolving Loans and payments
with respect thereto.

(b) In addition to the accounts and records referred to in subsection (a), each
Lender and the Administrative Agent shall maintain in accordance with its usual
practice accounts or records evidencing the purchases and sales by such Lender
of participations in Letters of Credit. In the event of any conflict between the
accounts and records maintained by the Administrative Agent and the accounts and
records of any Lender in respect of such matters, the accounts and records of
the Administrative Agent shall control.

2.11. Payments Generally.

(a) All payments to be made by the Borrowers shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly provided herein, all payments by the Borrowers hereunder
shall be made to the Administrative Agent, for the account of the respective
Lenders to which such payment is owed, at the Administrative Agent’s Office in
Dollars and in immediately available funds not later than noon, Dallas time, on
the date specified herein. The Administrative Agent will promptly distribute to
each Lender its Pro Rata Share (or other applicable share as provided herein) of
such payment in like funds as received by wire transfer to such Lender’s Lending
Office. All payments received by the Administrative Agent after noon, Dallas
time, shall be deemed received on the next succeeding Business Day and any
applicable interest or fee shall continue to accrue.

(b) Subject to the definition of “Interest Period,” if any payment to be made by
the Borrowers shall come due on a day other than a Business Day, payment shall
be made on the next following Business Day, and such extension of time shall be
reflected in computing interest or fees, as the case may be.

(c) If no Event of Default exists and if no order of application is otherwise
specified in the Loan Documents, payments and prepayments of the Obligations
shall be applied first to fees (which shall not be deemed to include Banking
Service Obligations), second to accrued interest then due and payable on the
Outstanding Amount of Revolving Loans and L/C Obligations, and then to the
remaining Obligations in the order and manner as Borrowers may direct.

(d) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully the Obligations, or if an Event of Default
exists, any payment or prepayment shall be applied in the following order:
(i) to the payment of enforcement expenses incurred by the Administrative Agent,
including Attorney Costs; (ii) to the ratable payment of all fees (which shall
not be deemed to include Banking Service Obligations), expenses and indemnities
(including amounts payable under Article III)

 

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for which the Administrative Agent, Lenders or Approved Hedge Counterparty have
not been paid or reimbursed in accordance with the Loan Documents or Approved
Hedge Counterparty Swap Contract (as used in this Section 2.11(d)(ii), a
“ratable payment” for any Lender, the Administrative Agent or Approved Hedge
Counterparty shall be, on any date of determination, that proportion which the
portion of the total fees, expenses and indemnities owed to such Lender, the
Administrative Agent or Approved Hedge Counterparty bears to the total aggregate
fees, expenses and indemnities owed to all Lenders, the Administrative Agent and
Approved Hedge Counterparty on such date of determination); (iii) to the ratable
payment of accrued and unpaid Letter of Credit fees, the Outstanding Amount of
L/C Borrowings, accrued and unpaid interest on, and principal of, the
Outstanding Amount of Revolving Loans and the Outstanding Amount of Obligations
under Lender Hedging Agreements; (it being understood that for purposes of this
clause (iii) the Outstanding Amount of Obligations under Lender Hedging
Agreements refers to payments owing in connection with an Early Termination Date
as defined in the 2002 Master Agreement form promulgated by the ISDA (or
equivalent type payment obligation if some other form of Swap Contract is in
effect)(as used in this Section 2.11(d)(iii), “ratable payment” means for any
Lender (or Lender Hedge Provider, in the case of Lender Hedging Agreements or
any Approved Hedge Counterparty, in the case of an Approved Hedge Counterparty
Swap Contract), on any date of determination, that proportion which the accrued
and unpaid Letter of Credit fees, the Outstanding Amount of L/C Borrowings,
accrued and unpaid interest on, and principal of, the Outstanding Amount of
Revolving Loans and the Outstanding Amount of Obligations under Lender Hedging
Agreements owed to such Lender (or Lender Hedge Provider, in the case of Lender
Hedging Agreements or any Approved Hedge Counterparty, in the case of an
Approved Hedge Counterparty Swap Contract) bears to the accrued and unpaid
Letter of Credit fees, the Outstanding Amount of L/C Borrowings, accrued and
unpaid interest on, and principal of, the Outstanding Amount of Revolving Loans
and the Outstanding Amount of Obligations under Lender Hedging Agreements owed
to all Lenders and Lender Hedge Providers, in the case of Lender Hedging
Agreements or any Approved Hedge Counterparty, in the case of an Approved Hedge
Counterparty Swap Contract)); (iv) to Cash Collateralize the Letters of Credit;
and (v) to the payment of the remaining Obligations, if any, in the order and
manner the Required Lenders deem appropriate. Subject to Section 2.14(g),
amounts used to Cash Collateralize the aggregate undrawn amount of Letters of
Credit pursuant to clause (iv) above shall be applied to satisfy drawings under
such Letters of Credit as they occur. If any amount remains on deposit as Cash
Collateral after all Letters of Credit have either been fully drawn or expired,
such remaining amount shall be applied to the other Obligations, if any, in the
order set forth above.

(e) Unless any Borrower or any Lender has notified the Administrative Agent
prior to the date any payment is required to be made by it to the Administrative
Agent hereunder, that such Borrower or such Lender, as the case may be, will not
make such payment, the Administrative Agent may assume that such Borrower or
such Lender, as the case may be, has timely made such payment and may (but shall
not be so required to), in reliance thereon, make available a corresponding
amount to the Person entitled thereto. If and to the extent that such payment
was not in fact made to the Administrative Agent in immediately available funds,
then:

(i) if a Borrower failed to make such payment, each Lender shall forthwith on
demand repay to the Administrative Agent the portion of such assumed payment
that was made available to such Lender in immediately available funds, together
with interest thereon in respect of each day from and including the date such
amount was made available by the Administrative Agent to such Lender to the date
such amount is repaid to the Administrative Agent in immediately available
funds, at the Federal Funds Rate from time to time in effect; and

 

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(ii) if any Lender failed to make such payment, such Lender shall forthwith on
demand pay to the Administrative Agent the amount thereof in immediately
available funds, together with interest thereon for the period from the date
such amount was made available by the Administrative Agent to the Borrowers to
the date such amount is recovered by the Administrative Agent (the “Compensation
Period”) at a rate per annum equal to the Federal Funds Rate from time to time
in effect. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender’s Revolving Loan, included in the
applicable Borrowing. If such Lender does not pay such amount forthwith upon the
Administrative Agent’s demand therefor, the Administrative Agent may make a
demand therefor upon the Borrowers, and the Borrowers shall pay such amount to
the Administrative Agent, together with interest thereon for the Compensation
Period at a rate per annum equal to the rate of interest applicable to the
applicable Borrowing. Nothing herein shall be deemed to relieve any Lender from
its obligation to fulfill its Revolving Commitment or to prejudice any rights
which the Administrative Agent or the Borrowers may have against any Lender as a
result of any default by such Lender hereunder.

A notice of the Administrative Agent to any Lender with respect to any amount
owing under this subsection (e) shall be conclusive, absent manifest error.

(f) If any Lender makes available to the Administrative Agent funds for any
Revolving Loan to be made by such Lender as provided in the foregoing provisions
of this Article II, and the conditions to the applicable Borrowing set forth in
Article IV are not satisfied or waived in accordance with the terms hereof, the
Administrative Agent shall return such funds (in like funds as received from
such Lender) to such Lender, without interest.

(g) The obligations of the Lenders hereunder to make Revolving Loans are several
and not joint. The failure of any Lender to make any Revolving Loan on any date
required hereunder shall not relieve any other Lender of its corresponding
obligation to do so on such date, and no Lender shall be responsible for the
failure of any other Lender to so make its Revolving Loan or purchase its
participation.

(h) Nothing herein shall be deemed to obligate any Lender to obtain the funds
for any Revolving Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain the funds for
any Revolving Loan in any particular place or manner.

2.12. Sharing of Payments. If, other than as expressly provided elsewhere
herein, any Lender shall obtain on account of the Revolving Loans made by it, or
the participations in the L/C Obligations, any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) in
excess of its ratable share (or other share contemplated hereunder) thereof,
such Lender shall immediately (a) notify the Administrative Agent, of such fact,
and (b) purchase from the other Lenders such participations in the Revolving
Loans made by them, and/or such subparticipations in the participations in L/C
Obligations held by them, as shall be necessary to cause such purchasing Lender
to share the excess payment in respect of such Revolving Loan or such
participations, as the case may be, pro rata with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from the purchasing Lender, such purchase shall to that extent be
rescinded and each other Lender shall repay to the purchasing Lender the
purchase price paid therefor, together with an amount equal to such paying
Lender’s ratable share (according to the proportion of (i) the amount of such
paying Lender’s required repayment to (ii) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrowers
agree that any Lender so purchasing a participation from another Lender may, to
the fullest extent permitted by law, exercise all its rights of payment
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Section 10.09) with respect to such participation as fully as if such Lender
were the direct creditor of the Borrowers in the amount of such participation.
The Administrative Agent will keep records (which shall be conclusive and
binding in the absence of manifest error) of participations purchased under this
Section and will in each case notify the Lenders following any such purchases or
repayments. Each Lender that purchases a participation pursuant to this Section
shall from and after such purchase have the right to give all notices, requests,
demands, directions and other communications under this Agreement with respect
to the portion of the Obligations purchased to the same extent as though the
purchasing Lender were the original owner of the Obligations purchased.

2.13. Pari Passu Lien Securing Lender Hedging Obligations and Banking Service
Obligations. All Obligations arising under the Loan Documents, including,
without limitation, Obligations under this Agreement, Banking Service
Obligations and Obligations under any Lender Hedging Agreement (but not
Indebtedness of any Borrower or Borrower Affiliate owing to any non-Lender,
non-Lender Affiliate or any Person other than any Approved Hedge Counterparty
which enters into a Swap Contract with any Borrower or any Borrower Affiliate),
shall be secured pari passu by the Collateral. No Lender Hedge Provider or any
Approved Hedge Counterparty shall have any voting rights under any Loan Document
as a result of the existence of obligations owed to it in connection with any
Banking Service Obligations or under any such Lender Hedging Agreement.

2.14. Letters of Credit. (a) The Letter of Credit Commitment.

(i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer
agrees, in reliance upon the agreements of the other Lenders set forth in this
Section 2.14, (1) from time to time on any Business Day during the period from
the Closing Date until the Letter of Credit Expiration Date, to issue Letters of
Credit for the account of any Borrower (and such Letters of Credit may be issued
for the benefit of any Borrower, or any of its Subsidiaries), and to amend or
renew Letters of Credit previously issued by it, in accordance with subsection
(b) below, and (2) to honor drafts under the Letters of Credit; and (B) the
Lenders severally agree to participate in Letters of Credit issued for the
account of any Borrower; provided that the L/C Issuer shall not be obligated to
make any L/C Credit Extension with respect to any Letter of Credit, and no
Lender shall be obligated to participate in any Letter of Credit, if as of the
date of such L/C Credit Extension, (x) the Total Outstandings would exceed the
Aggregate Revolving Commitment, (y) the aggregate Outstanding Amount of the
Revolving Loans of any Lender, plus such Lender’s Pro Rata Share of the
Outstanding Amount of all L/C Obligations would exceed such Lender’s Revolving
Commitment, or (z) the Outstanding Amount of the L/C Obligations would exceed
the Letter of Credit Sublimit. Within the foregoing limits, and subject to the
terms and conditions hereof, any Borrower’s ability to obtain Letters of Credit
shall be fully revolving, and accordingly any Borrower may, during the foregoing
period, obtain Letters of Credit to replace Letters of Credit that have expired
or that have been drawn upon and reimbursed.

(ii) The L/C Issuer shall be under no obligation to issue any Letter of Credit
if:

(A) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain the L/C Issuer from issuing
such Letter of Credit, or any Law applicable to the L/C Issuer or any request or
directive (whether or not having the force of law) from any Governmental
Authority with

 

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jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer
refrain from, the issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon the L/C Issuer with respect to such
Letter of Credit any restriction, reserve or capital requirement (for which the
L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing
Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense
which was not applicable on the Closing Date and which the L/C Issuer in good
faith deems material to it; provided, however, if any of the forgoing occur,
then the Borrowers may, at their sole expense and effort, upon notice to L/C
Issuer and Administrative Agent, require the L/C Issuer to resign as L/C Issuer
and a new replacement L/C Issuer be appointed, which new replacement L/C Issuer
shall be reasonably acceptable to the Administrative Agent;

(B) subject to Section 2.14(b)(iii), the expiry date of such requested Letter of
Credit would occur more than twelve months after the date of issuance or last
renewal, unless the Required Lenders have approved such expiry date;

(C) the expiry date of such requested Letter of Credit would occur after the
Letter of Credit Expiration Date, unless all the Lenders have approved such
expiry date;

(D) the issuance of such Letter of Credit would violate one or more policies of
the L/C Issuer generally applicable to all borrowers; or

(E) such Letter of Credit is in a face amount less than $50,000 (unless upon a
Borrower’s request the L/C Issuer agrees to issue a Letter of Credit for a
lesser amount), or is to be used for a purpose other than as described in
Section 6.12 or is denominated in a currency other than Dollars.

(iii) The L/C Issuer shall be under no obligation to amend any Letter of Credit
if (A) the L/C Issuer would have no obligation at such time to issue such Letter
of Credit in its amended form under the terms hereof, or (B) the beneficiary of
such Letter of Credit does not accept the proposed amendment to such Letter of
Credit.

(iv) The L/C Issuer shall act on behalf of the Lenders with respect to any
Letters of Credit issued by it and the documents associated therewith, and the
L/C Issuer shall have all of the benefits and immunities (A) provided to the
Administrative Agent in Article IX with respect to any acts taken or omissions
suffered by the L/C Issuer in connection with Letters of Credit issued by it or
proposed to be issued by it and L/C Issuer documents pertaining to such Letters
of Credit as fully as if the term “Administrative Agent” as used in Article IX
included the L/C Issuer with respect to such acts or omissions, and (B) as
additionally provided herein with respect to the L/C Issuer.

(b) Procedures for Issuance and Amendment of Letters of Credit; Evergreen
Letters of Credit.

(i) Each Letter of Credit shall be issued or amended, as the case may be, upon
the request of any Borrower delivered to the L/C Issuer (with a copy to the
Administrative Agent) in the form of a Letter of Credit Application,
appropriately completed and signed by a Responsible Officer of such Borrower.
Such Letter of Credit Application must be received by the L/C Issuer and the
Administrative Agent not later than noon, Dallas time, at least two Business
Days (or such later date and time as the L/C Issuer may agree in a particular
instance in its sole discretion) prior to the proposed issuance date or date of
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be. In the case of a request for an initial issuance of a Letter of Credit, such
Letter of Credit Application shall specify in form and detail satisfactory to
the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit
(which shall be a Business Day); (B) the amount thereof; (C) the expiry date
thereof; (D) the name and address of the beneficiary thereof; (E) the documents
to be presented by such beneficiary in case of any drawing thereunder; (F) the
full text of any certificate to be presented by such beneficiary in case of any
drawing thereunder; and (G) such other matters as the L/C Issuer may require. In
the case of a request for an amendment of any outstanding Letter of Credit, such
Letter of Credit Application shall specify in form and detail satisfactory to
the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of
amendment thereof (which shall be a Business Day); (C) the nature of the
proposed amendment; and (D) such other matters as the L/C Issuer may require.

(ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer
will confirm with the Administrative Agent (by telephone or in writing) that the
Administrative Agent has received a copy of such Letter of Credit Application
from a Borrower and, if not, the L/C Issuer will provide the Administrative
Agent with a copy thereof. Upon receipt by the L/C Issuer of confirmation from
the Administrative Agent that the requested issuance or amendment is permitted
in accordance with the terms hereof, then, subject to the terms and conditions
hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit
for the account of such Borrower or enter into the applicable amendment, as the
case may be, in each case in accordance with the L/C Issuer’s usual and
customary business practices. Immediately upon the issuance of each Letter of
Credit, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the L/C Issuer a participation in such
Letter of Credit in an amount equal to the product of such Lender’s Pro Rata
Share times the amount of such Letter of Credit.

(iii) If a Borrower so requests in any applicable Letter of Credit Application,
the L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter
of Credit that has automatic renewal provisions (each, an “Evergreen Letter of
Credit”); provided that any such Evergreen Letter of Credit must permit the L/C
Issuer to prevent any such renewal at least once in each twelve-month period
(commencing with the date of issuance of such Letter of Credit) by giving prior
notice to the beneficiary thereof not later than a day (the “Nonrenewal Notice
Date”) in each such twelve-month period to be agreed upon at the time such
Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, the
Borrowers shall not be required to make a specific request to the L/C Issuer for
any such renewal. Once an Evergreen Letter of Credit has been issued, the L/C
Issuer shall permit the renewal of such Letter of Credit unless the L/C Issuer
has received notice on or before the Business Day immediately preceding the
Nonrenewal Notice Date from any Lender stating that one or more of the
applicable conditions specified in Section 4.02 is not then satisfied or the L/C
Issuer would not then be required to issue a replacement Letter of Credit
pursuant to this Section 2.14.

(iv) Promptly after its delivery of any Letter of Credit or any amendment to a
Letter of Credit to an advising bank with respect thereto or to the beneficiary
thereof, the L/C Issuer will also deliver to the Borrowers and the
Administrative Agent a true and complete copy of such Letter of Credit or
amendment.

(c) Drawings and Reimbursements; Funding of Participations.

(i) Upon any drawing under any Letter of Credit, the L/C Issuer shall notify the
Borrowers and the Administrative Agent thereof. Not later than noon, Dallas
time, on the date of any payment by the L/C Issuer under a Letter of Credit
(each such date, an “Honor Date”),

 

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the Borrowers shall reimburse the L/C Issuer through the Administrative Agent in
an amount equal to the amount of such drawing. If the Borrowers fails to so
reimburse the L/C Issuer by such time, the Administrative Agent shall promptly
notify each Lender of the Honor Date, the amount of the unreimbursed drawing
(the “Unreimbursed Amount”), and such Lender’s Pro Rata Share thereof. In such
event, the Borrowers shall be deemed to have requested a Borrowing of Base Rate
Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed
Amount, without regard to the minimum and multiples specified in Section 2.03
for the principal amount of Base Rate Loans, but subject to the amount of the
unutilized portion of the Aggregate Revolving Commitment and the conditions set
forth in Section 4.02 (other than the delivery of a Borrowing Notice) and the
failure of the Borrowers to so reimburse the Administrative Agent shall not be
deemed a Default or an Event of Default. Any notice given by the L/C Issuer or
the Administrative Agent pursuant to this Section 2.14(c)(i) may be given by
telephone if immediately confirmed in writing; provided that the lack of such an
immediate confirmation shall not affect the conclusiveness or binding effect of
such notice.

(ii) Each Lender (including the Lender acting as L/C Issuer) shall upon any
notice pursuant to Section 2.14(c)(i) make funds available to the Administrative
Agent for the account of the L/C Issuer at the Administrative Agent’s Office in
an amount equal to its Pro Rata Share of the Unreimbursed Amount not later than
11:00 a.m., Dallas time, on the Business Day specified in such notice by the
Administrative Agent, whereupon, subject to the provisions of
Section 2.14(c)(iii), each Lender that so makes funds available shall be deemed
to have made a Base Rate Loan to the Borrowers in such amount. The
Administrative Agent shall remit the funds so received to the L/C Issuer.

(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a
Borrowing of Base Rate Loans because the conditions set forth in Section 4.02
cannot be satisfied or for any other reason, the Borrowers shall be deemed to
have incurred from the L/C Issuer an L/C Borrowing in the amount of the
Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due
and payable on demand (together with interest) and shall bear interest at the
Default Rate. In such event, each Lender’s payment to the Administrative Agent
for the account of the L/C Issuer pursuant to Section 2.14(c)(ii) shall be
deemed payment in respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Lender in satisfaction of its participation
obligation under this Section 2.14.

(iv) Until each Lender funds its Revolving Loan or L/C Advance pursuant to this
Section 2.14(c) to reimburse the L/C Issuer for any amount drawn under any
Letter of Credit, interest in respect of such Lender’s Pro Rata Share of such
amount shall be solely for the account of the L/C Issuer.

(v) Each Lender’s obligation to make Revolving Loans or L/C Advances to
reimburse the L/C Issuer for amounts drawn under Letters of Credit, as
contemplated by this Section 2.14(c), shall be absolute and unconditional and
shall not be affected by any circumstance, including (A) any set-off,
counterclaim, recoupment, defense or other right which such Lender may have
against the L/C Issuer, the Borrowers or any other Person for any reason
whatsoever; (B) the occurrence or continuance of a Default or Event of Default,
or (C) any other occurrence, event or condition, whether or not similar to any
of the foregoing. Any such reimbursement shall not relieve or otherwise impair
the obligation of the Borrowers to reimburse the L/C Issuer for the amount of
any payment made by the L/C Issuer under any Letter of Credit, together with
interest as provided herein.

 

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(vi) If any Lender fails to make available to the Administrative Agent for the
account of the L/C Issuer any amount required to be paid by such Lender pursuant
to the foregoing provisions of this Section 2.14(c) by the time specified in
Section 2.14(c)(ii), the L/C Issuer shall be entitled to recover from such
Lender (acting through the Administrative Agent), on demand, such amount with
interest thereon for the period from the date such payment is required to the
date on which such payment is immediately available to the L/C Issuer at a rate
per annum equal to the Federal Funds Rate from time to time in effect. A
certificate of the L/C Issuer submitted to any Lender (through the
Administrative Agent) with respect to any amounts owing under this clause
(vi) shall be conclusive absent manifest error.

(d) Repayment of Participations.

(i) At any time after the L/C Issuer has made a payment under any Letter of
Credit and has received from any Lender such Lender’s L/C Advance in respect of
such payment in accordance with Section 2.14(c), if the Administrative Agent
receives for the account of the L/C Issuer any payment related to such Letter of
Credit (whether directly from the Borrowers or otherwise, including proceeds of
cash Collateral applied thereto by the Administrative Agent), or any payment of
interest thereon, the Administrative Agent will distribute to such Lender its
Pro Rata Share thereof in the same funds as those received by the Administrative
Agent.

(ii) If any payment received by the Administrative Agent for the account of the
L/C Issuer pursuant to Section 2.14(c)(i) is required to be returned, each
Lender shall pay to the Administrative Agent for the account of the L/C Issuer
its Pro Rata Share thereof on demand of the Administrative Agent, plus interest
thereon from the date of such demand to the date such amount is returned by such
Lender, at a rate per annum equal to the Federal Funds Rate from time to time in
effect.

(e) Obligations Absolute. The obligation of the Borrowers to reimburse the L/C
Issuer for each drawing under each Letter of Credit, and to repay each L/C
Borrowing and each drawing under a Letter of Credit that is refinanced by a
Borrowing of Revolving Loans, shall be absolute, unconditional and irrevocable,
and shall be paid strictly in accordance with the terms of this Agreement under
all circumstances, including the following:

(i) any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other agreement or instrument relating thereto;

(ii) the existence of any claim, counterclaim, set-off, defense or other right
that the Borrowers may have at any time against any beneficiary or any
transferee of such Letter of Credit (or any Person for whom any such beneficiary
or any such transferee may be acting), the L/C Issuer or any other Person,
whether in connection with this Agreement, the transactions contemplated hereby
or by such Letter of Credit or any agreement or instrument relating thereto, or
any unrelated transaction;

(iii) any draft, demand, certificate or other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
or any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under such Letter of Credit;

 

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(iv) any payment by the L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit; or any payment made by the L/C Issuer under such
Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such Letter of Credit, including any arising in connection with
any proceeding under any Debtor Relief Law; or

(v) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, that might otherwise constitute a defense available to, or
a discharge of, the Borrowers.

The relevant Borrower requesting a Letter of Credit shall promptly examine a
copy of each Letter of Credit and each amendment thereto that is delivered to it
and, in the event of any claim of noncompliance with such Borrowers’
instructions or other irregularity, such Borrower will immediately notify the
L/C Issuer. The Borrowers shall be conclusively deemed to have waived any such
claim against the L/C Issuer and its correspondents unless such notice is given
as aforesaid.

(f) Role of L/C Issuer. Each Lender and the Borrowers agree that, in paying any
drawing under a Letter of Credit, the L/C Issuer shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document. No Agent-Related Person
nor any of the respective correspondents, Participants or assignees of the L/C
Issuer shall be liable to any Lender for (i) any action taken or omitted in
connection herewith at the request or with the approval of the Lenders or the
Required Lenders, as applicable, (ii) any action taken or omitted in the absence
of gross negligence or willful misconduct; or (iii) the due execution,
effectiveness, validity or enforceability of any document or instrument related
to any Letter of Credit or Letter of Credit Application. The Borrowers hereby
assume all risks of the acts or omissions of any beneficiary or transferee with
respect to its use of any Letter of Credit; provided, however, that this
assumption is not intended to, and shall not, preclude the Borrowers’ pursuing
such rights and remedies as it may have against the beneficiary or transferee at
law or under any other agreement. No Agent-Related Person, nor any of the
respective correspondents, Participants or assignees of the L/C Issuer, shall be
liable or responsible for any of the matters described in clauses (i) through
(v) of Section 2.14(e); provided, however, that anything in such clauses to the
contrary notwithstanding, the Borrowers may have a claim against the L/C Issuer,
and the L/C Issuer may be liable to the Borrowers, to the extent, but only to
the extent, of any direct, as opposed to consequential or exemplary, damages
suffered by the Borrowers which the Borrowers prove were caused by the L/C
Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful
failure to pay under any Letter of Credit after the presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with the
terms and conditions of a Letter of Credit. In furtherance and not in limitation
of the foregoing, the L/C Issuer may accept documents that appear on their face
to be in order, without responsibility for further investigation, regardless of
any notice or information to the contrary, and the L/C Issuer shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason.

(g) Cash Collateral. Upon the request of the Administrative Agent, (i) if the
L/C Issuer has honored any full or partial drawing request under any Letter of
Credit and such drawing has resulted in an L/C Borrowing, (ii) if, as of the
Letter of Credit Expiration Date, any Letter of Credit may for any reason remain
outstanding and partially or wholly undrawn, or (iii) if as a result of a
decrease in the Borrowing Base, the outstanding undrawn Letters of Credit exceed
the Letter of Credit Sublimit, the Borrowers shall immediately Cash
Collateralize the then Outstanding Amount of all L/C Obligations (in an amount
equal to such Outstanding Amount). The Borrowers hereby grant the Administrative
Agent, for the benefit of the L/C Issuer and the Lenders, a Lien on all such
cash and deposit accounts at any Lender.

 

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(h) Applicability of ISP98. Unless otherwise expressly agreed by the L/C Issuer
and the relevant Borrower requesting a Letter of Credit when a Letter of Credit
is issued, the rules of the “International Standby Practices 1998” published by
the Institute of International Banking Law & Practice (or such later version
thereof as may be in effect at the time of issuance) shall apply to each Letter
of Credit.

(i) Letter of Credit Fees. The Borrowers shall pay to the Administrative Agent
for the account of each Lender in accordance with its Pro Rata Share a Letter of
Credit fee for each Letter of Credit issued equal to the fee specified under the
heading “Letter of Credit” in the definition of the term Applicable Rate times
the actual daily undrawn amount under each Letter of Credit. Such fee for each
Letter of Credit shall be due and payable on the last Business Day of each
March, June, September and December, commencing with the first such date to
occur after the issuance of such Letter of Credit, and on the Letter of Credit
Expiration Date. If there is any change in the fee specified under the heading
“Letter of Credit” in the definition of the term Applicable Rate during any
quarter, the actual amount of each Letter of Credit shall be computed and
multiplied by the fee specified under the heading “Letter of Credit” in the
definition of the term Applicable Rate separately for each period during such
quarter that such Applicable Rate was in effect.

(j) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer.
The Borrowers shall pay directly to the L/C Issuer for its own account a
fronting fee in an amount with respect to each Letter of Credit issued equal to
 1/8 of 1% (0.125%) calculated on the face amount thereof. Such fee for each
Letter of Credit shall be due and payable in arrears on the last Business Day of
each March, June, September and December, commencing with the first such date to
occur after the issuance of such Letter of Credit, and on the Letter of Credit
Expiration Date. In addition, the Borrowers shall pay directly to the L/C Issuer
for its own account the customary issuance, presentation, amendment and other
processing fees, and other standard administrative costs and charges, of the L/C
Issuer relating to letters of credit as from time to time in effect. Such fees
and charges are due and payable on demand and are nonrefundable.

(k) Conflict with Letter of Credit Application. In the event of any conflict
between the terms hereof and the terms of any Letter of Credit Application, the
terms hereof shall control.

(l) Letters of Credit Issued for the Borrowers. Notwithstanding that a Letter of
Credit issued or outstanding hereunder is in support of any obligations of, or
is for the account of, a Borrower or any of its Subsidiaries, the Borrowers
shall be jointly and severally obligated to reimburse the L/C Issuer hereunder
for any and all drawings under such Letter of Credit. Each Borrower hereby
acknowledges that the issuance of Letters of Credit in support of any obligation
of, or for the account of the other Borrower or any of such other Borrower’s
Subsidiaries inures to the benefit of both Borrowers, and that each other
Borrower’s business derives substantial benefits from the businesses of the
other Borrower and its Subsidiaries.

 

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ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01. Taxes.

(a) Any and all payments by the Borrowers to or for the account of the
Administrative Agent or any Lender under any Loan Document shall be made free
and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and all liabilities with respect thereto other than Excluded Taxes (all
such non-excluded taxes, duties, levies, imposts, deductions, assessments, fees,
withholdings or similar charges, and liabilities being hereinafter referred to
as “Taxes”). If the Borrowers shall be required by any Laws to deduct any Taxes
from or in respect of any sum payable under any Loan Document to the
Administrative Agent or any Lender, (i) the Borrowers shall make such
deductions, (ii) the Borrowers shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
Laws and (iii) if the deductions are for Taxes, the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section), each of
the Administrative Agent and such Lender receives an amount equal to the sum it
would have received had no such deductions been made.

(b) In addition, the Borrowers agree to pay any and all present or future stamp,
mortgage, court or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under any Loan
Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Loan Document (hereinafter
referred to as “Other Taxes”).

(c) If the Borrowers shall be required to deduct or pay any Taxes or Other Taxes
from or in respect of any sum payable under any Loan Document to the
Administrative Agent or any Lender, the Borrowers shall also pay to the
Administrative Agent (for the account of such Lender) or to such Lender, at the
time interest is paid, such additional amount that such Lender specifies as
necessary to preserve the after-tax yield (after factoring in all taxes,
including taxes imposed on or measured by net income) such Lender would have
received if such Taxes or Other Taxes had not been imposed.

(d) The Borrowers agree to indemnify the Administrative Agent and each Lender
for (i) the full amount of Taxes and Other Taxes (including any Taxes or Other
Taxes imposed or asserted by any jurisdiction on amounts payable under this
Section) paid by the Administrative Agent and such Lender, and (ii) amounts
payable under Section 3.01(c) and (iii) any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, except to the
extent such sums are determined by a court of competent jurisdiction by final
and non-appealable judgment to have resulted from the gross negligence or
willful misconduct of the Administrative Agent, the L/C Issuer or such Lender,
as applicable. Neither the Administrative Agent, the L/C Issuer nor any Lender
shall be entitled to receive any payment with respect to any indemnity claim
under this Section 3.01 with respect to Taxes or Other Taxes that are incurred
or accrued more than 180 days prior to the date such party gives notice and
demand with respect thereto to the Borrowers. Payment under this subsection
(d) shall be made within 30 days after the date the Lender or the Administrative
Agent makes a demand therefor.

(e) As soon as practicable after any payment of indemnified Taxes or Other Taxes
by the Borrowers to a Governmental Authority, the Borrowers shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.

(f) Any Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the Law of the jurisdiction in which any Borrower is
resident for tax purposes, or any treaty to which such jurisdiction is a party,
with respect to payments hereunder or under any other Loan Document shall
deliver to the Borrowers (with a copy to the Administrative Agent), at the time
or times prescribed by applicable Law or reasonably requested by the Borrowers
or the Administrative Agent, such properly

 

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completed and executed documentation prescribed by applicable Law, or reasonably
requested by Borrowers, as will permit such payments to be made without
withholding or at a reduced rate of withholding. In addition, any Lender, if
requested by the Borrowers or the Administrative Agent, shall deliver such other
documentation prescribed by applicable Law or reasonably requested by the
Borrowers or the Administrative Agent as will enable the Borrowers or the
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements.

Without limiting the generality of the foregoing, in the event that any Borrower
is resident for tax purposes in the United States, any Foreign Lender shall
deliver to the Borrowers and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the request of the Borrowers or the Administrative Agent, but
only if such Foreign Lender is legally entitled to do so), whichever of the
following is applicable:

(i) duly completed copies of Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States is a
party;

(ii) duly completed copies of Internal Revenue Service Form W-8ECI;

(iii) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Code, (x) a certificate to the
effect that such Foreign Lender is not (A) a “bank” within the meaning of
section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of any Borrower
within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled
foreign corporation” described in section 881(c)(3)(C) of the Code and (y) duly
completed copies of Internal Revenue Service Form W-8BEN; or

(iv) any other form prescribed by applicable Law as a basis for claiming
exemption from or a reduction in United States Federal withholding tax duly
completed together with such supplementary documentation as may be prescribed by
applicable Law to permit the Borrowers to determine the withholding or deduction
required to be made.

(g) If the Administrative Agent, any Lender or the L/C Issuer determines, in its
sole discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrowers or with respect to which the
Borrowers have paid additional amounts pursuant to this Section, it shall pay to
the Borrowers an amount equal to such refund (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrowers under this
Section with respect to the Taxes or Other Taxes giving rise to such refund),
net of all out-of-pocket expenses of the Administrative Agent, such Lender or
the L/C Issuer, as the case may be, and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund); provided that the Borrowers, upon the request of the Administrative
Agent, such Lender or the L/C Issuer, agrees to repay the amount paid over to
the Borrowers (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent, such Lender or the
L/C Issuer in the event the Administrative Agent, such Lender or the L/C Issuer
is required to repay such refund to such Governmental Authority. This subsection
shall not be construed to require the Administrative Agent, any Lender or the
L/C Issuer to make available its tax returns (or any other information relating
to its taxes that it deems confidential) to the Borrowers or any other Person.

(h) FATCA. If a payment made to a Lender under this Agreement would be subject
to U.S. Federal withholding tax imposed by FATCA if such Lender fails to comply
with the applicable reporting requirements of FATCA (including those contained
in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall
deliver to the Borrower and the Administrative Agent, at the time or times

 

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prescribed by Law and at such time or times reasonably requested by the Borrower
and the Administrative Agent, such documentation prescribed by applicable Law
(including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such
additional documentation reasonably requested by the Borrower or the
Administrative Agent as may be necessary for the Borrower and the Administrative
Agent to comply with its obligations under FATCA, to determine that such Lender
has complied with such Lender’s obligations under FATCA or to determine the
amount to deduct and withhold from such payment. Solely for purposes of this
clause (h), “FATCA” shall include any amendments made to FATCA after the date of
this Agreement.

3.02. Illegality. If any Lender determines that any Change in Law has made it
unlawful for any Lender or its applicable Lending Office to make, maintain or
fund Eurodollar Rate Loans, or materially restricts the authority of such Lender
to purchase or sell, or to take deposits of, Dollars in the applicable offshore
Dollar market, or to determine or charge interest rates based upon the
Eurodollar Rate, then, on notice thereof by such Lender to the Borrowers through
the Administrative Agent, any obligation of such Lender to make or continue
Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans
shall be suspended until such Lender notifies the Administrative Agent and the
Borrowers that the circumstances giving rise to such determination no longer
exist. Upon receipt of such notice, the Borrowers shall, upon demand from such
Lender (with a copy to the Administrative Agent), prepay or, if applicable,
convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on
the last day of the Interest Period thereof, if such Lender may lawfully
continue to maintain such Eurodollar Rate Loans to such day, or immediately, if
such Lender may not lawfully continue to maintain such Eurodollar Rate Loans.
Upon any such prepayment or conversion, the Borrowers shall also pay interest on
the amount so prepaid or converted and all amounts due under Section 3.05 in
accordance with the terms thereof due to such prepayment or conversion. Each
Lender agrees to designate a different Lending Office if such designation will
avoid the need for such notice and will not, in the reasonable judgment of such
Lender, otherwise be materially disadvantageous to such Lender.

3.03. Inability to Determine Rates. If (a) the Administrative Agent (or any
Lender) determines in connection with any request for a Eurodollar Rate Loan or
a conversion to or continuation thereof that Dollar deposits are not being
offered to banks (or such Lender) in the applicable offshore Dollar market for
the applicable amount and Interest Period of such Eurodollar Rate Loan, or
adequate and reasonable means do not exist for determining the Eurodollar Rate
for such Eurodollar Rate Loan, or (b) the Required Lenders (or any Lender)
determine and notify the Administrative Agent that the Eurodollar Rate for such
Eurodollar Rate Loan does not adequately and fairly reflect the cost to the
Lenders (or such Lender) of funding such Eurodollar Rate Loan, then the
Administrative Agent will promptly notify the Borrowers and all Lenders.
Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate
Loans shall be suspended until all of the Lenders agree the conditions specified
in clauses (a) or (b) above no longer exist, whereupon the Administrative Agent
shall revoke such notice. Upon receipt of such notice, the Borrowers may revoke
any pending request for a Borrowing, conversion or continuation of Eurodollar
Rate Loans or, failing that, will be deemed to have converted such request into
a request for a Borrowing of Base Rate Loans in the amount specified therein.

 

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3.04. Increased Cost and Reduced Return; Capital Adequacy; Reserves on
Eurodollar Rate Loans.

(a) If any Lender or the L/C Issuer determines that as a result of a Change in
Law, or such Lender’s or L/C Issuer’s compliance therewith, there shall be any
increase in the cost to such Lender or L/C Issuer of agreeing to make or making,
funding or maintaining Eurodollar Rate Loans or to increase the cost to such
Lender or the L/C Issuer of participating in, issuing or maintaining any Letter
of Credit, or a reduction in the amount received or receivable by such Lender or
L/C Issuer in connection with any of the foregoing (excluding for purposes of
this subsection (a) any such increased costs or reduction in amount resulting
from (i) Taxes or Other Taxes (as to which Section 3.01 shall govern),
(ii) changes in the basis of taxation of overall net income or overall gross
income by the United States or any foreign jurisdiction or any political
subdivision of either thereof under the Laws of which such Lender or L/C Issuer
is organized or has its Lending Office, and (iii) reserve requirements
contemplated by Section 3.04(c) utilized, as to Eurodollar Rate Loans, in the
determination of the Eurodollar Rate), then from time to time upon demand of
such Lender or L/C Issuer (with a copy of such demand to the Administrative
Agent), the Borrowers shall pay to such Lender or L/C Issuer, as the case may
be, such additional amounts as will compensate such Lender or L/C Issuer for
such increased cost or reduction.

(b) If any Lender determines a Change in Law has the effect of reducing the rate
of return on the capital of such Lender or any corporation controlling such
Lender as a consequence of such Lender’s obligations hereunder (taking into
consideration its policies with respect to capital adequacy and such Lender’s
desired return on capital), then from time to time upon demand of such Lender
(with a copy of such demand to the Administrative Agent), the Borrowers shall
pay to such Lender such additional amounts as will compensate such Lender for
such reduction.

(c) The Borrowers shall pay to each Lender, as long as such Lender shall be
required under regulations of the Board to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency funds or deposits
(currently known as “Eurocurrency liabilities”), additional costs on the unpaid
principal amount of each Eurodollar Rate Loan equal to the actual costs of such
reserves allocated to such Revolving Loan by such Lender (as determined by such
Lender in good faith, which determination shall be conclusive), which shall be
due and payable on each date on which interest is payable on such Revolving
Loan; provided the Borrowers shall have received at least 15 days’ prior notice
(with a copy to the Administrative Agent) of such additional interest from such
Lender. If a Lender fails to give notice 15 days prior to the relevant Interest
Payment Date, such additional interest shall be due and payable 15 days from
receipt of such notice.

(d) Failure or delay on the part of any Lender or the L/C Issuer to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender’s or the L/C Issuer’s right to demand such compensation; provided that
the Borrowers shall not be required to compensate a Lender or the L/C Issuer
pursuant to this Section for any increased costs or reductions incurred more
than 180 days prior to the date that such Lender or the L/C Issuer, as the case
may be, notifies the Borrowers of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or the L/C Issuer’s intention
to claim compensation therefor; provided further that, if the Change in Law
giving rise to such increased costs or reductions is retroactive, then the
180-day period referred to above shall be extended to include the period of
retroactive effect thereof.

3.05. Compensation for Losses. Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Borrowers shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:

(a) any assignment pursuant to Section 10.15 (except pursuant to clause
(iii) and clause (iv) of the second sentence in Section 10.15, to the extent
clause (iv) includes clause (iii)) or any continuation, conversion, payment,
prepayment of any Revolving Loan other than a Base Rate Loan on a day other than
the last day of the Interest Period for such Revolving Loan (whether voluntary,
mandatory, automatic, by reason of acceleration, or otherwise); or

 

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(b) any failure by the Borrowers (for a reason other than the failure of such
Lender to make a Revolving Loan) to prepay, borrow, continue or convert any
Revolving Loan other than a Base Rate Loan on the date or in the amount notified
by the Borrowers; including any loss of anticipated profits and any loss or
expense arising from the liquidation or reemployment of funds obtained by it to
maintain such Revolving Loan or from fees payable to terminate the deposits from
which such funds were obtained. The Borrowers shall also pay any customary
administrative fees charged by such Lender in connection with the foregoing.

For purposes of calculating amounts payable by the Borrowers to the Lenders
under this Section 3.05, each Lender shall be deemed to have funded each
Eurodollar Rate Loan made by it at the Eurodollar Rate for such Revolving Loan
by a matching deposit or other borrowing in the applicable offshore Dollar
interbank market for a comparable amount and for a comparable period, whether or
not such Eurodollar Rate Loan was in fact so funded.

3.06. Matters Applicable to all Requests for Compensation. A certificate of the
Administrative Agent or any Lender claiming compensation under this Article III
and setting forth the additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of manifest error. In determining such
amount, the Administrative Agent or such Lender may use any reasonable averaging
and attribution methods.

3.07. Survival. All of the Borrowers’ obligations under this Article III shall
survive termination of the Aggregate Revolving Commitment and payment in full of
all the other Obligations.

3.08. Mitigation Obligations. If any Lender or L/C Issuer requests compensation
under Section 3.04, or if the Borrowers are required to pay any additional
amount to any Lender, L/C Issuer or any Governmental Authority for the account
of any Lender or L/C Issuer, as applicable, pursuant to Section 3.01, then such
Lender or L/C Issuer shall use reasonable efforts to designate a different
lending office for funding or booking its Revolving Loans or issuing Letters of
Credit hereunder or to assign its rights and obligations hereunder to another of
its offices, branches or affiliates, if, in the judgment of such Lender or L/C
Issuer, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 3.01 or Section 3.04, as the case may be, in the
future and (ii) would not subject such Lender or L/C Issuer to any un-reimbursed
cost or expense and would not otherwise be disadvantageous to such Lender or L/C
Issuer. The Borrowers hereby agree to pay all reasonable costs and expenses
incurred by any Lender or L/C Issuer in connection with any such designation or
assignment.

ARTICLE IV.

CONDITIONS PRECEDENT TO CREDIT EXTENSION

4.01. Conditions Precedent to Initial Credit Extension. The obligation of the
L/C Issuer and each Lender to make its initial Credit Extension hereunder is
subject to satisfaction of the following conditions precedent:

 

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(a) As of the Closing Date and after giving effect to the initial Credit
Extensions hereunder, (i) Borrowers have a minimum of $20,000,000 of unused
Borrowing Base availability and (ii) Borrowers’ total Indebtedness of the type
described in clauses (a) and (b) of the definition of “Indebtedness” shall be
reduced to no more than $70,000,000.

(b) Receipt by the Administrative Agent of executed counterparts of the
Assignments and Assumptions relating to the Original Credit Agreement.

(c) The Administrative Agent’s receipt of the following, each of which shall be
originals or facsimiles (followed promptly by originals) and unless otherwise
specified, each properly executed by a Responsible Officer of the signing Loan
Party or other Person party thereto, each dated the Closing Date (or, in the
case of certificates of governmental officials, a recent date before the Closing
Date), and each in form and substance reasonably satisfactory to the
Administrative Agent and its legal counsel:

(i) executed counterparts dated as of the Closing Date of this Agreement, the
Parent Guaranty, and the other Collateral Documents including, without
limitation, the amended and amended and restated Collateral Documents covering
all Collateral of each Loan Party including, without limitation, the Borrowing
Base Oil and Gas Properties and related Collateral and all other Loan Documents,
granting a first priority Lien to secure the Obligations, subject to Permitted
Liens, sufficient in number for distribution to the Administrative Agent, each
Lender and Borrowers;

(ii) Revolving Notes executed by the Borrowers in favor of each Lender
requesting a Revolving Note, each Revolving Note in a principal amount equal to
such Lender’s Revolving Commitment, and each Revolving Note dated as of the
Closing Date;

(iii) such certificates of resolutions or other action, incumbency certificates
and/or other certificates of officers of each Loan Party as the Administrative
Agent may require to establish the identities of and verify the authority and
capacity of each officer thereof authorized to act in connection with this
Agreement and the other Loan Documents to which such Loan Party is a party;

(iv) such evidence as the Administrative Agent may reasonably require to verify
that each Loan Party is duly organized or formed, validly existing, and in good
standing in the jurisdiction of its organization and is qualified to engage in
business in each jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification;

(v) a certificate signed by a Responsible Officer of each Borrower certifying
(A) that the representations and warranties contained in Article V are true and
correct in all respects on and as of the Closing Date, (B) no Default or Event
of Default will exist immediately after closing and the initial Credit Extension
under this Agreement, (C) all material governmental and third party approvals
necessary or, in the discretion of the Administrative Agent, advisable in
connection with the financing contemplated by this Agreement and the continuing
operation of the Borrowers and their respective Subsidiaries have been obtained
and are in full force and effect, and (D) no action, suit, investigation or
proceeding is pending or, to the knowledge of such Responsible Officer,
threatened in any court or before any arbitrator or governmental authority by or
against the Borrowers, Parent, or any of their respective properties, that
(x) could reasonably be expected to materially and adversely affect the
Borrowers and their respective Subsidiaries, taken as a whole, or (z) seeks to
affect or pertains to any transaction contemplated hereby or the ability of the
Borrowers or any Guarantor to perform its obligations under the Loan Documents;

 

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(vi) a certificate of a Responsible Officer of the Borrowers (a) as to the
satisfaction of all conditions specified in this Section 4.01 and Section 4.02;
(b) certifying that the Borrowers have entered into Swap Contracts covering at
least 37.5% of estimated net production from Proved Developed Producing Reserves
for the four year period ending December 31, 2016 and attaching copies of all
Swap Contracts to which Borrowers are party and (c) providing such other
financial information as the Administrative Agent may reasonably request;

(vii) a Request for Borrowing; and

(viii) such other assurances, certificates, documents, consents or opinions as
the Arranger, Administrative Agent and Lenders reasonably may require.

(d) An opinion from counsel to each Loan Party, in form and substance
satisfactory to the Administrative Agent and its counsel, including where
advisable local counsel.

(e) All fees specified in the Fee Letter shall have been paid by the Borrowers.

(f) The Borrowers shall have paid Attorney Costs of the Administrative Agent to
the extent invoiced prior to, or on, the Closing Date.

(g) The Administrative Agent’s receipt of Collateral Documents, in appropriate
form for recording, where necessary, together with:

(i) such Lien searches as the Administrative Agent shall have reasonably
requested, and such amendment or termination statements or other documents as
may be necessary to confirm that the Collateral is subject to no other Liens
(other than Permitted Liens) in favor of any Persons;

(ii) funds sufficient to pay any filing or recording tax or fee in connection
with any and all UCC-1 financing statements and fees associated with the filing
of the Mortgages;

(iii) evidence that the Administrative Agent has been named as mortgagee or
additional insured under all policies of casualty insurance pertaining to the
Collateral and all general liability policies;

(iv) certificates evidencing all of the issued and outstanding shares of capital
stock or membership interests pledged pursuant thereto, which certificates shall
in each case be accompanied by undated stock powers duly executed in blank, or,
if any securities pledged pursuant thereto are uncertificated securities,
confirmation and evidence satisfactory to the Administrative Agent that the
security interest in such uncertificated securities has been transferred to and
perfected by the Administrative Agent for the benefit of the Lenders in
accordance with the Uniform Commercial Code; provided, any such certificates may
be in the possession of the Original Administrative Agent on the Closing Date so
long as the Original Administrative Agent has agreed to promptly deliver all
such certificates and blank stock powers to the Administrative Agent; and

 

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(v) evidence that all other actions reasonably necessary or, in the opinion of
the Administrative Agent or the Lenders, desirable to perfect and protect the
first priority Lien created by the Collateral Documents (except to the extent
otherwise permitted hereunder), and to enhance the Administrative Agent’s
ability to preserve and protect its interests in and access to the Collateral,
have been taken.

(h) The Administrative Agent’s receipt (with sufficient copies for all Lenders)
of the certificate of formation of each Loan Party, together with all
amendments, certified by an appropriate governmental officer in its jurisdiction
of organization, as well as any other information required by Section 326 of the
USA Patriot Act or necessary for the Administrative Agent or any Lender to
verify the identity of such Loan Parties as required by Section 326 of the USA
Patriot Act.

(i) The Administrative Agent’s receipt (with sufficient copies for all Lenders)
of the initial Reserve Report, which shall be satisfactory to the Administrative
Agent and the Lenders in their sole discretion.

(j) The Administrative Agent’s receipt (with sufficient copies for all Lenders)
of such environmental information regarding the Borrowing Base Oil and Gas
Properties as the Administrative Agent and the Lenders may reasonably request,
all of which environmental information shall be satisfactory to the
Administrative Agent and the Lenders in their sole discretion.

(k) The completion of, and the satisfaction to the Administrative Agent and the
Lenders in all respects with the results of, the Administrative Agent’s and the
Lenders’ on going due diligence investigation of the business, assets,
contracts, agreements, liabilities, operations, condition (financial and
otherwise) of the Loan Parties.

(l) Administrative Agent’s satisfactory review of the Loan Parties’ corporate,
capital and ownership structure.

(m) No Material Adverse Effect shall have occurred, including, solely for
purposes of this Section 4.01(m), any material adverse change in the condition
(financial or otherwise) or prospects of the Loan Parties taken as a whole.

(n) The Closing Date and the initial funding under this Agreement shall occur on
or before December 28, 2012.

The Administrative Agent shall notify Borrowers and the Lenders of the Closing
Date, and such notice shall be conclusive and binding.

4.02. Conditions to all Credit Extensions. The obligation of each Lender to
honor any Borrowing Notice for a Credit Extension and the obligation of the L/C
Issuer to issue any Letter of Credit is subject to the following conditions
precedent:

(a) The representations and warranties of the Loan Parties contained in Article
V (including, without limitation, Sections 5.05(b) and 5.06), or which are
contained in any document furnished at any time under or in connection herewith,
including but not limited to the Collateral Documents, shall be true and correct
in all material respects on and as of the date such Revolving Loan is made or
such Letter of Credit is issued except to the extent that such representations
and warranties specifically refer to an earlier date, in which case they shall
be true and correct in all material respects as of such earlier date.

 

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(b) No Borrowing Base Deficiency, Default or Event of Default shall exist or
would result from such proposed Revolving Loan or L/C Credit Extension.

(c) The Administrative Agent and, if applicable, the L/C Issuer, shall have
received a Request for Credit Extension and, if applicable, a Letter of Credit
Application in accordance with the requirements hereof.

(d) As of the time of funding any additional advances to the Borrowers that have
been approved by the Lenders pursuant to Section 2.01 and are made in
conjunction with the addition of Oil and Gas Properties or other Collateral
owned by the Borrowers or other Loan Party to the Borrowing Base Oil and Gas
Properties, the Borrowers and each other applicable Loan Party shall have duly
delivered to the Administrative Agent: (i) the Collateral Documents that are
necessary or appropriate, in the reasonable opinion of the Administrative Agent,
relating to such additional Oil and Gas Properties or other Collateral, and
(ii) evidence, reasonably satisfactory to Administrative Agent in its sole
discretion, that the Borrowers and the Borrowing Base Oil and Gas Properties
will be in material compliance with all Environmental Laws. Furthermore,
Administrative Agent shall have completed its title due diligence confirming
that a Borrower or other Loan Party has satisfactory title to the Leases.

(e) The Administrative Agent and Lenders shall have received, in form and
substance reasonably satisfactory to them, the information reasonably requested
by them under applicable “know your customer” and anti-money laundering rules
and regulations.

Each Request for Credit Extension submitted by Borrowers shall be deemed to be a
representation and warranty that the conditions specified in Sections 4.02(a)
and (b) have been satisfied on and as of the date of the applicable Credit
Extension.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

Each of the Borrowers represents and warrants to the Administrative Agent and
the Lenders that:

5.01. Existence; Qualification and Power; Compliance with Laws. As of the
Closing Date, CEPM and PESC are direct Wholly-Owned Subsidiaries of Parent, and
MidContinent, Eastern and PR Holdco are direct Wholly-Owned Subsidiaries of PESC
and STP is a direct Wholly-Owned Subsidiary of MidContinent. Each Loan Party
(a) is a corporation or limited liability company duly organized or formed,
validly existing and in good standing under the Laws of the jurisdiction of its
incorporation or organization, (b) has all requisite power and authority and all
governmental licenses, authorizations, consents and approvals to own its assets,
carry on its business and to execute, deliver, and perform its obligations under
the Loan Documents to which it is a party, (c) is duly qualified and is licensed
and in good standing under the Laws of each jurisdiction where its ownership,
lease or operation of properties or the conduct of its business requires such
qualification or license, except in each case referred to in clause (a), (b) or
(c), to the extent that failure to do so could not reasonably be expected to
have a Material Adverse Effect, (d) is not a Person (i) whose property or
interest in property is blocked or subject to blocking pursuant to Section 1 of
Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)), or (ii) who engages in any dealings or transactions
prohibited by Section 2 of such executive order, or is otherwise associated with
any such Person in any manner violative of Section 2, or (iii) on the list of
Specially Designated Nationals and Blocked Persons or subject to the limitations
or prohibitions under any other U.S. Department of Treasury’s Office of Foreign
Assets Control regulation or executive order, and (e) is in compliance, in all

 

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material respects, with (A) the Trading with the Enemy Act, as amended, and each
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling
legislation or executive order relating thereto, and (B) the Uniting And
Strengthening America By Providing Appropriate Tools Required To Intercept And
Obstruct Terrorism (USA Patriot Act of 2001). No part of the proceeds of the
Revolving Loans or L/C Credit Extensions will be used, directly or indirectly,
for any payments to any governmental official or employee, political party,
official of a political party, candidate for political office, or anyone else
acting in an official capacity, in order to obtain, retain or direct business or
obtain any improper advantage, in violation of the United States Foreign Corrupt
Practices Act of 1977, as amended.

5.02. Authorization; No Contravention. The execution, delivery and performance
by each Loan Party of each Loan Document to which such Person is party, have
been duly authorized by all necessary corporate or other organizational action,
and do not and will not: (a) contravene the terms of any of such Person’s
Organization Documents; (b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any material Contractual
Obligation (other than the Liens created under the Loan Documents) to which such
Person is a party or any order, injunction, writ or decree of any Governmental
Authority to which such Person or its property is subject; or (c) violate any
Law except in each case referred to in clause (b) or (c), to the extent that any
such conflict, breach, contravention, creation or violation could not reasonably
be expected to have a Material Adverse Effect.

5.03. Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority, except for the filings in connection with the granting
or continuation of security interests pursuant to the Collateral Documents or
filings to maintain the existence, foreign qualification and good standing of
the Loan Parties, is necessary or required in connection with the execution,
delivery or performance by any Loan Party of this Agreement or any other Loan
Document.

5.04. Binding Effect. This Agreement has been, and each other Loan Document,
when delivered hereunder, will have been duly executed and delivered by each
Loan Party that is party thereto. This Agreement constitutes, and each other
Loan Document when so delivered will constitute, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is party
thereto in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other Laws affecting creditors’ rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at Law.

5.05. Financial Statements; No Material Adverse Effect.

(a) The financial statements delivered to the Lenders pursuant to Sections
6.01(a) and (b) for periods commencing with the period beginning January 1, 2012
have been, in the case of financial statements delivered prior to the Closing
Date, and will be, with respect to hereafter delivered financial statements,
prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein. Such financial
statements will: (i) fairly present in all material respects the financial
condition of Parent and its consolidated Subsidiaries as of the date thereof and
their results of operations for the period covered thereby in accordance in all
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with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein, subject in the case of quarterly financial
statements delivered pursuant to Section 6.01(b) to year-end audit adjustments
and the absence of footnotes; and (ii) show all material indebtedness and other
liabilities of Parent and its consolidated Subsidiaries as of the date thereof
required to be reflected therein in accordance with GAAP consistently applied
throughout the period covered thereby.

(b) Since December 31, 2011, there has been no event or circumstance that has or
could reasonably be expected to have a Material Adverse Effect.

5.06. Litigation. There are no actions, suits, proceedings, claims or disputes
pending or, to the knowledge of Borrowers, threatened or contemplated in
writing, at law, in equity, in arbitration or before any Governmental Authority,
by or against Borrowers or any Borrower Affiliate or against any of their
properties or revenues which (a) seek to affect or pertain to this Agreement or
any other Loan Document, the borrowing of Revolving Loans, the use of the
proceeds thereof, or the issuance of Letters of Credit hereunder, or (b) could
reasonably be expected to have a Material Adverse Effect.

5.07. No Default. Neither the Borrowers nor any Borrower Affiliate is in default
under or with respect to any Contractual Obligation which could be reasonably
expected to have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing or would result from the consummation of the
transactions contemplated by this Agreement or any other Loan Document. There is
no default under any Material Agreement, which could reasonably be expected to
have a Material Adverse Effect.

5.08. Title; Liens; Priority of Liens.

Each Loan Party (a) has Marketable Title in fee simple to, or valid leasehold
interests in, all real property necessary or used in the ordinary conduct of its
business, except for such defects in title as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, (b) owns
the personal property granted by it as Collateral under the Collateral
Documents, free and clear of any and all Liens in favor of third parties other
than Permitted Liens, and (c) has Marketable Title to the working and net
revenue interests in the Borrowing Base Oil and Gas Properties as reflected on
the Mortgage encumbering such Borrowing Base Oil and Gas Properties, subject to
the limitations and qualifications set forth in such Mortgage. Except as
reflected on the Mortgage encumbering such Borrowing Base Oil and Gas
Properties, all such shares of production which each Borrower and each other
applicable Loan Party is entitled to receive, and shares of expenses which each
Borrower and each other applicable Loan Party is obligated to bear, are not
subject to change, except for changes attributable to future elections by each
such Borrower and each other applicable Loan Party not to participate in
operations proposed pursuant to customary forms of applicable joint operating
agreements, and except for changes attributable to changes in participating
areas under any federal units wherein participating areas may be formed,
enlarged or contracted in accordance with the rules and regulations of the
applicable Governmental Authority. The property of the Loan Parties is subject
to no Liens, other than Permitted Liens.

5.09. Environmental Compliance. The Borrowers have reasonably concluded that
(a) there are no claims alleging potential liability under or responsibility for
violation of any Environmental Law except any such claims that could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, (b) there is no environmental condition or circumstance, such as
the presence or Release of any Hazardous Substance,

 

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on any property owned, operated or used by any Borrower or any Borrower
Affiliate that could reasonably be expected to have a Material Adverse Effect,
and (c) there is no violation by any Borrower or any Borrower Affiliate of any
Environmental Law, except for such violations as could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.

5.10. Insurance. The properties of the Borrowers and the Borrower Affiliates are
insured with financially sound and reputable insurance companies not Affiliates
of the Borrowers, in such amounts, with such deductibles and covering such risks
as are consistent with past practice.

5.11. Taxes. The Borrowers and the Borrower Affiliates have filed all federal,
state and other material tax returns and reports required to be filed, and have
paid all federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP or to the extent that the failure to do so
could not reasonably be expected to result in a Material Adverse Effect. To the
knowledge of the Borrowers, there is no proposed tax assessment against the
Borrowers or any Borrower Affiliate or any of their respective Subsidiaries that
would, if made, have a Material Adverse Effect.

5.12. ERISA Compliance. The representations and warranties set forth in this
Section 5.12 shall apply only if any Borrower or an ERISA Affiliate establishes
a Plan.

(a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state Laws except to the
extent that noncompliance could not reasonably be expected to have a Material
Adverse Effect and except to the extent disclosed on Schedule 5.12. Each Plan
that is intended to qualify under Section 401(a) of the Code has received a
favorable determination letter from the IRS, an application for such a letter is
currently being processed by the IRS with respect thereto or the Plan utilizes a
prototype form plan document and the prototype plan’s sponsor has received a
favorable opinion or advisory letter from the IRS upon which such Borrower or
such ERISA Affiliate may rely, and, to the knowledge of the Borrowers, nothing
has occurred which would prevent, or cause the loss of, such qualification,
except to the extent that nonqualification could not reasonably be expected to
have a Material Adverse Effect and except to the extent disclosed on Schedule
5.12. Any such Borrower and each ERISA Affiliate have made all required
contributions to each Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan,
except to the extent that nonpayment could not reasonably be expected to have a
Material Adverse Effect except to the extent disclosed on Schedule 5.12.

(b) There are no pending or, to the knowledge of the Borrowers, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that could reasonably be expected to have a Material Adverse
Effect or except to the extent disclosed on Schedule 5.12. Neither any Borrower
nor any ERISA Affiliate has engaged in or knowingly permitted to occur and, to
each Borrower’s knowledge, no other party has engaged in or permitted to occur
any prohibited transaction or violation of the fiduciary responsibility rules
with respect to any Plan that has resulted or could reasonably be expected to
result in a Material Adverse Effect or except to the extent disclosed on
Schedule 5.12.

 

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(c) (i) No ERISA Event has occurred or is reasonably expected to occur that
could reasonably be expected to have a Material Adverse Effect; (ii) no Pension
Plan has any Unfunded Pension Liability that (when aggregated with any other
Unfunded Pension Liability) has resulted or could reasonably be expected to
result in a Material Adverse Effect; and (iii) neither any Borrower nor any
ERISA Affiliate has engaged in a transaction that could be subject to Sections
4069 or 4212(c) of ERISA that could reasonably be expected to have a Material
Adverse Effect.

5.13. Subsidiaries and other Investments. Except as set forth on Schedule 5.13,
as of the Closing Date, the Loan Parties have no Subsidiaries and have no equity
Investment in any other Person.

5.14. Margin Regulations; Investment Company Act; Use of Proceeds.

(a) Neither any Borrower nor any Borrower Affiliate is engaged nor will it
engage, principally or as one of its important activities, in the business of
purchasing or carrying margin stock (within the meaning of Regulation U issued
by the Board), or extending credit for the purpose of purchasing or carrying
margin stock.

(b) Neither any Borrower nor any Borrower Affiliate, no Person controlling any
Borrower or any Borrower Affiliate, or any Subsidiary thereof is or is required
to be registered as an “investment company” under the Investment Company Act of
1940.

(c) The Borrowers will use all proceeds of Credit Extensions in the manner set
forth in Section 6.12.

5.15. Disclosure; No Material Misstatements. All material factual information
furnished in connection with this Agreement by or on behalf of any Borrower in
writing to the Administrative Agent or any Lender for purposes of or in
connection with this Agreement or any transaction contemplated hereby, as
modified or supplemented by other information so furnished, is true and accurate
in all material respects, and such information is not, or shall not be, as the
case may be, incomplete by omitting to state any material fact necessary to make
such information, in light of the circumstances under which it was made, not
misleading. All estimates and projections delivered to the Administrative Agent
or any Lender in connection with this Agreement were based upon information that
was available at the time such estimates or projections were prepared and
believed to be correct and upon assumptions believed to be reasonable at that
time; however, the Borrowers do not warrant that such estimates and projections
will ultimately prove to have been accurate.

5.16. Location of Business and Offices. Each Loan Party’s (i) jurisdiction of
organization, (ii) organizational identification number, (iii) correct legal
name, and (iv) principal place of business and chief executive offices are as
set forth in the Security Agreement to which such Loan Party is a party.

 

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5.17. Compliance with Laws. Except with respect to Environmental Laws and Laws
relating to taxes and employee benefits (which are covered by Sections 5.09,
5.11 and 5.12, respectively), neither any Borrower nor any Borrower Affiliate is
in violation of any Laws, other than such violations which could not,
individually or collectively, reasonably be expected to have a Material Adverse
Effect. Neither any Borrower nor any Borrower Affiliate has received notice
alleging any noncompliance with any Laws, except for (i) such noncompliance
which no longer exists, or (ii) noncompliance which could not reasonably be
expected to have a Material Adverse Effect.

5.18. Third Party Approvals. No approval, consent, exemption, authorization, or
other action by, or notice to, or filing with, any party that is not a party to
this Agreement is necessary or required in connection with the execution,
delivery or performance by any Loan Party of this Agreement or any other Loan
Document except where obtained or where the failure to receive such approval,
consent, exemption, authorization, or the failure to do such other action by, or
provide such notice, could not reasonably be expected to have a Material Adverse
Effect; and provided, however, that the transfer of rights in certain Collateral
consisting of rights under contracts to a foreclosure purchaser may, in some
instances, require the consent of third parties who have rights in such
Collateral.

5.19. Solvency. The Borrowers on a consolidated basis are not “insolvent” as
such term is used and defined in (i) the United States Bankruptcy Code or
(ii) the New York Uniform Fraudulent Transfer Act.

5.20. Oil and Gas Leases. The Leases which constitute any part of the Borrowing
Base Oil and Gas Properties are in full force and effect as to those portions
thereof that comprise the Borrowing Base Oil and Gas Properties, except to the
extent the failure to be in full force and effect could not reasonably be
expected to have a Material Adverse Effect.

5.21. Oil and Gas Contracts. Except (a) as set out on Schedule 5.21 attached
hereto, and (b) as may subsequently occur and be disclosed by Borrowers in the
next Compliance Certificate delivered by Borrowers after such occurrence,
neither any Borrower nor any other Loan Party is obligated, by virtue of any
prepayment under any contract providing for the sale by any Borrower or any
other Loan Party of Hydrocarbons which contains a “take-or-pay” clause or under
any similar prepayment agreement or arrangement, including, “gas balancing
agreements”, to deliver a material amount of Hydrocarbons produced from the
Borrowing Base Oil and Gas Properties at some future time without then or
thereafter receiving full payment therefor (i.e., in the case of oil, not in
excess of sixty days, and in the case of gas, not in excess of ninety days).
Except (a) as set out on Schedule 5.21 attached hereto, and (b) as may
subsequently occur and be disclosed by Borrowers in the next Compliance
Certificate delivered by Borrowers after such occurrence, the Borrowing Base Oil
and Gas Properties are not subject to any contractual or other arrangement for
the sale of Hydrocarbons which cannot be canceled on ninety days’ (or less)
notice, unless the price provided for therein is equal to or greater than the
prevailing market price in the vicinity. To the best of the Borrowers’
knowledge, the Borrowing Base Oil and Gas Properties are not subject to any
regulatory refund obligation and no facts exist which might cause the same to be
imposed.

 

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5.22. Producing Wells. All producing wells that constitute part of the Borrowing
Base Oil and Gas Properties (a) have been, during all times that any such wells
were operated by any Borrower or any Borrower Affiliate, and (b) to the
knowledge of Borrowers, have been at all other times, drilled, operated and
produced in conformity with all applicable Laws, are subject to no penalties on
account of past production, and are bottomed under and are producing from, and
the well bores are wholly within, the Borrowing Base Oil and Gas Properties, or
on Oil and Gas Properties which have been pooled, unitized or communitized with
the Borrowing Base Oil and Gas Properties, except to the extent that any
noncompliance with the representations set out in this Section 5.22 would not
have a Material Adverse Effect.

5.23. Purchasers of Production. The names and business addresses of the Persons
who (a) have purchased any of Borrowers’ or any other Loan Party’s interests in
oil and gas produced from the Borrowing Base Oil and Gas Properties during the
six calendar months preceding the Closing Date, and (b) as of the Closing Date,
are considered by Borrowers or such other Loan Party to be potential future
purchasers of any Borrower’s interest in oil and gas produced from the Borrowing
Base Oil and Gas Properties, are identified on Schedule 5.23 attached hereto.

5.24. Swap Contracts. Schedule 5.24, as of the date hereof, sets forth, a true
and complete list of all Swap Contracts of each Loan Party, the material terms
thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net mark to market value thereof, all credit support
agreements relating thereto (including any margin required or supplied) and the
counterparty to each such agreement.

ARTICLE VI.

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Revolving Commitment hereunder, or any
Revolving Loan or other Obligation (other than contingent indemnity obligations,
Banking Service Obligations and obligations under Lender Hedging Agreements)
shall remain unpaid or unsatisfied, or any Letter of Credit shall remain
outstanding (unless such Letter of Credit has been Cash Collateralized), each of
the Borrowers shall, and shall cause each of their Subsidiaries (other than the
Excluded Subsidiaries) to:

6.01. Financial Statements. Deliver to the Administrative Agent, in form and
detail reasonably satisfactory to the Administrative Agent and the Required
Lenders (and the Administrative Agent shall deliver to the Lenders):

(a) as soon as available, but in any event within 90 days after the end of each
fiscal year of Parent (beginning with the 2012 fiscal year), consolidated
balance sheets of Parent and its Subsidiaries as at the end of such fiscal year,
and the related consolidated statements of income and cash flows for such fiscal
year and consolidating balance sheets and income statements (but not cash flow
statements) of Parent and its Subsidiaries at the end of such fiscal year
(notwithstanding the foregoing, as long as Parent is a public company, such
financial statements shall be required to be furnished no later than the date
that Parent is required to timely file its annual report on Form 10-K with the
Securities Exchange Commission (taking into account any extension of time
available under Rule 12b-25 under the Securities Exchange Act of 1934)), setting
forth in each case in comparative form the figures for the previous fiscal year
of Parent, if any, all in reasonable detail, audited and accompanied by a report
and opinion of UHY LLP or other nationally recognized firm of independent
certified public accountants reasonably acceptable to the Required Lenders,
which report and opinion shall be prepared in accordance with GAAP (except as

 

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otherwise noted herein) and, as it pertains to the Borrowers and each of their
respective Subsidiaries (other than the Excluded Subsidiaries), shall not be
subject to any qualifications or exceptions as to the scope of the audit nor to
any qualifications and exceptions not reasonably acceptable to the Required
Lenders;

(b) as soon as available, but in any event within 45 days after the end of each
of the first three fiscal quarters of each fiscal year of Parent, an unaudited
consolidated balance sheet of Parent and its Subsidiaries as at the end of such
fiscal quarter, and the related consolidated statements of income and cash flows
for such fiscal quarter and for the portion of Parent’s fiscal year then ended
and unaudited consolidating balance sheets and income statements (but not cash
flow statements) of Parent and its Subsidiaries (notwithstanding the foregoing,
as long as Parent continues to be a public company, such financial statements
shall be required to be furnished no later than the date that Parent is required
to timely file its quarterly report on Form 10-Q with the Securities Exchange
Commission (taking into account any extension of time available under Rule
12b-25 under the Securities Exchange Act of 1934)), setting forth in each case
in comparative form the figures for the corresponding fiscal quarter of the
previous fiscal year of Parent and the corresponding portion of the previous
fiscal year of Parent, if any, all in reasonable detail and certified by a
Responsible Officer of Parent, as fairly presenting in all material respects the
financial condition, results of operations and cash flows of Parent and its
Subsidiaries in accordance with GAAP (except as otherwise noted herein), subject
only to normal year-end audit adjustments and the absence of footnotes; and

(c) within 90 days after the end of each fiscal year, PESC shall deliver
Parent’s one year projection/budget for the year following such fiscal year.

6.02. Certificates; Other Information. Deliver to the Administrative Agent, in
form and detail reasonably satisfactory to the Administrative Agent and the
Required Lenders:

(a) concurrently with the delivery of the financial statements referred to in
Sections 6.01(a) and (b), a duly completed Compliance Certificate in the form of
Exhibit C signed by a Responsible Officer of Parent;

(b) promptly upon request, copies of each annual report, proxy or financial
statement or other report or written communication sent to the equity owners of
Parent, and copies of all annual, regular, periodic and special reports and
registration statements which Parent may file or be required to file with the
Securities and Exchange Commission under Section 13 or 15(d) of the Securities
Exchange Act of 1934, and not otherwise required to be delivered to the
Administrative Agent pursuant hereto;

(c) copies of Material Agreements and any material amendment thereto; and

(d) promptly, such additional information (that is in the possession of the
Borrowers or that may be readily produced by the Borrowers without undue effort
or expense) regarding the business, financial or corporate affairs of any Loan
Party as the Administrative Agent, at the request of any Lender, may from time
to time reasonably request, which information may include copies of any detailed
audit reports, if any, management letters or recommendations submitted to the
board of directors or managers (or the audit committee of the board of directors
or managers) of Parent by independent accountants in connection with the
accounts or books of Parent or any of its Subsidiaries, or any audit of any of
them.

 

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6.03. Notices. Promptly notify the Administrative Agent:

(a) of the occurrence of any Default or Event of Default, as soon as possible
but in any event, if such Default or Event of Default is then continuing, within
ten (10) days after the Borrowers have knowledge thereof;

(b) of any matter that has resulted or could reasonably be expected to result in
a Material Adverse Effect, including any of the following events if such has
resulted or could reasonably be expected to result in a Material Adverse Effect:
(i) breach or non-performance of, or any default under, a Contractual Obligation
of any Loan Party; (ii) any litigation, investigation by or required by a
Governmental Authority, proceeding or suspension of licenses or permits between
any Loan Party and any Governmental Authority (other than any litigation
disclosed on any schedule hereto); and (iii) any dispute, litigation,
investigation or proceeding involving any Loan Party related to any
Environmental Law;

(c) of any litigation, investigation or proceeding known to and affecting any
Borrower or any Borrower Affiliate in which (i) the amount involved exceeds
(individually or collectively) $1,000,000, or (ii) injunctive relief or other
relief is sought, which could be reasonably expected to have a Material Adverse
Effect;

(d) of any material change in accounting policies or financial reporting
practices by Parent or the Borrowers; and

(e) by means of written notice at least ten (10) days before any proposed
(A) relocation of any Loan Party’s principal place of business or chief
executive office, (B) change of any Loan Party’s name, identity, or corporate,
partnership or limited liability company structure, (C) relocation of the place
where the books and records concerning a Loan Party’s accounts are kept,
(D) relocation of any Loan Party’s Collateral (other than delivery of inventory
in the ordinary course of business to third party contractors for processing and
sales of inventory in the ordinary course of business or as permitted by any
Loan Document) to a location not described on Annex A to the Security Agreement
to which such Loan Party is a party, and (E) change of any Loan Party’s
jurisdiction of organization or organizational identification number, as
applicable.

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the notifying Borrower setting forth details of the
occurrence referred to therein and stating what action such Borrower has taken
and proposes to take with respect thereto. Each notice pursuant to
Section 6.03(a) shall describe with particularity any and all provisions of this
Agreement or other Loan Document that have been breached.

6.04. Payment of Obligations. Pay and discharge as the same shall become due and
payable (a) the Obligations, (b) all tax liabilities, assessments and
governmental charges or levies upon it or its properties or assets and (c) all
lawful claims which, if unpaid, would by law become a Lien upon its property;
except, in the case of clause (b) or (c), where (x) the validity thereof are
being contested in good faith by appropriate proceedings and (y) adequate
reserves in accordance with GAAP are being maintained by the appropriate Loan
Party.

6.05. Preservation of Existence, Etc. (a) Preserve, renew and maintain in full
force and effect its legal existence and good standing under the Laws of the
jurisdiction of its organization, except in a transaction permitted by Sections
7.06 and 7.07, and (b) take all reasonable action to maintain all rights,
privileges, permits, licenses and franchises material to the conduct of its
business, except in a transaction permitted by Sections 7.06 and 7.07, except
where the failure to do so in each case could not reasonably be expected to have
a Material Adverse Effect.

 

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6.06. Maintenance of Assets and Business. (a) Keep all property material to the
conduct of its business in good working order and condition (ordinary wear and
tear excepted) and make all necessary repairs thereto and replacements thereof;
provided that no item of operating equipment need be repaired or replaced if the
Borrowers shall determine in good faith that such action is not necessary or
desirable for the continued efficient and profitable operation of the business
of the Borrowers and their respective Subsidiaries (other than the Excluded
Subsidiaries); (b) do all things necessary to obtain, renew, extend, and
continue in effect all Authorizations which may at any time and from time to
time be necessary for the operation of its business in compliance with
applicable Law, except where the failure to so maintain, renew, extend, or
continue in effect could not reasonably be expected to have a Material Adverse
Effect; and (c) use the standard of care typical in the industry in the
operation and maintenance of its facilities.

6.07. Maintenance of Insurance. (a) Maintain with responsible insurance
companies insurance with respect to its properties and business (including
business interruption insurance) against such casualties and contingencies and
of such types and in such amounts as is customary in the case of similar
businesses and which is reasonably acceptable to the Administrative Agent and
will (i) furnish to the Administrative Agent on each anniversary of the Closing
Date a certificate or certificates of insurance from the applicable insurance
company evidencing the existence of insurance required to be maintained by this
Agreement and the other Loan Documents and evidencing that Administrative Agent
is listed as mortgagee on property insurance as to all properties serving as
Collateral hereto and the Administrative Agent and Lenders are additional
insureds on liability insurance, and (ii) upon request of the Administrative
Agent, furnish to each Lender at reasonable intervals a certificate of a
Responsible Officer of the Borrowers setting forth the nature and extent of all
insurance maintained in accordance with this Section.

(b) Except as the Administrative Agent may otherwise consent to in writing,
Borrowers will, and will cause each of their respective Subsidiaries to,
forthwith upon receipt, transmit and deliver to the Administrative Agent, in the
form received, all cash, checks, drafts, chattel paper and other instruments or
writings for the payment of money (properly endorsed, where required, so that
such items may be collected by the Administrative Agent) which may be received
by the Borrowers at any time in full or partial payment of amounts due under any
insurance policy in an amount in excess of $1,000,000. Except as the
Administrative Agent may otherwise consent in writing, any such items which may
be received by the Borrowers in excess of $1,000,000 will not be commingled with
any other of its funds or property, but will be held separate and apart from its
own funds or property and upon express trust for the Administrative Agent until
delivery is made to the Administrative Agent.

6.08. Compliance with Laws and Contractual Obligations. (a) Comply in all
material respects with the requirements of all Laws (including Environmental
Laws) applicable to it or to its business or property, except in such instances
in which (i) such requirement of Law is being contested in good faith or a bona
fide dispute exists with respect thereto, or (ii) the failure to comply
therewith could not be reasonably expected to have a Material Adverse Effect;
and (b) comply with all Contractual Obligations, except if the failure to comply
therewith could not be reasonably expected to have a Material Adverse Effect.

 

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6.09. Books and Records. Maintain (a) proper books of record and account, in
which full, true and correct entries in conformity with GAAP consistently
applied (except as otherwise noted herein) shall be made of all financial
transactions and matters involving its assets and business, and (b) maintain
such books of record and account in material conformity with all applicable
requirements of any Governmental Authority having regulatory jurisdiction over
it.

6.10. Inspection Rights. Permit representatives and independent contractors of
the Administrative Agent and each Lender to visit and inspect any of its
properties, to examine its corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its officers and independent public accountants, and make all
financial records and other records relating to the Borrowing Base Oil & Gas
Properties available for inspection at such reasonable times during normal
business hours and as often as may be reasonably desired upon reasonable advance
notice to the Borrowers; provided, however, that when an Event of Default exists
the Administrative Agent or any Lender (or any of their respective
representatives or independent contractors) may do any of the foregoing at the
expense of the Borrowers at any time during normal business hours and without
advance notice. Additionally, Administrative Agent may, at the request of the
Required Lenders, conduct or cause to be conducted a commercial field
examination of the Borrowers’ and their respective Subsidiaries’ (other than the
Excluded Subsidiaries’) financial and accounting records and Borrowers shall pay
the cost of such commercial field examination; provided so long as no Event of
Default shall exist and be continuing, no more than one such commercial field
examination shall be undertaken at the Borrowers’ expense during any period of
twelve consecutive months and the Borrowers shall not be obligated to pay more
than the reasonable out-of-pocket expenses of one agent or representative of
Administrative Agent and one agent or representative of the Lenders as a group
for any such annual commercial field examination.

6.11. Compliance with ERISA. With respect to each Plan maintained by a Borrower
or an ERISA Affiliate, do each of the following: (a) maintain each Plan in
compliance in all material respects with the applicable provisions of ERISA, the
Code and other federal or state Laws, (b) cause each Plan which is qualified
under Section 401(a) of the Code to maintain such qualification; and (c) make
all required contributions to any Plan subject to Section 412 of the Code,
except to the extent that noncompliance, with respect to each event listed
above, could not be reasonably expected to have a Material Adverse Effect and
except to the extent disclosed on Schedule 5.12.

6.12. Use of Proceeds. Use proceeds of the Revolving Loans on and after the
Closing Date to (i) refinance Borrowers’ Indebtedness outstanding under the
Original Credit Agreement, (ii) cash collateralize the RBC Letters of Credit,
(iii) finance working capital and capital expenditures of the Borrowers and
their respective Subsidiaries, including in connection with the acquisition,
development, exploitation and exploration of Oil and Gas Properties and the
Midstream Businesses, (iv) finance Permitted Acquisitions; (v) issue Letters of
Credit, (vi) pay fees, costs and expenses owed pursuant to this Agreement; and
(vii) make Restricted Payments permitted under Section 7.08; provided no
proceeds of Revolving Loans may be (A) advanced to, or used to purchase or
acquire any Investment in, the Excluded Subsidiaries, or (B) used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, to
purchase or carry margin stock (within the meaning of Regulation U of the Board)
or to extend credit to others for the purpose of purchasing or carrying margin
stock or to refund indebtedness originally incurred for such purpose.

 

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6.13. Material Agreements. Enforce the obligations of parties to the Material
Agreements, except where such failure could not reasonably be expected to have a
Material Adverse Effect.

6.14. Guaranties; New Subsidiaries’ Collateral Documents. As an inducement to
the Administrative Agent and Lenders to enter into this Agreement, cause Parent
and each Subsidiary of the Borrowers to execute and deliver to Administrative
Agent a Guaranty executed by the Parent and Borrowers’ Subsidiaries, each in
form and substance reasonably satisfactory to the Administrative Agent,
providing for the guaranty of payment and performance of the Obligations. In
addition, within thirty (30) days after the formation or acquisition of any
domestic Subsidiary of Parent or any Borrower (other than any Excluded
Subsidiaries) after the date hereof, cause such Subsidiary to execute and
deliver to the Administrative Agent (a) a Guaranty in form and substance
reasonably satisfactory to the Administrative Agent, providing for the guaranty
of payment and performance of the Obligations, (b) Collateral Documents in form
and substance reasonably satisfactory to the Administrative Agent creating Liens
in all Borrowing Base Oil and Gas Properties and substantially all of the
property of such Subsidiary and in the equity interests in such Subsidiary,
subject to Permitted Liens, and (c) certified copies of such Subsidiary’s
Organization Documents and opinions of counsel with respect to such Subsidiary
and such Guaranty, and (d) such other documents and instruments as may be
required with respect to such Subsidiary pursuant to Section 6.15.

6.15. Further Assurances; Additional Collateral; In Lieu Letters.

(a) The Loan Parties shall cause each of their respective Subsidiaries (other
than the Excluded Subsidiaries) to take such actions and to execute and deliver
such documents and instruments as the Administrative Agent shall require to
ensure that the Administrative Agent or Collateral Agent on behalf of the
Secured Parties shall, at all times, have received currently effective duly
executed Loan Documents granting Liens and security interests in all Borrowing
Base Oil and Gas Properties and in substantially all of the property of the Loan
Parties (other than (x) the two producing wells in Steuben County, New York
(which have not been, and are not contemplated to be, subjected to a Lien
because New York state taxation of real property secured revolving lines of
credit subjects each loan advance to tax), (y) the Three Little Pipes (which
because of their minimal value have not been, and are not contemplated to be,
subjected to a Lien) and (z) the Excluded Subsidiaries), including all capital
stock, partnership, joint venture, membership interests, or other equity
interests except for (i) any motor vehicle or other equipment that has a
certificate of title and a fair market value of less than $250,000,
(ii) Excluded Assets, and (iii) those properties and assets as to which the
Administrative Agent shall determine in its sole discretion (in consultation
with the Borrowers) that the costs of obtaining such security interest are
excessive in relation to the value of the security to be afforded thereby;
provided, that with respect to rights of way, easements, leases or other similar
property interests acquired by any Loan Party after the date hereof relating to
the Bluestem Gathering System now owned by MidContinent or other gathering
systems or pipelines hereafter acquired, the relevant Loan Party shall promptly
grant to the Collateral Agent as additional security for the Obligations, within
60 days after each June 30th and December 31st, a security interest in and
Mortgage on each right of way, easement, lease or other similar property
interest acquired by it during the six month period ended on such June 30 or
December 31, as applicable, and not constituting an Excluded Asset. In
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the foregoing, the Borrowers shall cause each of their respective Subsidiaries
(other than the Excluded Subsidiaries) to execute and deliver such stock
certificates, blank stock powers, evidence of corporate authorization, opinions
of counsel, current valuations, evidence of title, and other documents, and
shall use commercially reasonable efforts to obtain third party consents, as
shall be reasonably requested by the Administrative Agent, in each case in form
and substance reasonably satisfactory to the Administrative Agent.

(b) The Liens required by this Section 6.15 shall be first priority Liens in
favor of the Administrative Agent or Collateral Agent for the benefit of the
Secured Parties, subject to no other Liens except Permitted Liens of the type
described in Section 7.01. The Liens required by this Section 6.15 shall be
perfected Liens in favor of the Administrative Agent or Collateral Agent for the
benefit of the Secured Parties in all collateral to the extent perfection has or
will occur by (i) the filing of a Uniform Commercial Code financing statement in
the relevant jurisdiction, (ii) filing or recording a mortgage in real property
records of the county in which such real property or fixtures is located,
(iii) possession or control or (iv) the notation on a certificate of title. If
the Administrative Agent shall determine that, as of any date, the Borrowers
shall have failed to comply with this Section 6.15, the Administrative Agent may
(and at the direction of the Required Lenders, shall) notify the Borrowers in
writing of such failure and, within 30 days from and after receipt of such
written notice by the Borrowers, the Borrowers shall execute and deliver to the
Administrative Agent supplemental or additional Loan Documents, in form and
substance satisfactory to the Administrative Agent and its counsel, securing
payment of the Revolving Notes and the other Obligations and covering additional
assets and properties not then encumbered by any Loan Documents (together with
such other information, as may be requested by the Administrative Agent, each of
which shall be in form and substance reasonably satisfactory to the
Administrative Agent) such that the Administrative Agent shall have received
currently effective duly executed and perfected Collateral Documents encumbering
substantially all of the assets of the Loan Parties (other than any interest in
the Excluded Subsidiaries or their assets) as required by Section 6.15(a).

(c) If an Event of Default exists and is continuing, the Borrowers agree to
deliver and to cause each other Loan Party to deliver, whenever requested by
Administrative Agent, in its sole and absolute discretion, transfer orders or
letters in lieu thereof with respect to the production and proceeds of
production from the Borrowing Base Oil and Gas Properties, in form and substance
satisfactory to Administrative Agent.

6.16. Title Defects. Cure any title defects to the Borrowing Base Oil and Gas
Properties material in value, in the reasonable opinion of the Administrative
Agent, within ninety days after receipt of written notice thereof from
Administrative Agent and, in the event any title defects are not cured in a
timely manner, pay all related costs and fees reasonably incurred by the
Administrative Agent for the account of the Lenders to do so; provided the
Borrowers may remove any of its Oil and Gas Properties from the Borrowing Base
Oil and Gas Properties so long as the Indebtedness evidenced by the Revolving
Notes is less than or equal to the Borrowing Base (determined by the Lenders in
accordance with Section 2.02 exclusive of such Oil and Gas Properties). In the
event that the Borrowers are unable to cure a title defect, the Borrowers shall
have the ability to substitute additional collateral; provided that the
Borrowers’ ability to substitute such collateral is subject to the full
satisfaction of the Administrative Agent, including, without limitation, full
compliance with the requirements described in Section 2.02. Furthermore, after
identification and prior to the cure of any such title defect, the
Administrative Agent may, subject to approval of the Required Lenders, and must,
upon the request of the Required Lenders, redetermine the Borrowing Base to
reflect the amount of such title defect.

 

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6.17. Leases. Keep and continue all material Leases comprising the Borrowing
Base Oil and Gas Properties and related contracts and agreements relating
thereto in full force and effect in accordance with the terms thereof and not
permit the same to lapse or otherwise become impaired for failure to comply with
the obligations thereof, whether express or implied; provided, however, that
this provision shall not prevent the Borrowers or any other Loan Party from
abandoning and releasing any such Leases upon their termination as the result of
cessation of production in paying quantities that did not result from any
Borrower’s or any other Loan Party’s failure to maintain such production as a
reasonably prudent operator. Subject to approval by the Administrative Agent,
the Borrowers and each Loan Party shall have the right to replace Leases that
lapse or become impaired.

6.18. Operation of Borrowing Base Oil and Gas Properties. Operate or, to the
extent that the right of operation is vested in others, exercise all reasonable
efforts to require the operator to operate the Borrowing Base Oil and Gas
Properties and all wells drilled thereon and that may hereafter be drilled
thereon, continuously and in a prudent and workmanlike manner and in accordance
with all Laws of the state in which the Borrowing Base Oil and Gas Properties
are situated and the United States, as well as all rules, regulations, and Laws
of any Governmental Authority having jurisdiction to regulate the manner in
which the operation of the Borrowing Base Oil and Gas Properties shall be
carried on, and comply with all terms and conditions of the Leases it now holds,
and any assignment or contract obligating any Borrower or any other Loan Party
in any way with respect to the Borrowing Base Oil and Gas Properties, except for
any such non-compliance that would not have a Material Adverse Effect; but
nothing herein shall be construed to empower any Borrower to bind the
Administrative Agent or any Lender to any contract obligation, or render the
Administrative Agent or any Lender in any way responsible or liable for bills or
obligations incurred by any Borrower or any other Loan Party.

6.19. Change of Purchasers of Production. Concurrently with the delivery of (and
as part of) the annual Compliance Certificate, and at any other time that the
Administrative Agent may reasonably request in writing, the Borrowers shall
notify the Administrative Agent in writing of the identity and address of each
Person who: (a) has purchased any of any Borrower’s or any other Loan Party’s
interests in oil and gas produced from the Borrowing Base Oil and Gas Properties
during the six calendar months preceding such anniversary of the Closing, and
(b) are considered by Borrowers or another Loan Party to be potential future
purchasers of any Borrower’s or any other Loan Party’s interest in oil and gas
produced from the Borrowing Base Oil and Gas Properties.

6.20. Fiscal Year. The Borrowers shall maintain their December 31 fiscal year
end.

6.21. Liens on Oil and Gas Properties; Title Information. (a) At all times have
granted in favor of the Administrative Agent for the benefit of the Secured
Parties as security for the Obligations first priority perfected Liens on no
less than eighty percent (80%) of PV9 of the Proved Reserves that are
attributable to the Borrowing Base Oil and Gas Properties.

On or before the delivery to the Administrative Agent of each Reserve Report
required by Sections 2.02(b) and (c), the Borrowers will deliver (or have
previously delivered to the Administrative Agent) title information in form and
substance acceptable to the Administrative Agent comprising a minimum of eighty
percent (80%) of the PV9 (based on the most recent Borrowing Base evaluation by
the Administrative Agent) of the Proved Reserves that are attributable to those
Borrowing Base Oil and Gas Properties evaluated by such Reserve Report (it being
acknowledged that landman title reports on proved but undeveloped Oil and Gas
Properties shall be satisfactory to the Administrative Agent and Lenders for the
purpose of demonstrating the status of title to such Oil and Gas Properties).

 

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ARTICLE VII.

NEGATIVE COVENANTS

So long as any Lender shall have any Revolving Commitment hereunder, or any
Revolving Loan or other Obligations (other than contingent indemnity
obligations, Banking Service Obligations and obligations under Lender Hedging
Agreements) shall remain unpaid or unsatisfied, or any Letter of Credit shall
remain outstanding (unless such Letter of Credit has been Cash Collateralized),
each of the Loan Parties agrees that it shall not, nor shall it permit any of
its Subsidiaries (other than the Excluded Subsidiaries) to, directly or
indirectly:

7.01. Liens. Create, incur, assume or suffer to exist, any Lien upon any of its
Borrowing Base Oil and Gas Properties, or any of its directly-held property,
assets or revenues, whether now owned or hereafter acquired, other than the
following:

(a) Liens pursuant to any Loan Document;

(b) Liens existing on the Closing Date and listed on Schedule 7.01 to this
Agreement and any renewals or extensions thereof; provided that the property
covered thereby is not increased, the amount of the Indebtedness secured thereby
is not increased, and any renewal or extension of the obligations secured or
benefited thereby is permitted under this Agreement;

(c) Liens for taxes, assessments, or other governmental charges or levies not
yet due or which are being contested in good faith and by appropriate
proceedings, if adequate reserves with respect thereto are maintained on the
books of the applicable Person in accordance with GAAP;

(d) landlord’s, royalty owner’s, supplier’s, constructor’s, operator’s,
vendor’s, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or
other like Liens arising in the ordinary course of business or which are
incident to the exploration, development, operation and maintenance of the
Borrowing Base Oil and Gas Properties or the Midstream Businesses not overdue
for a period of more than 60 days or which are being contested in good faith and
by appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the applicable Person;

(e) pledges or deposits in the ordinary course of business in connection with
workers’ compensation, unemployment insurance, old age pensions or other social
security or retirement benefits or similar legislation or to secure public or
statutory obligations of the Borrowers;

(f) deposits to secure the performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case incurred
in the ordinary course of business;

(g) easements, rights-of-way, restrictions, servitudes, permits, conditions,
covenants, exceptions or reservations and other similar encumbrances, defects,
irregularities and deficiencies in title affecting real property which, in the
aggregate, are not substantial in amount, and which do not, taken as a whole,
materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the applicable Person;

 

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(h) attachment and judgment Liens not giving rise to an Event of Default;

(i) any Lien existing on any asset (other than stock of a Subsidiary) prior to
acquisition of such asset (or of the company owning such asset) by a Loan Party;
provided that (i) no such Lien shall be extended to cover property other than
the asset being acquired (whether acquired directly or by virtue of Loan Party’s
acquisition of the company that owns such asset), and (ii) such Lien was not
created in contemplation of or in connection with such acquisition;

(j) (i) Liens securing Capital Lease obligations, provided that the Indebtedness
in respect of such Capital Lease obligations is permitted under Section 7.04(e),
and (ii) Liens securing any leases constituting operating leases permitted under
Section 7.05;

(k) purchase money Liens upon or in any property acquired, constructed or
improved by any Loan Party (placed on such property at the time of such
acquisition or the completion of the construction or improvement or within 90
days thereafter) to secure the deferred portion of the purchase price of such
property or to secure Indebtedness incurred to finance the acquisition,
construction or improvement of such property; provided that (i) no such Lien
shall be extended to cover property other than the property being acquired,
constructed or improved and (ii) the Indebtedness thereby secured is permitted
by Section 7.04(d);

(l) Liens reserved in or exercisable under any lease or sublease to which any
Loan Party is a lessee which secure the payment of rent or compliance with the
terms of such lease or sublease; provided, that the rent under such lease or
sublease is not then overdue and such Loan Party is in material compliance with
the terms and conditions thereof;

(m) any interest or title of a lessor under any lease entered into by any Loan
Party in the ordinary course of its business and covering only the assets so
leased, and any interest of a landowner in the case of easements entered into by
any Loan Party in the ordinary course of its business and covering only the
property subject to the easement;

(n) Liens securing obligations (other than obligations representing Indebtedness
for borrowed money) under operating, reciprocal easement or similar agreements
entered into in the ordinary course of business of the Loan Parties;

(o) licenses of patents, trademarks and other intellectual property rights
granted by each Loan Party in the ordinary course of business and not
interfering in any material respect with the ordinary conduct of the business of
each such Loan Party;

(p) Liens arising solely by virtue of any statutory or common law provision
relating to banker’s liens, rights of set-off or similar rights and remedies and
burdening only deposit accounts or other funds maintained with a creditor
depository institution;

(q) Liens on any additions, improvements, replacements, repairs, fixtures,
appurtenances or component parts thereof attaching to or required to be attached
to property or assets pursuant to the terms of any mortgage, pledge agreement,
security agreement or other similar instrument, creating a Lien upon such
property or asset otherwise permitted under this Section;

 

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(r) Liens securing an obligation of a third party neither created, assumed nor
guaranteed by any Loan Party upon lands over which easements or similar rights
are acquired by such Loan Party in the ordinary course of their business;

(s) any Liens arising out of the refinancing, extension, renewal or refunding of
any Indebtedness secured by any Lien permitted by any of the foregoing clauses
of this Section; provided that such Indebtedness is not increased except for
increases in an amount equal to a reasonable premium or other reasonable amount
paid, and fees and expenses reasonably incurred, in connection with such
extension, renewal, refinancing, or replacement and in an amount equal to any
existing commitments unutilized thereunder, and is not secured by any additional
assets;

(t) Liens arising solely by virtue of cash collateralizing letters of credit
issued by non-Lender financial institutions in an aggregate amount not to exceed
$2,000,000.

(u) contractual Liens which arise in the ordinary course of business under
operating agreements, joint venture agreements, oil and gas partnership
agreements, oil and gas leases, farm-out agreements, division orders, contracts
for sale, purchase, transportation or exchange of oil or natural gas,
unitization and pooling declarations and agreements, area of mutual interest
agreements, royalty and overriding royalty agreements, marketing agreements,
processing agreements, net profits agreements, development agreements, gas
balancing or deferred production agreements, injection, repressuring and
recycling agreements, salt water or other disposal agreements, seismic or other
geophysical permits or agreements, and other agreements which are usual and
customary in the oil and gas business and are for claims which are not
delinquent;

(v) Rights reserved to or vested in a Governmental Authority having jurisdiction
to control or regulate any Oil and Gas Property or other Collateral in any
manner whatsoever and all laws of such Governmental Authorities, so long as the
Loan Parties are in compliance with all such laws, except for any non-compliance
that would not result in a Material Adverse Effect;

(w) consents to assignment and similar contractual provisions affecting an Oil
and Gas Property or other Collateral to the extent, and only to the extent, such
consents are not affected by or required for the execution, delivery,
performance and enforcement of any Loan Document;

(x) preferential rights to purchase and similar contractual provisions affecting
an Oil and Gas Property or other Collateral to the extent, and only to the
extent, such consents are not affected by delivery of any Loan Document or, if
affected, have been waived;

(y) all defects and irregularities affecting title to an Oil and Gas Property or
other Collateral that could not operate to reduce the net revenue interest of
any Borrower and its Subsidiaries for such Oil and Gas Property (if any),
increase the working interest of any Borrower and its Subsidiaries for such Oil
and Gas Property (if any) without a corresponding increase in the corresponding
net revenue interest, or otherwise interfere materially with the operation,
value or use of such Oil and Gas Property or other Collateral or cause a
Material Adverse Effect;

(z) intentionally deleted;

(aa) contractual or statutory Liens securing obligations for labor, services,
materials and supplies furnished to Oil and Gas Properties, or Liens on pipeline
or pipeline facilities which arise out of operation of law;

 

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(bb) encumbrances on title to real property arising from any pooling or
unitization (whether voluntary, compulsory or otherwise) made herein or as
permitted in any Mortgage;

(cc) other Liens consented to in writing by Required Lenders from time to time
in their sole discretion; and

(dd) Liens arising in connection with the RBC Cash Collateral Agreement.

7.02. Investments. Make or own any Investments, except

(a) Investments existing on the Closing Date and listed in Section (b) of
Schedule 5.13 and with respect to Parent’s Investment in CEPM, Parent shall not
increase its Investment in CEPM (other than (i) increases resulting from
appreciation in the value of the Constellation Equity owned by CEPM, and
(ii) Investments made with the proceeds from any issuance of equity securities
of, or from any capital contribution to, Parent; provided however, (A) no
Default or Event of Default has occurred and is then continuing, (B) after
giving pro forma effect to such equity issuance the Leverage Ratio is not
greater than 3.00 to 1.00 both immediately before and after giving effect to
such event (computed after giving pro forma effect to such issuance) and
(c) both immediately before and after giving effect to such proposed equity
issuance the Total Outstandings are not more than eighty–five (85%) of the
Borrowing Base as of such date);

(b) Cash Equivalents;

(c) Investments constituting Indebtedness permitted under Section 7.04(b);

(d) (i) Investments by any Loan Party in domestic Subsidiaries which are Loan
Parties formed to acquire Oil and Gas Properties or in connection with the
Midstream Businesses, and (ii) Investments not exceeding $5,000,000 in the
aggregate resulting from any Loan Party’s acquisition of equity or joint venture
interests in a Person primarily engaged in the ownership or development of Oil
and Gas Properties or in the Midstream Businesses;

(e) Investments by any Loan Party in another Loan Party that, prior to or
contemporaneously with such Investment, is a Loan Party;

(f) Investments in or acquisitions of Oil and Gas Properties, assets or
interests; provided any such acquired Oil and Gas Properties, assets or
interests (other than Excluded Assets) are pledged to secure, on a first lien
basis, the Obligations;

(g) Guarantees of Indebtedness permitted under Section 7.04;

(h) Swap Contracts permitted under Section 7.03;

(i) Investments consisting of extensions of credit, including without
limitation, in the nature of accounts receivable, arising from the grant of
trade credit or prepayments or similar transactions entered into in the ordinary
course of business and investments by any Loan Party in satisfaction or partial
satisfaction thereof from financially troubled account debtors to prevent or
limit financial loss;

(j) endorsements for collection or deposit in the ordinary course of business;

 

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(k) Permitted Acquisitions by a Loan Party;

(l) Investments not otherwise permitted by this Section 7.02 (other than
additional Investments in CEPM) in an aggregate amount not to exceed $5,000,000
at anytime outstanding;

(m) Investments consisting of any deferred portion of the sales price received
by the Borrowers or any of their respective Subsidiaries in connection with any
sale of assets permitted hereunder;

(n) Investments in direct ownership interests in additional Oil and Gas
Properties and pipelines, gathering systems, platforms or other assets related
thereto or related to farm-out, farm-in, joint operating, joint venture or area
of mutual interest agreements, gathering systems, pipelines or other similar
arrangements which are usual and customary in the oil and gas exploration and
production business located within the geographic boundaries of the United
States of America, subject to providing a Lien on such Investments to the extent
required under the terms of this Agreement;

(o) Investments funded entirely using proceeds from equity issued by Parent or
partially using such proceeds if the remainder of the Investment is otherwise
permitted hereunder; provided however, that notwithstanding anything herein to
the contrary, in the event the proceeds from equity issued by Parent are
pre-paid under Section 2.04 hereof, such proceeds may be reborrowed by the
Borrowers or their respective Subsidiaries, subject to compliance with
Section 4.02; and

(p) Investments funded entirely using proceeds from a sale of the Constellation
Equity by CEPM or a sale of CEPM’s equity by Parent or partially using such
proceeds if the remainder of the Investment is otherwise permitted hereunder.

7.03. Hedging Agreements. (a) Enter into any Swap Contracts other than in the
ordinary course of business for the purpose of protecting against fluctuations
in interest rates, commodity prices, or foreign exchange rates and not for
purposes of speculation; provided:

(i) that, except as required under applicable Law, the Swap Contract shall not
contain any provision (a) exonerating the non-defaulting party from its
obligation to make payments on outstanding transactions to the defaulting party
other than pursuant to netting and setoff provisions based on standard
provisions in documentation promulgated by the International Swaps and
Derivatives Association or similar organization recognized as providing
standardized documentation for Swap Contracts; and (b) requiring any Loan Party
at any time or under any circumstance to post any cash collateral or letter of
credit or grant a Lien on any collateral to secure any Loan Party’s obligations
under such Swap Contract (except for Lender Hedging Agreements which shall be
secured by a pari passu Lien on the Collateral as provided in Section 2.13 but
which shall not be secured by any other or additional collateral); provided
however that in no event may any Approved Hedge Counterparty Swap Contract
require any Loan Party at any time or under any circumstance to post any cash
collateral or letter of credit as long as this Agreement is in effect); provided
further however, that notwithstanding the foregoing, if the Swap Contracts in
question are cleared (directly or ultimately) through clearing corporations or
on an exchange, the foregoing shall not prohibit the posting of initial or
variance margins or other amounts, if required by Law, in order for the Loan
Party to enter into Swaps Contracts of a nature that, in the business judgment
of the Loan Party, represent an appropriate pricing and structure as among
available alternatives; provided, further however, a Loan Party may not elect to
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corporation or an exchange if an Event of Default has occurred and is continuing
but if applicable Law requires that a Loan Party clear its Swap Contracts
through a clearing corporation or be exchanged traded and in connection
therewith any margin is required to be posted, the Loan Party may do so in
compliance with applicable Law.

(ii) if the Swap Contract relates to Hydrocarbons, a Loan Party enters into such
Swap Contract with or through a counterparty that has a credit rating of at
least “A-” by S&P or “A3” by Moody’s at the time that such Loan Party enters
into such Swap Contract;

(iii) such Swap Contracts relating to Hydrocarbons cover monthly notional
volumes of Hydrocarbons that do not exceed ninety percent (90%) of a Loan
Party’s forecasted oil and gas production for the next five years after the
Closing Date for each of such Loan Party’s crude oil and natural gas properties
calculated separately, from Proved Developed Producing Reserves (such amount
computed on an annual basis and applied to crude oil and natural gas properties
calculated separately); provided that the aggregate amount of all such Swap
Contracts shall not exceed one hundred percent (100%) of actual oil or gas
production, calculated separately, in any given month (or if as a result of a
force majeure event the foregoing limitations are breached, then in any given
three consecutive month period); and

(iv) that where only annual volumes are presented in the Reserve Report, monthly
volumes will be calculated by dividing the applicable volumes by the number of
months covered by the Reserve Report for the applicable year.

7.04. Indebtedness. Create, incur, or assume any Indebtedness except:

(a) Indebtedness incurred pursuant to the Loan Documents or existing on the date
hereof and disclosed on Schedule 7.04 attached hereto;

(b) Indebtedness owed by a Loan Party to another Loan Party; provided, that, in
each such case such Indebtedness is governed by an intercompany agreement and
evidenced by bookkeeping entries;

(c) obligations (contingent or otherwise) of the Loan Parties existing or
arising under any Swap Contract to the extent permitted by Section 7.03;

(d) Indebtedness of the Loan Parties incurred to finance the acquisition of any
equipment (whether or not in respect of purchase money obligations) and any
Indebtedness assumed in connection with the acquisition of any such equipment or
secured by a lien on any such equipment prior to the acquisition thereof;
provided, however, that the aggregate amount of such Indebtedness at any one
time outstanding shall not exceed $7,500,000;

(e) Indebtedness of the Loan Parties in respect of Capital Lease obligations;
provided that, such Capital Lease obligations will not require the payment of an
aggregate amount in excess of $4,000,000 annually; and provided that any Capital
Lease obligation relating to compressors or compression equipment shall be
excluded from this subsection and dealt with in Section 7.05;

(f) Indebtedness consisting of surety bonds that the Loan Parties are required
to obtain in order to comply with applicable Law or the requirements of any
Governmental Authority;

 

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(g) Indebtedness secured by any Lien permitted under Section 7.01(i); provided,
however, that the aggregate amount of such Indebtedness at any one time
outstanding shall not exceed $5,000,000; and Indebtedness secured by any other
Lien permitted under Section 7.01; and

(h) other Indebtedness of the Loan Parties not to exceed $7,500,000 in the
aggregate principal amount outstanding at any time;

(i) Indebtedness associated with bonds, surety obligations or sinking funds
required by any Governmental Authority or operators in connection with the
operation of Oil and Gas Properties or the Midstream Businesses;

(j) (i) reimbursement obligations under Letters of Credit issued for any Loan
Party under this Agreement; and (ii) reimbursement obligations under letters of
credit issued for any Loan Party by third parties not to exceed $2,000,000 in
the aggregate amount outstanding at any one time;

(k) Guarantees in respect of Indebtedness otherwise permitted hereunder;

(l) Indebtedness issued to insurance companies, or their Affiliates, to finance
insurance premiums payable to such insurance companies in connection with
insurance policies purchased by Borrowers or any of their respective
Subsidiaries in the ordinary course of business;

(m) endorsements of negotiable instruments for collection in the ordinary course
of business;

(n) other Indebtedness on terms and conditions consented to in writing by
Required Lenders from time to time;

provided, that if any Indebtedness is incurred pursuant to this Section 7.04,
immediately after such Indebtedness is created, incurred or assumed, no Default
or Event of Default shall exist.

7.05. Lease Obligations. Create or suffer to exist any obligations for the
payment of rent for any property (excluding leases of Oil and Gas Properties)
under operating leases or agreements to lease, except for (a) operating leases
(or Capital Lease obligations) for compressors and compression equipment and
services for which no dollar limitation shall be applicable; (b) such other
non-compressor and non-compression equipment and services operating leases (or
Capital Lease obligations) having an annual aggregate payment amount not to
exceed $10,000,000 (excluding escalations resulting from a rise in the consumer
price or similar index), exclusive of expenses for maintenance, repairs,
insurance, taxes, assessments and similar changes, and (c) other operating
leases (other than those constituting Synthetic Lease Obligations) entered into
or assumed by a Loan Party prior to the date hereof or after the date hereof in
the ordinary course of business or entered into or assumed in connection with
any Permitted Acquisition; provided that, such other operating leases under this
clause (c) will not require the payment of an aggregate amount of payments in
excess of (excluding escalations resulting from a rise in the consumer price or
similar index) $4,000,000 annually, exclusive of expenses for maintenance,
repairs, insurance, taxes, assessments and similar changes.

 

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7.06. Fundamental Changes. Merge, dissolve, liquidate, or consolidate with or
into, or convey, transfer, lease or otherwise Dispose of (whether in one
transaction or in a series of related transactions) all or substantially all of
its assets (whether now owned or hereafter acquired) to or in favor of any
Person; except that, so long as no Default or Event of Default exists or would
result therefrom:

(a) any Person may merge, dissolve or liquidate into a Loan Party; provided that
a Loan Party is the surviving entity;

(b) any Loan Party may sell all or substantially all of its assets (upon
voluntary liquidation or otherwise), to another Loan Party; provided that if the
seller in such a transaction is a Wholly-Owned Subsidiary of a Loan Party, then
the purchaser must also be a Wholly-Owned Subsidiary of a Loan Party;

(c) any Dispositions permitted under Section 7.07; and

(d) any liquidation or dissolution of STP in accordance with applicable Law.

7.07. Dispositions. Make any Disposition or enter into any agreement to make any
Disposition, except:

(a) Dispositions by any Loan Party of (i) Hydrocarbons in the ordinary course of
business for fair market value or (ii) other inventory in the ordinary course of
business;

(b) Dispositions of property by any Loan Party to another Loan Party;

(c) Dispositions of equipment and other real and personal property for fair
market value by any Loan Party to the extent that such property is exchanged for
credit against the purchase price of similar replacement or exchanged property;

(d) other Dispositions for fair market value; provided no Default or Event of
Default then exists or arises as a result thereof; and provided that if the
Disposition is for cash and a prepayment is required by Section 2.04(c), the
Loan Party making such Disposition shall make such prepayment in accordance with
such Section;

(e) Dispositions of property that is no longer commercially viable to maintain
or is obsolete, surplus or worn-out property;

(f) Dispositions permitted under Section 7.06;

(g) Disposition by PESC of its membership interests in Eastern and PR Holdco;

(h) Disposition by MidContinent of the Three Little Pipes or its equity
interests in STP;

(i) Dispositions of the Constellation Equity by CEPM;

(j) Dispositions of the Equity Interests in CEPM by Parent;

(k) Dispositions of claims against customers, working interest owners, other
industry partners or any other Person in connection with workouts or bankruptcy,
insolvency or other similar proceedings with respect thereto;

(l) Dispositions of funds collected for the beneficial interest of, or of the
interests owned by, royalty, overriding royalty or working interest owners;

 

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(m) abandonment of Oil and Gas Properties and lease terminations with respect to
leases not capable of producing Hydrocarbons in paying quantities after
expiration of their primary terms;

(n) Dispositions of defaulted receivables in the ordinary course of business for
collection; and

(o) Dispositions involving the entering into leases of Oil and Gas Property in
the ordinary course of business in connection with oil and gas exploration and
development.

7.08. Restricted Payments; Distributions and Redemptions. Declare or make,
directly or indirectly, any Restricted Payment to any Person or incur any
obligation (contingent or otherwise) to do so, except that

(a) any Loan Party may make Restricted Payments to any other Loan Party;

(b) after the Closing Date, Parent may make Restricted Payments to White Deer
Energy consisting of payment-in-kind (PIK) dividends on Parent Series A
Preferred Stock; and

(c) Parent may make Restricted Payments to White Deer Energy consisting of cash
dividends on Parent Series A Preferred Stock; provided (i) no Default or Event
of Default has occurred and is continuing or, after giving pro forma effect to
such Restricted Payment, would result from the making of such Restricted
Payment, (ii) the Leverage Ratio is less than 3.00 to 1.00 both immediately
before and after giving effect to such proposed Restricted Payment (computed
after giving pro forma effect to such proposed Restricted Payment) and
(iii) both immediately before and after giving effect to such proposed
Restricted Payment, the Total Outstandings are less than eighty–five (85%) of
the Borrowing Base as of such date.

7.09. ERISA. At any time engage in a transaction which could be subject to
Section 4069 or 4212(c) of ERISA, or knowingly permit any Plan maintained by a
Loan Party to: (a) engage in any non-exempt “prohibited transaction” (as defined
in Section 4975 of the Code); (b) fail to comply with ERISA or any other
applicable Laws except as disclosed on Schedule 5.12; or (c) incur any material
“accumulated funding deficiency” (as defined in Section 302 of ERISA), which,
with respect to each event listed above, could be reasonably expected to have a
Material Adverse Effect or except to the extent disclosed on Schedule 5.12.

7.10. Nature of Business; Risk Management. Engage in any line of business other
than exploration, production and marketing of Hydrocarbons and related
activities and the Midstream Businesses or make any capital expenditures or
Permitted Acquisitions permitted by Section 7.02, except in connection
therewith. Without the written approval of the Administrative Agent, the Loan
parties shall not materially change their risk management policy.

7.11. Transactions with Affiliates. Sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (i) transactions between or among the Loan Parties, not
involving any other Affiliate; (ii) any Investment permitted under Section 7.02;
(iii) any transaction involving Indebtedness permitted under Section 7.04;
(iii) any transactions permitted under Section 7.06; (iv) any Dispositions
permitted under Section7.07; (v)

 

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any Restricted Payment permitted under Section 7.08; (vi) the transactions under
the agreements listed on Schedule 7.11; and (vii) in the ordinary course of
business at prices and on terms and conditions not less favorable to the
applicable Loan Parties than could be obtained on an arm’s length basis from
unrelated third parties.

7.12. Burdensome Agreements. Enter into any Contractual Obligation that
(a) limits the ability of any Subsidiary of Parent to make Restricted Payments
to Parent or to otherwise transfer property to Parent, or (b) limits the ability
of any Subsidiary of a Borrower to make Restricted Payments to such Borrower;
provided that (i) the foregoing shall not apply to restrictions and conditions
imposed by applicable Law or by this Agreement, (ii) the foregoing shall not
apply to customary restrictions and conditions contained in agreements relating
to the sale of a Subsidiary pending such sale, provided such restrictions and
conditions apply only to the Subsidiary that is to be sold and such sale is
permitted hereunder, and (iii) the foregoing shall not apply to restrictions and
conditions contained in the documentation evidencing any Indebtedness permitted
hereunder. Notwithstanding the foregoing, (i) documents governing a Capitalized
Lease or a purchase money Lien permitted by Sections 7.01(j) and (k) may
prohibit other Liens on the asset encumbered by such Lien.

7.13. Reserved.

7.14. Material Agreements. Permit any amendment to any Organization Document of
any Loan Party or any Material Agreement if such amendment could reasonably be
expected to (a) have a Material Adverse Effect on the ability of any Loan Party
to perform its obligations under the Loan Documents to which it is a party or
(b) otherwise materially adversely affect the Lenders.

7.15. Pooling or Unitization. Voluntarily pool or unitize all or any part of the
Borrowing Base Oil and Gas Properties where the pooling or unitization would
result in any material diminution of any Loan Party’s net revenue interest in
production from the pooled or unitized lands, without the Required Lenders’
prior consent, which will not be unreasonably withheld, unless (a) such pooling
or unitization could reasonably be anticipated to (i) increase the PV 9 value of
the associated Oil and Gas Property compared to the pre-unitized PV 9 value, or
(ii) spread interest, direct risk, and allow for longer lateral wells, or
(b) where the failure to pool or unitize such Oil and Gas Properties would not
be consistent with prudent industry practices, in each such case no consent will
be required. Any unitization, pooling or communitization or other action or
instrument in violation of this Section 7.15 shall be of no force or effect
against any Lender.

7.16. Financial Covenants. For purposes of determining compliance with the
financial covenants contained in this Agreement any election by Parent to
measure an item of Indebtedness using fair value (as permitted by Statement of
Financial Accounting Standards No. 159 or any similar accounting standard) shall
be disregarded and such determination shall be made as if such election had not
been made.

 

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(a) Current Ratio. Permit the ratio (calculated based on the Compliance
Certificate most recently delivered pursuant to Section 6.02(a)) of (i) the
current assets (including the unused amount of the Borrowing Base, but excluding
non-cash assets under FAS 133) of Parent and its Subsidiaries on a consolidated
basis (excluding the Excluded Subsidiaries) to (ii) consolidated current
liabilities (excluding non-cash obligations under FAS 133, asset and asset
retirement obligations and current maturities of Indebtedness under this
Agreement) at any fiscal quarter-end, commencing with the quarter-ended
December 31, 2012, to be less than or equal to 1.0 to 1.0; provided, however,
that for purposes of this covenant, current assets and current liabilities shall
exclude mark-to-market values of Swap Contracts, to the extent such values are
included in current assets and current liabilities.

(b) Interest Coverage Ratio. Permit the Interest Coverage Ratio at any fiscal
quarter-end, commencing with the quarter-ended December 31, 2012, to be less
than or equal to 3.0 to 1.0.

(c) Leverage Ratio. Permit the Leverage Ratio at any fiscal quarter-end,
commencing with the quarter-ended December 31, 2012, to be greater than 3.5 to
1.0.

(d) Intentionally Deleted.

(e) Adjustments for Permitted Acquisitions and Material Acquisitions. For
purposes of determining compliance with Section 7.16(b) and (c):

(i) Consolidated EBITDAX shall be calculated after giving effect, on a pro forma
basis (in a manner reasonably acceptable to the Administrative Agent) for the
four consecutive fiscal quarters most recently completed, to any Permitted
Acquisition or Material Acquisition occurring during such period, as if such
Permitted Acquisition or Material Acquisition occurred on the first day of such
period.

(ii) If, in connection with a Permitted Acquisition or a Material Acquisition,
any Indebtedness is incurred or assumed by a Loan Party, then Consolidated
Interest Charges shall be calculated, on a pro forma basis (in a manner
reasonably acceptable to the Administrative Agent) for the four quarters most
recently completed, as if such Indebtedness had been incurred on the first day
of such period.

7.17. Certain Other Limitations on Parent. Without limiting any restrictions on
Parent otherwise set forth in this Article VII, Parent shall not (a) create,
incur, assume or suffer to exist any Liens on any Equity Interests of any
Borrower or any of its Subsidiaries (other than pursuant to this Agreement or
any Loan Document), or (b) conduct or engage in any operations or business other
than (i) those incidental to its ownership of the Equity Interests of CEPM and
any Excluded Subsidiaries, the Borrowers and the Borrowers’ Subsidiaries, and
any other Subsidiaries hereafter formed by Parent that are Loan Parties,
(ii) the maintenance of its legal existence, (iii) the performance of the Loan
Documents, (iv) any public offering of its common stock or any other issuance of
its Equity Interests, (v) any transaction that Parent is expressly permitted or
not otherwise prohibited to enter into or consummate under this Agreement,
(vi) guaranteeing the obligations of its Subsidiaries (other than the Excluded
Subsidiaries) to the extent permitted by this Agreement, (vii) participating in
tax, accounting and other administrative matters as a member of the
consolidated, combined, unitary or similar group that includes Parent and the
Borrowers, (viii) holding any cash or property received by Parent (A) in
connection with Restricted Payments made by the Borrowers and their Subsidiaries
and any other Loan Parties hereafter formed pursuant to this Agreement, (B) from
the Excluded Subsidiaries or (C) as contributions to its capital or in exchange
for the issuance of Equity Interests, in each case, pending application thereof
by Parent or the making of Restricted Payments, (ix) providing indemnification
to officers and directors and (x) any activities incidental to any of the
foregoing.

 

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ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES

8.01. Events of Default. Any of the following shall constitute an Event of
Default:

(a) Non-Payment. The Borrowers fail to pay (i) when and as required to be paid
herein, any amount of principal of any Revolving Loan or any L/C Obligation or
(ii) within three Business Days after the same becomes due, any interest on any
Revolving Loan, any L/C Obligation, any commitment or other fee due hereunder,
or any other amount payable hereunder or under any other Loan Document; or

(b) Specific Covenants. The Borrowers fail to perform or observe any term,
covenant or agreement contained in any of Section 6.03(a), 6.05 (with respect to
the respective Borrower’s existence), 6.12, 6.13 or Article VII; or

(c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in subsection (a) or (b) above) contained
in any Loan Document on its part to be performed or observed and such failure
continues for 30 days after the date notice has been given to the Borrowers by
the Administrative Agent or the Required Lenders; or

(d) Representations and Warranties. Any representation or warranty made or
deemed made by the Borrowers or any other Loan Party herein, in any other Loan
Document, or in any document delivered in connection herewith or therewith
proves to have been incorrect in any material respect when made or deemed made;
or

(e) Cross-Default. (i) The Borrowers or any Borrower Affiliate (A) fails to make
any payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness or Guaranty
Obligation in respect of Indebtedness (other than Indebtedness under Swap
Contracts) having an aggregate principal amount (or, in the case of a
Capitalized Lease or a Synthetic Lease Obligation, Attributable Indebtedness)
(including undrawn or available amounts and including amounts owing to all
creditors under any combined or syndicated credit arrangement) of more than
(individually or collectively) $5,000,000, or (B) fails to observe or perform
any other agreement or condition relating to any such Indebtedness or Guaranty
Obligation in respect of Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event occurs,
the effect of which default or other event is to cause, or to permit the holder
or holders of such Indebtedness, the lessor under such Synthetic Lease
Obligation or the beneficiary or beneficiaries of such Guaranty Obligation (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to be demanded or to become due or to be repurchased or redeemed
(automatically or otherwise) prior to its stated maturity, or such Guaranty
Obligation to become payable or cash collateral in respect thereof to be
demanded; provided that this clause (e)(i)(B) shall not apply to secured
Indebtedness that becomes due as a result of the voluntary sale or transfer of
the property or assets securing such Indebtedness; or (ii) (A) there occurs
under any Swap Contract an Early Termination Date (as defined in such Swap
Contract) resulting from any event of default under such Swap Contract as to
which a Borrower or any Borrower Affiliate is the Defaulting Party (as defined
in such Swap Contract) and the Swap Termination Value owed by a Borrower or any
Borrower Affiliate as a result thereof is greater than (individually or
collectively) $5,000,000, or (B) there occurs under any Swap Contract an Early
Termination Date (as defined in such Swap Contract) resulting from any
Termination Event (as so defined) under such Swap Contract as to which a
Borrower or any Borrower Affiliate is an Affected Party (as so defined) and the
Early Termination Amount owed by a Borrower and Borrower Affiliate as a result
thereof is greater than (individually or collectively) $5,000,000 and such
amount is not paid when due under such Swap Contract; or

 

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(f) Insolvency Proceedings, Etc. (i) A Borrower or any Borrower Affiliate
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer for it or for all or any material
part of its property or takes any action to effect any of the foregoing; or
(ii) any receiver, trustee, custodian, conservator, liquidator, rehabilitator or
similar officer is appointed without the application or consent of such Person
and the appointment continues undischarged or unstayed for 60 calendar days; or
(iii) any proceeding under any Debtor Relief Law relating to any such Person or
to all or any part of its property is instituted without the consent of such
Person and continues undismissed or unstayed for 60 calendar days, or an order
for relief is entered in any such proceeding; or

(g) Inability to Pay Debts; Attachment. (i) A Borrower or any Borrower Affiliate
becomes unable or admits in writing its inability or fails generally to pay its
debts as they become due, or (ii) any writ or warrant of attachment or execution
or similar process is issued or levied against property which is a material part
of the property of the Borrowers and their Subsidiaries (other than the Excluded
Subsidiaries) taken as a whole, and is not released, vacated or fully bonded
within 45 days after its issue or levy; or

(h) Judgments. There is entered against a Borrower or any Borrower Affiliate
(i) a final non-appealable judgment or order for the payment of money in an
aggregate amount exceeding (individually or collectively) $5,000,000 (to the
extent not covered by third-party insurance as to which the insurer does not
dispute coverage), or (ii) any non-monetary final non-appealable judgment that
has or could reasonably be expected to have a Material Adverse Effect and, in
either case, (A) enforcement proceedings are commenced by any creditor upon such
judgment or order and is not released, vacated or fully bonded within 60 days
after its attachment or levy; or (B) there is a period of 60 consecutive days
during which a stay of enforcement of such judgment, by reason of a pending
appeal or otherwise, is not in effect; or

(i) ERISA. (i) If a Borrower, any Borrower Affiliate or any of their ERISA
Affiliates maintains any Pension Plan or any Multiemployer Plan, an ERISA Event
occurs with respect to a Pension Plan or Multiemployer Plan which has resulted
or could reasonably be expected to result in liability of a Borrower or any
Borrower Affiliate under Title IV of ERISA to the Pension Plan, Multiemployer
Plan or the PBGC in an aggregate amount in excess of $1,000,000, or (ii) if
there is any Multiemployer Plan, a Borrower, any Borrower Affiliate or any ERISA
Affiliate thereof fails to pay when due, after the expiration of any applicable
grace period, any installment payment with respect to its withdrawal liability
under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in
excess of $1,000,000; or

(j) Invalidity of Loan Documents. Any Loan Document, at any time after its
execution and delivery and for any reason other than the agreement of the
Required Lenders or termination of all Revolving Commitments and satisfaction in
full of all the Obligations, ceases to be in full force and effect, or is
declared by a court of competent jurisdiction to be null and void, invalid or
unenforceable in any material respect; or any Loan Party denies that it has any
or further liability or obligation under any Loan Document, or purports to
revoke, terminate or rescind any Loan Document; provided, however, that the
foregoing shall not apply to the Guaranty and other Collateral Documents of any
Subsidiary that is Disposed of by a Borrower in accordance with the provisions
of this Agreement; or

(k) Change of Control. There occurs any Change of Control; or

 

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(l) Dissolution. A Borrower or any Borrower Affiliate shall dissolve, liquidate,
or otherwise terminate its existence, except as permitted in Section 7.06; or

(m) Collateral; Impairment of Security, etc. (i) Any provision of any Loan
Document shall for any reason cease to be valid and binding on or enforceable
against a Loan Party or any Loan Party shall so state in writing or bring an
action to limit its obligations or liabilities thereunder; or (ii) any
Collateral Document shall for any reason (other than pursuant to the terms
thereof) cease to create a valid security interest in the Collateral purported
to be covered thereby or such security interest shall for any reason (other than
as permitted herein or in any Collateral Document) cease to be a perfected and
first priority security interest subject to Permitted Liens; provided, however,
that the foregoing shall not apply to the Guaranty and other Collateral
Documents of any Subsidiary that is Disposed of by the Borrowers in accordance
with the provisions of this Agreement; or

(n) Borrowing Base Deficiency. If any Borrowing Base Deficiency continues to
exist beyond the applicable time periods permissible under Section 2.04 .

8.02. Remedies Upon Event of Default. If any Event of Default occurs and is
continuing, the Administrative Agent shall, at the request of, or may, with the
consent of, the Required Lenders:

(a) declare the Revolving Commitment of each Lender to make Revolving Loans and
any obligation of the L/C Issuer to make L/C Credit Extensions to be terminated,
whereupon such Revolving Commitments and obligations shall be terminated;

(b) declare the unpaid principal amount of all outstanding Revolving Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other notice of any kind, all of which are hereby expressly
waived by the Borrowers;

(c) declare that an amount equal to the then Outstanding Amount of all L/C
Obligations be immediately due and payable by the Borrowers, without
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other notice of any kind, all of which are hereby expressly
waived by the Borrowers, and require that the Borrowers deliver such payments to
the Administrative Agent to Cash Collateralize the L/C Obligations (in an amount
equal to the then Outstanding Amount thereof); and

(d) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents or applicable Law;

provided, however, that upon the occurrence of any event specified in subsection
(f) of Section 8.01, the obligation of each Lender to make Revolving Loans and
any obligation of the L/C Issuer to make L/C Credit Extensions shall
automatically terminate, the unpaid principal amount of all outstanding
Revolving Loans and all interest and other amounts as aforesaid shall
automatically become due and payable, and an amount equal to the then
Outstanding Amount of all L/C Obligations shall be deemed to be forthwith due
and owing by the Borrowers to the L/C Issuer and the Lenders as of the date of
such occurrence and the Borrowers’ obligation to pay such amounts shall be
absolute and unconditional, without regard to whether any beneficiary of any
such Letter of Credit has attempted to draw down all or a portion of such amount
under the terms of a Letter of Credit and, to the fullest extent permitted by
applicable Law, shall not be subject to any defense or be affected by a right of
set-off, counterclaim or recoupment which the Borrowers may now or hereafter
have against any such beneficiary, the L/C Issuer, the Administrative Agent, the
Lenders or any other Person for any reason whatsoever. Such payments shall be
delivered to and held by the Administrative Agent as cash collateral securing
the L/C Obligations.

 

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8.03. Application of Funds. After the exercise of remedies provided for in
Section 8.02 (or after the Revolving Loans have automatically become immediately
due and payable and the L/C Obligations have automatically been required to be
Cash Collateralized as set forth in the proviso to Section 8.02), any amounts
received on account of the Obligations shall be applied by the Administrative
Agent as set forth in Section 2.11(d).

ARTICLE IX.

ADMINISTRATIVE AGENT

9.01. Appointment and Authorization of Agents; Lender Hedging Agreements.
(a) Each Lender hereby irrevocably (subject to Section 9.10) appoints,
designates and authorizes the Administrative Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to it
by the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere herein or in any other Loan Document, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Administrative Agent have or be deemed
to have any fiduciary relationship with any Lender or Participant, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent. Without limiting the
generality of the foregoing sentence, the use of the term “agent” herein and in
the other Loan Documents with reference to the Administrative Agent or
Collateral Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable Law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties.

(b) The L/C Issuer shall act on behalf of the Lenders with respect to any
Letters of Credit issued by it and the documents associated therewith until such
time (and except for so long) as the Administrative Agent may agree at the
request of the Required Lenders to act for the L/C Issuer with respect thereto;
provided, however, that the L/C Issuer shall have all of the benefits and
immunities (i) provided to the Administrative Agent in this Article IX with
respect to any acts taken or omissions suffered by the L/C Issuer in connection
with Letters of Credit issued by it or proposed to be issued by it and the
application and agreements for letters of credit pertaining to the Letters of
Credit as fully as if the term “Administrative Agent” as used in this Article IX
included the L/C Issuer with respect to such acts or omissions, and (ii) as
additionally provided herein with respect to the L/C Issuer.

(c) To the extent any Lender Hedge Provider is a party to a Lender Hedging
Agreement and accepts the benefits of the Liens in the Collateral arising
pursuant to the Collateral Documents, such Lender (for itself and on behalf of
any such Affiliates) shall be deemed (i) to appoint the Administrative Agent and
Collateral Agent, as its nominee and agent, to act for and on behalf of such
Lender or Affiliate thereof in connection with the Collateral Documents and
(ii) to be bound by the terms of this Article IX.

 

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9.02. Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents
(including the Collateral Agent), employees or attorneys-in-fact and shall be
entitled to advice of counsel and other consultants or experts concerning all
matters pertaining to such duties. Neither the Administrative Agent nor
Collateral Agent shall be responsible for the negligence or misconduct of any
agent or attorney-in-fact that it selects in the absence of gross negligence or
willful misconduct.

9.03. Default; Collateral. (a) Upon the occurrence and continuance of a Default
or Event of Default, the Lenders agree to promptly confer in order that Required
Lenders or the Lenders, as the case may be, may agree upon a course of action
for the enforcement of the rights of the Lenders; and the Administrative Agent
shall be entitled to refrain from taking any action (without incurring any
liability to any Person for so refraining) unless and until the Administrative
Agent shall have received instructions from Required Lenders. All rights of
action under the Loan Documents and all right to the Collateral, if any,
hereunder may be enforced by the Administrative Agent (or Collateral Agent) and
any suit or proceeding instituted by the Administrative Agent (or Collateral
Agent) in furtherance of such enforcement shall be brought in its name as the
Administrative Agent (or Collateral Agent) without the necessity of joining as
plaintiffs or defendants any other Lender, and the recovery of any judgment
shall be for the benefit of the Lenders (and, with respect to Lender Hedging
Agreements and Banking Services, Lender Hedge Providers or Affiliates, if
applicable) subject to the expenses of the Administrative Agent and Collateral
Agent. In actions with respect to any property of the Borrowers or any other
Obligor, the Administrative Agent (and the Collateral Agent) is acting for the
ratable benefit of each Lender (and, with respect to Lender Hedging Agreement
and Banking Services, Lender Hedge Providers or Affiliates, if applicable). Any
and all agreements to subordinate (whether made heretofore or hereafter) other
indebtedness or obligations of Borrowers to the Obligations shall be construed
as being for the ratable benefit of each Lender (and, with respect to Lender
Hedging Agreement and Banking Services, Lender Hedge Providers or Affiliates, if
applicable).

(b) Each Lender authorizes and directs the Administrative Agent and the
Collateral Agent to enter into the Collateral Documents on behalf of and for the
benefit of the Lenders (and, with respect to Lender Hedging Agreements and
Banking Services, Lender Hedge Providers or Affiliates, if applicable)(or if
previously entered into, hereby ratifies the Administrative Agent’s and
Collateral Agent’s previously entering into such agreements and Collateral
Documents).

(c) Except to the extent unanimity (or other percentage set forth in
Section 10.01) is required hereunder, each Lender agrees that any action taken
by the Required Lenders in accordance with the provisions of the Loan Documents,
and the exercise by the Required Lenders of the power set forth herein or
therein, together with such other powers as are reasonably incidental thereto,
shall be authorized and binding upon all of the Lenders.

(d) The Administrative Agent and Collateral Agent are each hereby authorized on
behalf of the Lenders, without the necessity of any notice to or further consent
from any Lender, from time to time to take any action with respect to any
Collateral or Collateral Documents which may be necessary to perfect and
maintain perfected the Liens upon the Collateral granted pursuant to the
Collateral Documents.

(e) Neither the Administrative Agent nor the Collateral Agent shall have any
obligation whatsoever to any Lender or to any other Person to assure that the
Collateral exists or is owned by any Obligor or is cared for, protected, or
insured or has been encumbered or that the Liens granted to the Administrative
Agent and/or Collateral Agent herein or pursuant thereto have been properly or
sufficiently or lawfully created, perfected, protected, or enforced, or are
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure, or fidelity, or to

 

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continue exercising, any of the Rights granted or available to the
Administrative Agent or Collateral Agent in this Section 9.03 or in any of the
Collateral Documents; it being understood and agreed that in respect of the
Collateral, or any act, omission, or event related thereto, the Administrative
Agent may act in any manner it may deem appropriate, in its sole discretion,
given the Administrative Agent’s own interest in the Collateral as one of the
Lenders and that the Administrative Agent shall have no duty or liability
whatsoever to any Lender, other than to act without gross negligence or willful
misconduct and the same shall apply to the Collateral Agent so long as the
Administrative Agent is also the Collateral Agent.

(f) The Lenders hereby irrevocably authorize the Administrative Agent and/or
Collateral Agent, at its option and in its discretion, to release any Lien
granted to or held by the Administrative Agent or Collateral Agent upon any
Collateral: (i) constituting property in which no Obligor owned an interest at
the time the Lien was granted or at any time thereafter; (ii) constituting
property leased or granted to an Obligor under a lease, easement or right-of-way
which has expired or been terminated in a transaction permitted under the Loan
Documents or is about to expire and which has not been, and is not intended by
such Obligor to be, renewed; and (iii) consisting of an instrument evidencing
Indebtedness pledged to the Administrative Agent or Collateral Agent (for the
benefit of the Lenders), if the Indebtedness evidenced thereby has been paid in
full. In addition, the Lenders irrevocably authorize the Administrative Agent
and Collateral Agent to release Liens upon Collateral as contemplated in
Section 10.01(c) or (d), or if approved, authorized, or ratified in writing by
the requisite Lenders. Upon request by the Administrative Agent (or Collateral
Agent) at any time, the Lenders will confirm in writing the Administrative
Agent’s (or Collateral Agent’s) authority to release particular types or items
of Collateral pursuant to this Section 9.03.

(g) In furtherance of the authorizations set forth in this Section 9.03, each
Lender hereby irrevocably appoints the Administrative Agent and Collateral Agent
its attorney-in-fact, with full power of substitution, for and on behalf of and
in the name of each such Lender (i) to enter into Collateral Documents
(including, without limitation, any appointments of substitute trustees under
any Collateral Documents and any appointment of a collateral agent under the
Intercreditor Agreement), (ii) to take action with respect to the Collateral and
Collateral Documents to perfect, maintain, and preserve Lenders’ Liens, and
(iii) to execute instruments of release or to take other action necessary to
release Liens upon any Collateral to the extent authorized in paragraph
(f) hereof. This power of attorney shall be liberally, not restrictively,
construed so as to give the greatest latitude to the Administrative Agent’s and
the Collateral Agent’s power, as attorney, relative to the Collateral matters
described in this Section 9.03. The powers and authorities herein conferred on
the Administrative Agent and Collateral Agent may be exercised by the
Administrative Agent or Collateral Agent through any Person who, at the time of
the execution of a particular instrument, is an officer of the Administrative
Agent or Collateral Agent (or any Person acting on behalf of the Administrative
Agent or Collateral Agent pursuant to a valid power of attorney). The power of
attorney conferred by this Section 9.03(g) to the Administrative Agent and
Collateral Agent is granted for valuable consideration and is coupled with an
interest and is irrevocable so long as the Obligations, or any part thereof,
shall remain unpaid or the Lenders have any Revolving Commitment hereunder.

9.04. Liability of Agents. No Agent-Related Person shall (a) be liable for any
action taken or omitted to be taken by any of them under or in connection with
this Agreement or any other Loan Document or the transactions contemplated
hereby (except for its own gross negligence or willful misconduct in connection
with its duties expressly set forth herein), or (b) be responsible in any manner
to any Lender or Participant for any recital, statement, representation or
warranty made by any Loan Party or any officer thereof, contained herein or in
any other Loan Document, or in any certificate, report, statement or other
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provided for in, or received by Administrative Agent or Collateral Agent under
or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for the creation, perfection or
priority of any Liens purported to be created by any of the Loan Documents, or
the validity, genuineness, enforceability, existence, value or sufficiency of
any collateral security, or to make any inquiry respecting the performance by
the Borrowers of their obligations hereunder or under any other Loan Document,
or for any failure of any Loan Party or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Lender or Participant to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of any Loan Party or any Affiliate thereof.

9.05. Reliance by Administrative Agent. (a) The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any writing,
communication, signature, resolution, representation, notice, consent,
certificate, affidavit, letter, facsimile, electronic mail message or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to any Loan Party), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under any Loan Document unless it shall
first receive such advice or concurrence of the Required Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Required Lenders or all the Lenders,
if required hereunder, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and Participants. Where
this Agreement expressly permits or prohibits an action unless the Required
Lenders otherwise determine, the Administrative Agent shall, and in all other
instances, the Administrative Agent may, but shall not be required to, initiate
any solicitation for the consent or a vote of the Lenders.

(b) For purposes of determining compliance with the conditions specified in
Section 4.01, each Lender that has funded its Pro Rata Share of the Borrowing on
the Closing Date shall be deemed to have consented to, approved or accepted or
to be satisfied with, each document or other matter either sent by the
Administrative Agent to such Lender (or otherwise made available for such Lender
on Intralinks or any similar website) for consent, approval, acceptance or
satisfaction, or required hereunder to be consented to or approved by or
acceptable or satisfactory to a Lender.

9.06. Notice of Default. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest and fees required
to be paid to the Administrative Agent for the account of the Lenders, unless
the Administrative Agent shall have received written notice from a Lender or the
Borrowers referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a “notice of default.” The
Administrative Agent will notify the Lenders of its receipt of any such notice.
The Administrative Agent shall take such action with respect to such Default or
Event of Default as may be directed by the Required Lenders in accordance with
Article VIII; provided, however, that unless and until the Administrative Agent
has received any such direction, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable or in the best
interest of the Lenders.

 

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9.07. Credit Decision; Disclosure of Information by Administrative Agent. Each
Lender acknowledges that no Agent-Related Person has made any representation or
warranty to it, and that no act by the Administrative Agent hereinafter taken,
including any consent to and acceptance of any assignment or review of the
affairs of any Loan Party or any Affiliate thereof, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Lender as to any matter, including whether Agent-Related Persons have disclosed
material information in their possession. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their respective Subsidiaries, and all
applicable bank or other regulatory Laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to the Borrowers hereunder. Each Lender also represents that it
will, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrowers and the other Loan Parties. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Administrative Agent herein, the Administrative Agent shall not
have any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of any of the Loan Parties or any of
their respective Affiliates which may come into the possession of any Agent-
Related Person.

9.08. Indemnification of Agents. Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand each
Agent-Related Person (to the extent not reimbursed by or on behalf of any Loan
Party and without limiting the obligation of any Loan Party to do so), pro rata,
and hold harmless each Agent-Related Person from and against any and all
Indemnified Liabilities incurred by it; provided, however, that no Lender shall
be liable for the payment to any Agent-Related Person of any portion of such
Indemnified Liabilities to the extent determined in a final, nonappealable
judgment by a court of competent jurisdiction to have been caused primarily by
such Agent-Related Person’s own gross negligence or willful misconduct;
provided, however, it being agreed by all Lenders that no action taken in
accordance with the directions of the Required Lenders shall be deemed to
constitute gross negligence or willful misconduct for purposes of this Section.
Without limitation of the foregoing, each Lender shall reimburse the
Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs, costs and expenses in
connection with the use of Intralinks, Inc. or other similar information
transmission systems in connection with this Agreement) incurred by the
Administrative Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that the
Administrative Agent is not reimbursed for such expenses by or on behalf of the
Borrowers. The undertaking in this Section shall survive termination of the
Revolving Commitments, the payment of all Obligations hereunder and the
resignation or replacement of the Administrative Agent.

 

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9.09. Administrative Agent in its Individual Capacity. Citibank and its
Affiliates may make loans to, accept deposits from, acquire equity interests in
and generally engage in any kind of banking, trust, financial advisory,
underwriting or other business with each of the Loan Parties and their
respective Affiliates as though Citibank were not the Administrative Agent,
Collateral Agent or the L/C Issuer hereunder and without notice to or consent of
the Lenders. The Lenders acknowledge that, pursuant to such activities, Citibank
or its Affiliates may receive information regarding any Loan Party or its
Affiliates (including information that may be subject to confidentiality
obligations in favor of such Loan Party or such Affiliate) and acknowledge that
the Administrative Agent shall be under no obligation to provide such
information to them. With respect to its Revolving Loans, Citibank shall have
the same rights and powers under this Agreement as any other Lender and may
exercise such rights and powers as though it were not the Administrative Agent,
Collateral Agent or the L/C Issuer, and the terms “Lender” and “Lenders” include
Citibank in its individual capacity.

9.10. Successor Administrative Agent and Collateral Agent.

(a) The Administrative Agent may resign as Administrative Agent and Collateral
Agent upon 30 days’ notice to the Lenders with a copy of such notice to the
Borrowers. If the Administrative Agent resigns under this Agreement, the
Required Lenders shall appoint from among the Lenders a successor administrative
agent and collateral agent for the Lenders which successor administrative agent
shall be consented to by the Borrowers at all times other than during the
existence of an Event of Default (which consent of the Borrowers shall not be
unreasonably withheld, conditioned or delayed). If no successor administrative
agent is appointed prior to the effective date of the resignation of the
Administrative Agent, the Administrative Agent may appoint, after consulting
with the Lenders and the Borrowers, a successor administrative agent from among
the Lenders who shall also succeed to the role of successor collateral agent.
Upon the acceptance of its appointment as successor administrative agent
hereunder, such successor administrative agent shall succeed to all the rights,
powers and duties of the resigning Administrative Agent and the term
“Administrative Agent” shall mean such successor administrative agent and the
resigning Administrative Agent’s appointment, powers and duties as
Administrative Agent shall be terminated. After any resigning Administrative
Agent’s resignation hereunder as Administrative Agent, the provisions of this
Article IX and Sections 10.04 and 10.13 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative Agent
under this Agreement. If no successor administrative agent has accepted
appointment as Administrative Agent by the date which is 30 days following a
resigning Administrative Agent’s notice of resignation, the resigning
Administrative Agent’s resignation shall nevertheless thereupon become effective
and the Lenders shall perform all of the duties of the Administrative Agent and
Collateral Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above.

(b) The Collateral Agent may resign as Collateral Agent upon 30 days’ notice to
the Administrative Agent with a copy of such notice to the Borrowers. If the
Collateral Agent resigns under this Agreement, the Administrative Agent shall
designate a successor collateral agent. Upon the acceptance of its appointment
as successor collateral agent hereunder, such successor collateral agent shall
succeed to all the rights, powers and duties of the resigning Collateral Agent
and the term “Collateral Agent” shall mean such successor collateral agent and
the resigning Collateral Agent’s appointment, powers and duties as Collateral
Agent shall be terminated. After any resigning Collateral Agent’s resignation
hereunder as Collateral Agent, the provisions of this Article IX and Sections
10.04 and 10.13 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Collateral Agent under this Agreement.

 

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9.11. Other Agents. None of the Lenders or other Persons identified on the
facing page or signature pages of this Agreement as a “syndication agent,” as a
“documentation agent,” any other type of agent (other than the Administrative
Agent and Collateral Agent), shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Lenders as such. Without limiting the foregoing, none of the Lenders so
identified shall have or be deemed to have any fiduciary relationship with any
Lender. Each Lender acknowledges that it has not relied, and will not rely, on
any of the Lenders so identified in deciding to enter into this Agreement or in
taking or not taking action hereunder.

9.12. Administrative Agent May File Proofs of Claim. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
any Loan Party, the Administrative Agent (irrespective of whether the principal
of any Revolving Loan or L/C Obligation shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Borrowers) shall be
entitled and empowered, by intervention in such proceeding or otherwise

(i) to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Revolving Loans, L/C Obligations and all
other Obligations that are owing and unpaid and to file such other documents as
may be necessary or advisable in order to have the claims of the Lenders, the
L/C Issuer and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders, the L/C
Issuer and the Administrative Agent and their respective agents and counsel and
all other amounts due the Lenders, the L/C Issuer and the Administrative Agent
under Sections 2.14(i) and 2.14(j), 2.08, 10.04 and 10.05) allowed in such
judicial proceeding; and

(ii) to collect and receive any monies or other property payable or deliverable
on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender and the L/C Issuer to make such payments to the Administrative Agent
and, in the event that the Administrative Agent shall consent to the making of
such payments directly to the Lenders and the L/C Issuer, to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Administrative Agent and its agents and
counsel, and any other amounts due the Administrative Agent under Sections 2.08,
10.04 and 10.05.

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender or the L/C
Issuer any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or to authorize the
Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding.

9.13. Hedging Agreements. To the extent any Affiliate of a Lender is a party to
a Swap Contract with a Borrower or any Borrower Affiliate and thereby becomes a
beneficiary of the Liens pursuant to the Collateral Documents, such Affiliate of
a Lender shall be deemed to appoint the Administrative Agent and Collateral
Agent its nominee and agent to act for and on behalf of such Affiliate in
connection with the Collateral Documents and to be bound by the terms of this
Article IX, and Section 10.01(e).

 

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9.14. Banking Services. To the extent any Affiliate of a Lender provides any
Banking Services and thereby becomes a beneficiary of the Liens pursuant to the
Collateral Documents, such Affiliate of a Lender shall be deemed to appoint the
Administrative Agent and Collateral Agent its nominee and agent to act for and
on behalf of such Affiliate in connection with the Collateral Documents and to
be bound by the terms of this Article IX, Section 10.01(e)) and the last
sentence of Section 2.13.

ARTICLE X.

MISCELLANEOUS

10.01. Amendments, Release of Collateral, Etc.

(a) No amendment or waiver of any provision of this Agreement or any other Loan
Document, and no consent to any departure by the Borrowers or any other Loan
Party therefrom shall be effective unless in writing signed by the Required
Lenders and the Borrowers or the applicable Loan Party, as the case may be, and
acknowledged by the Administrative Agent, and each such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that in connection with subsections (i) through
(viii) below, no such amendment, waiver or consent shall, unless in writing and
signed by all of the Lenders and by the Borrowers, and acknowledged by the
Administrative Agent:

(i) extend or increase the Revolving Commitment of any Lender (or reinstate any
Revolving Commitment terminated pursuant to Section 8.02);

(ii) extend the Maturity Date or extend, postpone or delay any date fixed by
this Agreement or any other Loan Document for any payment or mandatory
prepayment of principal, interest, fees or other amounts due to the Lenders (or
any of them) hereunder or under any other Loan Document;

(iii) reduce the principal of, or the rate of interest specified herein on, any
Revolving Loan or L/C Borrowing or any fees or other amounts payable hereunder
or under any other Loan Document; provided, however, that only the consent of
the Required Lenders shall be necessary to (A) amend the definition of “Default
Rate” or to waive any obligation of the Borrowers to pay interest at the Default
Rate or (B) to amend any financial covenant hereunder (or any defined term used
therein) even if the effect of such amendment would be to reduce the rate of
interest on any Revolving Loan or L/C Borrowing or to reduce any fee payable
hereunder;

(iv) change the percentage of the Aggregate Revolving Commitment or of the
aggregate unpaid principal amount of the Revolving Loans and L/C Obligations
which is set forth in the definition of “Required Lenders”;

(v) change the Pro Rata Share of any Lender except pursuant to subsection
(i) above;

(vi) release of all or substantially all of Collateral or release any material
Guarantor from a Guaranty (except in connection with a Disposition permitted
under Section 7.07 or as otherwise permitted under this Section 10.01, which
shall not require any Lender consents other than Lenders’ execution of this
Agreement);

 

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(vii) amend the definition of the term “Borrowing Base” or amend the requirement
that the Borrowing Base may be increased only with the consent of all Lenders;
or

(viii) amend this Section, or Section 2.04(b) or 2.12, or any provision herein
providing for unanimous consent or other action by all the Lenders;

and, provided further: (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Required Lenders or all
the Lenders, as the case may be, affect the rights or duties of the L/C Issuer
under this Agreement or any Letter of Credit Application relating to any Letter
of Credit issued or to be issued by it; (ii) no amendment, waiver or consent
shall, unless in writing and signed by the Administrative Agent in addition to
the Required Lenders or all the Lenders, as the case may be, affect the rights
or duties of the Administrative Agent under this Agreement or any other Loan
Document; and (iii) the Fee Letter may be amended or waived by the Borrowers and
Administrative Agent without the consent of any Lender. Notwithstanding anything
to the contrary herein, any Lender that has failed to fund any portion of the
Revolving Loans or participation in L/C Obligations required to be funded by it
hereunder shall not have any right to approve or disapprove any amendment,
waiver or consent hereunder, except that the Pro Rata Share of such Lender may
not be increased without the consent of such Lender.

The right of each Lender to receive in connection with the Revolving Loan owed
to it interest on each Interest Payment Date and to receive principal on the
Maturity Date shall not be impaired or affected without the consent of such
Lender, nor shall such Lender’s right to institute suit against the Borrowers or
Guarantors for payment of such amounts on or after the due dates thereof be
impaired or affected without the consent of such Lender; provided the foregoing
shall not give any Lender any right to proceed against Collateral or take any
actions described in Section 8.02 that are vested in the Administrative Agent or
Required Lenders.

(b) Any amendment to any Loan Document which purports to (i) decrease the amount
of any mandatory prepayment or commitment reduction required by Section 2.04(c)
or (ii) change this Section 10.01(b), must be by an instrument in writing
executed by the Borrowers, the Administrative Agent, and the Required Lenders.

(c) Upon any sale, transfer, or Disposition of Collateral which is permitted
pursuant to the Loan Documents and upon 3 Business Days’ prior written request
by the Borrowers (which request must be accompanied by (i) true and correct
copies of all material documents of transfer or Disposition, including any
contract of sale, to the extent then available and to be updated with final
agreements prior to Closing, (ii) a preliminary closing statement and
instructions to the title company, if any, (iii) all requested release
instruments in form and substance satisfactory to the Administrative Agent and
(iv) if required, written consent of the requisite Lenders), the Administrative
Agent and/or Collateral Agent shall (and is hereby irrevocably authorized by the
Lenders to) execute such documents as may be necessary to evidence the release
of Liens granted to the Administrative Agent and/or Collateral Agent for the
benefit of the Secured Parties pursuant hereto in such Collateral. Neither the
Administrative Agent nor the Collateral Agent shall be required to execute any
release instruments on terms which, in the Administrative Agent’s (or Collateral
Agent’s) opinion, would expose the Administrative Agent or Collateral Agent to
liability or create any obligation or entail any consequence other than the
release of Liens without recourse or warranty. No such release shall impair the
Administrative Agent’s and/or Collateral Agent’s Lien on the proceeds of sale of
such Collateral.

 

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(d) If all outstanding Revolving Loans and other Obligations (other than
contingent indemnity obligations) have been indefeasibly paid in full (or, with
respect to L/C Obligations, Cash Collateralized) and the Revolving Commitments
have terminated or have been reduced to zero, and, subject to Section 10.01(e)
all Lender Hedging Agreement have terminated, the Administrative Agent agrees
to, and the Lenders hereby instruct the Administrative Agent and Collateral
Agent to, at the Borrowers’ expense, execute and authorize such releases of the
Collateral Documents as the Borrowers shall reasonably request and this
Agreement shall be deemed terminated except that such termination shall not
relieve the Borrowers of any obligation to make any payments to the
Administrative Agent or any Lender required by any Loan Document to the extent
accruing, or relating to an event occurring, prior to such termination.

(e) Notwithstanding any provision herein to the contrary, if the Revolving
Commitments have been terminated, and the only outstanding Obligations (other
than contingent indemnity obligations, Banking Service Obligations and L/C
Obligations that are Cash Collateralized) are amounts owed pursuant to one or
more Lender Hedging Agreements, the Administrative Agent and/or Collateral Agent
will, and is hereby authorized to, (A) release the Liens created under the Loan
Documents and (B) release all Guaranties of the Guarantors; provided, that
contemporaneously with such release, (i) the Borrowers (and, if applicable, any
Borrower Affiliate that is a party to such Lender Hedging Agreements)
(A) execute a margin agreement in form and substance acceptable to such Lender
Hedge Providers or Approved Hedge Counterparties that are parties to such Lender
Hedging Agreements (the “Lender Counterparties”) and (B), if required, provide
collateral in the form of cash or a letter of credit having an aggregate value
acceptable to such Lender Counterparties, and (ii) if such Lender Hedging
Agreement is executed by a Subsidiary of the Borrowers and the Borrowers are not
parties thereto, the Borrowers execute a guaranty covering such Subsidiary’s
obligations thereunder, such guaranty to be in form and substance satisfactory
to the Lender Counterparties. Any release under this Section 10.01(e) must be in
writing and signed by the Administrative Agent.

10.02. Notices and Other Communications; Facsimile Copies.

(a) General. Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder and under the other Loan Documents shall
be in writing (including by facsimile transmission) and mailed, faxed or
delivered, to the address, facsimile number or (subject to subsection (c) below)
electronic mail address specified for notices on Schedule 10.02 (for the
Borrowers, any Guarantor and the Administrative Agent) or on the Administrative
Details Form (for the other Lenders); or, in the case of the Borrowers, the
Guarantors, the Administrative Agent, or the L/C Issuer, to such other address
as shall be designated by such party in a notice to the other parties, and in
the case of any other party, to such other address as shall be designated by
such party in a notice to the Borrowers, the Administrative Agent and the L/C
Issuer. All such notices and other communications shall be deemed to be given or
made upon the earlier to occur of (i) actual receipt by the intended recipient
and (ii) (A) if delivered by hand or by courier, when signed for by the intended
recipient; (B) if delivered by mail, four Business Days after deposit in the
mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has
been confirmed by telephone; and (D) if delivered by electronic mail (which form
of delivery is subject to the provisions of subsection (c) below), when
delivered; provided, however, that notices and other communications to the
Administrative Agent or the L/C Issuer pursuant to Article II shall not be
effective until actually received by such Person. Any notice or other
communication permitted to be given, made or confirmed by telephone hereunder
shall be given, made or confirmed by means of a telephone call to the intended
recipient at the number specified in accordance with this Section, it being
understood and agreed that a voicemail message shall in no event be effective as
a notice, communication or confirmation hereunder.

 

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(b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be
transmitted and/or signed by facsimile or other electronic means. The
effectiveness of any such documents and signatures shall, subject to applicable
Law, have the same force and effect as manually-signed originals and shall be
binding on all Loan Parties, the Administrative Agent and the Lenders. The
Administrative Agent may also require that any such documents and signatures be
confirmed by a manually-signed original thereof; provided, however, that the
failure to request or deliver the same shall not limit the effectiveness of any
facsimile document or signature.

(c) Limited Use of Electronic Mail. Electronic mail and internet and intranet
websites may be used only to distribute routine communications, such as
financial statements and other information, and to distribute Loan Documents for
execution by the parties thereto, and shall not be recognized hereunder for any
other purpose.

(d) Reliance by Administrative Agent and Lenders. The Administrative Agent and
the Lenders shall be entitled to rely and act upon any notices (including
telephonic Borrowing Notices) purportedly given by or on behalf of the Borrowers
even if (i) such notices were not made in a manner specified herein, were
incomplete or were not preceded or followed by any other form of notice
specified herein, or (ii) the terms thereof, as understood by the recipient,
varied from any confirmation thereof. The Borrowers shall indemnify each
Agent-Related Person and each Lender from all losses, costs, expenses and
liabilities resulting from the reliance by such Person on each notice
purportedly given by or on behalf of the Borrowers. All telephonic notices to
and other communications with the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such
recording.

10.03. No Waiver; Cumulative Remedies. No failure by any Lender or the
Administrative Agent to exercise, and no delay by any such Person in exercising,
any right, remedy, power or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein or therein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by Law.

10.04. Attorney Costs; Expenses and Taxes. The Borrowers agree (a) to pay or
reimburse the Arranger and Administrative Agent for all reasonable and customary
costs and expenses incurred in connection with due diligence and the
development, preparation, negotiation, syndication, administration and execution
of this Agreement and the other Loan Documents, including the filing, recording,
refiling or rerecording of any Mortgage, any pledge agreement and any Security
Agreement and/or any Uniform Commercial Code financing statements relating
thereto and all amendments, supplements and modifications to any thereof and any
and all other documents or instruments of further assurance required to be filed
or recorded or refiled or rerecorded by the terms hereof or of any mortgage, any
pledge agreement or any security agreement, and any amendment, waiver, consent
or other modification of the provisions hereof and thereof (whether or not the
transactions contemplated hereby or thereby are consummated), and the
consummation and administration of the transactions contemplated hereby and
thereby, including all Attorney Costs and reasonable costs and expenses in
connection with the use of Intralinks, Inc. or other similar information
transmission systems in connection with this Agreement and (b) to pay or
reimburse the Administrative Agent and each Lender for all costs and expenses
incurred in connection with the enforcement, attempted enforcement, or
preservation of any rights or remedies under this Agreement or the other Loan
Documents (including all such costs and expenses incurred during any workout or
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of the Obligations and during any legal proceeding, including any proceeding
under any Debtor Relief Law), including all Attorney Costs. The foregoing costs
and expenses shall include all search, filing, recording, title insurance, title
review, third party engineering and appraisal charges and fees and taxes related
thereto, and other out-of-pocket expenses incurred by the Administrative Agent
and the cost of independent public accountants and other outside experts
retained by the Administrative Agent or any Lender (if such Lender is otherwise
entitled to recover such costs under the terms of this Agreement). The
agreements in this Section shall survive the termination of the Aggregate
Revolving Commitment and repayment of all the other Obligations.

10.05. Indemnification. Whether or not the transactions contemplated hereby are
consummated, each of the Borrowers and each other Guarantor (by execution of a
Guaranty), jointly and severally, agrees to indemnify, save and hold harmless
the Arranger, each Agent-Related Person, the Administrative Agent, the
Collateral Agent, each Lender, the L/C Issuer and their respective Affiliates,
directors, officers, employees, counsel, agents and attorneys-in-fact
(collectively the “Indemnitees”) from and against: (a) any and all claims,
demands, actions or causes of action that are asserted against any Indemnitee by
any Person (other than the Administrative Agent or any Lender) relating directly
or indirectly to a claim, demand, action or cause of action that such Person
asserts or may assert against any Loan Party, any Affiliate of any Loan Party or
any of their respective officers or directors, arising out of or relating to,
the Loan Documents, the Aggregate Revolving Commitment, the use or contemplated
use of the proceeds of any Revolving Loans, or the relationship of any Loan
Party, the Administrative Agent, the Collateral Agent, the Lenders and the L/C
Issuer under this Agreement or any other Loan Document; (b) any and all claims,
demands, actions or causes of action that may at any time (including at any time
following repayment of the Obligations and the resignation of the Administrative
Agent or the replacement of any Lender) be asserted or imposed against any
Indemnitee by any Person or by a Borrower or any other Loan Party, arising out
of or relating to, the Loan Documents, the Revolving Commitments, the use or
contemplated use of the proceeds of any Revolving Loans, or the relationship of
any Loan Party, the Administrative Agent, the Collateral Agent, the Lenders and
the L/C Issuer under this Agreement or any other Loan Document; (c) without
limiting the foregoing, any and all claims, demands, actions or causes of
action, judgments and orders, penalties and fines that are asserted or imposed
against any Indemnitee, (i) under the application of any Environmental Law
applicable to the Borrowers or any of their respective Subsidiaries (other than
the Excluded Subsidiaries) or any of their properties or assets, including the
treatment or disposal of Hazardous Substances on any of their properties or
assets, (ii) as a result of the breach or non-compliance by the Borrowers or any
of their respective Subsidiaries (other than the Excluded Subsidiaries) with any
Environmental Law applicable to the Borrowers or any of their respective
Subsidiaries (other than the Excluded Subsidiaries), (iii) due to past ownership
by the Borrowers or any of their respective Subsidiaries (other than the
Excluded Subsidiaries) of any of their properties or assets or past activity on
any of their properties or assets which, though lawful and fully permissible at
the time, could result in present liability, (iv) due to the presence, use,
storage, treatment or disposal of Hazardous Substances on or under, or the
escape, seepage, leakage, spillage, discharge, emission or Release from, any of
the properties owned or operated by the Borrowers or any of their respective
Subsidiaries (other than the Excluded Subsidiaries) (including any liability
asserted or arising under any Environmental Law), regardless of whether caused
by, or within the control of, the Borrowers or any of their respective
Subsidiaries (other than the Excluded Subsidiaries), or (v) due to any other
environmental, health or safety condition in connection with the Loan Documents;
(d) any administrative or investigative proceeding by any Governmental Authority
arising out of or related to a claim, demand, action or cause of action
described in subsection (a), (b) or (c) above; and (e) any and all liabilities
(including liabilities under indemnities), losses, costs, damages or expenses
(including Attorney Costs and settlement costs) that any Indemnitee suffers or
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cause of action or proceeding, or as a result of the preparation of any defense
in connection with any foregoing claim, demand, action, cause of action or
proceeding, in all cases, WHETHER OR NOT ARISING OUT OF THE STRICT LIABILITY OR
NEGLIGENCE OF AN INDEMNITEE, and whether or not an Indemnitee is a party to such
claim, demand, action, cause of action or proceeding (all the foregoing,
collectively, the “Indemnified Liabilities”); provided that such indemnity shall
not, as to any Indemnitees, be available to the extent that such liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, expenses or disbursements are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence, willful misconduct or willful breach of such Indemnitee’s
obligations or from a violation of Law if such violation of Law is one which
public policy does not permit the one violating the Law to be indemnified. The
agreements in this Section shall survive and continue for the benefit of the
Indemnitees at all times after the Borrowers’ acceptance of the Lenders’
Revolving Commitments under this Agreement, whether or not the Closing Date
shall occur and shall survive the termination of the Revolving Commitments and
repayment of all the other Obligations. This Section 10.05 shall not apply to
taxes, which shall be governed exclusively by Sections 3.01 and 3.04.

10.06. Payments Set Aside. To the extent that the Borrowers make a payment to
the Administrative Agent or any Lender, or the Administrative Agent or any
Lender exercises its right of setoff, and such payment or the proceeds of such
set-off or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Administrative Agent or such Lender in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under any Debtor Relief Law or otherwise, then
(a) to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such setoff had not occurred, and
(b) each Lender severally agrees to pay to the Administrative Agent upon demand
its applicable share of any amount so recovered from or repaid by the
Administrative Agent, plus interest thereon from the date of such demand to the
date such payment is made at a rate per annum equal to the Federal Funds Rate
from time to time in effect.

10.07. Successors and Assigns.

(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that no Borrower may assign or otherwise transfer any
of its rights or obligations hereunder without the prior written consent of each
Lender and no Lender may assign or otherwise transfer any of its rights or
obligations hereunder except (i) to an Eligible Assignee in accordance with the
provisions of paragraph (b) of this Section, (ii) by way of participation in
accordance with the provisions of paragraph (d) of this Section or (iii) by way
of pledge or assignment of a security interest subject to the restrictions of
paragraph (f) of this Section (and any other attempted assignment or transfer by
any party hereto shall be null and void). Nothing in this Agreement, expressed
or implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in paragraph (d) of this Section and, to the extent
expressly contemplated hereby, the Related Parties of each of the Administrative
Agent and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.

(b) Any Lender may at any time assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Revolving Commitment and the Revolving Loans (including for
purposes of this subsection (b), participations in L/C Obligations) at the time
owing to it); provided that:

 

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except in the case of an assignment of the entire remaining amount of the
assigning Lender’s Revolving Commitment and the Revolving Loans at the time
owing to it or in the case of an assignment to a Lender or an Affiliate of a
Lender or an Approved Fund with respect to a Lender, the aggregate amount of the
Revolving Commitment (which for this purpose includes Revolving Loans
outstanding hereunder) or, if the applicable Revolving Commitment is not then in
effect, the outstanding principal balance of the Revolving Loan of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Assumption with respect to such assignment is delivered to the
Administrative Agent or, if “Trade Date” is specified in the Assignment and
Assumption, as of the Trade Date) shall not be less than $5,000,000, unless each
of the Administrative Agent and, so long as no Default or Event of Default has
occurred and is continuing, the Borrowers otherwise consent (neither the
Administrative Agent’s nor Borrowers’ consent to be unreasonably withheld,
conditioned or delayed);

(i) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement
with respect to the Revolving Loan or the Revolving Commitment assigned;

(ii) any assignment of a Revolving Commitment must be approved by the
Administrative Agent and L/C Issuer unless the Person that is the proposed
assignee is itself a Lender (whether or not the proposed assignee would
otherwise qualify as an Eligible Assignee); and

(iii) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500 (including in the case of an assignment from a
Lender to another Lender), and the Eligible Assignee, if it shall not be a
Lender, shall deliver to the Administrative Agent an Administrative Details
Form.

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to paragraph (c) of this Section, from and after the effective date specified in
each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 3.07, 10.04 and 10.05 with respect to
facts and circumstances occurring prior to the effective date of such
assignment. Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this paragraph shall be treated
for purposes of this Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with paragraph (d) of this Section.

(c) The Administrative Agent, acting solely for this purpose as an agent of the
Borrowers, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Revolving Commitment of, and principal amounts
of the Revolving Loans and L/C Obligations owing to, each Lender pursuant to the
terms hereof from time to time (the “Register”). The entries in the Register
shall be conclusive absent manifest error, and the Borrowers, the Administrative
Agent and the Lenders may treat each Person

 

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whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrowers and
any Lender, at any reasonable time and from time to time upon reasonable prior
notice.

(d) Any Lender may at any time, without the consent of, or notice to, the
Borrowers or the Administrative Agent, sell participations to any Person (other
than a natural person or the Borrowers or any of the Borrowers’ Affiliates or
Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s
rights and/or obligations under this Agreement (including all or a portion of
its Revolving Commitment and/or the Revolving Loans (including such Lender’s
participation in L/C Obligations) owing to it); provided that (i) such Lender’s
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrowers, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver that would (i) postpone any date upon which
any payment of money is scheduled to be paid to such Participant, (ii) reduce
the principal, interest, fees or other amounts payable to such Participant, or
(iii) release all or substantially all of the Guarantors from their respective
Guaranties. Subject to subsection (e) of this Section, the Borrowers agree that
each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and
3.05 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to subsection (b) of this Section; provided said Participant
agrees to be subject to Sections 3.08 and 10.15 as though it were a Lender. To
the extent permitted by Law, each Participant also shall be entitled to the
benefits of Section 10.09 as though it were a Lender; provided such Participant
agrees to be subject to Section 2.12 as though it were a Lender. Each Lender
that sells a participation shall, acting solely for this purpose as an agent of
the Borrower, maintain a register on which it enters the name and address of
each Participant and the principal amounts (and stated interest) of each
Participant’s interest in the Borrowings or other obligations under the Loan
Documents (the “Participant Register”); provided that no Lender shall have any
obligation to disclose all or any portion of the Participant Register (including
the identity of any Participant or any information relating to a Participant’s
interest in any commitments, loans, letters of credit or its other obligations
under any Loan Document) to any Person except to the extent that such disclosure
is necessary to establish that such commitment, loan, letter of credit or other
obligation is in registered form under Section 5f.103-1(c) of the United States
Treasury Regulations. The entries in the Participant Register shall be
conclusive absent manifest error, and such Lender shall treat each Person whose
name is recorded in the Participant Register as the owner of such participation
for all purposes of this Agreement notwithstanding any notice to the contrary.
For the avoidance of doubt, the Administrative Agent (in its capacity as
Administrative Agent) shall have no responsibility for maintaining the
Participant Register.

(e) A Participant shall not be entitled to receive any greater payment under
Section 3.01 or 3.04 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrowers’ prior
written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 3.01 unless the
Borrowers are notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrowers, to comply with
Section 3.01 as though it were a Lender.

 

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(f) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement (including under its Revolving
Notes, if any) to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release a Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.

(g) If the consent of the Borrowers to an assignment or to an Eligible Assignee
is required hereunder (including a consent to an assignment which does not meet
the minimum assignment threshold specified in clause (i) of the proviso to the
first sentence of Section 10.07(b)), the Borrowers shall be deemed to have given
their consent five Business Days after the date notice thereof has been
delivered by the assigning Lender (through the Administrative Agent) unless such
consent is expressly refused by the Borrowers prior to such fifth Business Day.

(h) Notwithstanding anything to the contrary contained herein, if at any time
Citibank assigns all of its Revolving Commitment and Revolving Loans pursuant to
subsection (b) above, Citibank may, upon 30 days’ notice to the Borrowers and
the Lenders, resign as L/C Issuer. In the event of any such resignation as L/C
Issuer, the Borrowers shall be entitled to appoint from among the Lenders a
successor L/C Issuer hereunder; provided, however, that any such successor L/C
Issuer have accepted such appointment; provided further, however, that no
failure by the Borrowers to appoint any such successor shall affect the
resignation of Citibank as L/C Issuer. Citibank shall retain all the rights and
obligations of the L/C Issuer hereunder with respect to all Letters of Credit
outstanding as of the effective date of its resignation as L/C Issuer and all
L/C Obligations with respect thereto (including the right to require the Lenders
to make Base Rate Loans or fund participations in Unreimbursed Amounts pursuant
to Section 2.14(c)).

10.08. Confidentiality. Each Lender agrees that it will not disclose without the
prior consent of the Borrowers (other than to directors, officers, employees,
auditors, accountants, counsel or other professional advisors of the
Administrative Agent or any Lender) any information with respect to the
Borrowers or any of their respective Subsidiaries, which is furnished pursuant
to this Agreement; provided that any Lender may disclose any such information
(a) as has become generally available to the public, (b) as may be required or
appropriate in any report, statement or testimony submitted to or required by
any municipal, state or federal regulatory body having or claiming to have
jurisdiction over such Lender or submitted to or required by the Board or the
Federal Deposit Insurance Corporation or similar organizations (whether in the
United States or elsewhere) or their successors, (c) as may be required or
appropriate in response to any summons or subpoena in connection with any
litigation, (d) in order to comply with any law, order, regulation or ruling
applicable to such Lender, (e) to any Eligible Assignee of or Participant in, or
any prospective Eligible Assignee of or Participant in, any of its rights or
obligations under this Agreement; provided that such Eligible Assignee or
Participant or prospective Eligible Assignee or Participant executes an
agreement containing provisions substantially similar to those contained in this
Section 10.08, (f) in connection with the exercise of any remedy by such Lender
if an Event of Default pertaining to the Loan Documents has occurred and is
continuing, (g) in connection with any litigation involving such Lender
pertaining to the Loan Documents, (h) to any Lender or the Administrative Agent,
or (i) to any Affiliate of any Lender (it being understood that the Persons to
whom such disclosure is made will be informed of the confidential nature of such
information and obligated to keep such information confidential).

10.09. Set-off. In addition to any rights and remedies of the Lenders provided
by Law, upon the occurrence and during the continuance of any Event of Default,
each Lender is authorized at any time and from time to time, without prior
notice to the Borrowers or any other Guarantor, any such notice being waived by
the

 

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Borrowers (each on its own behalf and on behalf of each Guarantor) to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Lender to or for the credit or
the account of the respective Borrowers or Guarantor, as applicable, against any
and all Obligations (other than Banking Service Obligations) owing to the
Administrative Agent and the Lenders, now or hereafter existing, irrespective of
whether or not the Administrative Agent or such Lender shall have made demand
under this Agreement or any other Loan Document and although such Obligations
may be contingent or unmatured. Each Lender agrees promptly to notify the
Borrowers and the Administrative Agent after any such set-off and application
made by such Lender; provided, however, that the failure to give such notice
shall not affect the validity of such set-off and application.

10.10. Interest Rate Limitation. Regardless of any provision contained in any
Loan Document, neither the Administrative Agent nor any Lender shall ever be
entitled to contract for, charge, take, reserve, receive, or apply, as interest
on all or any part of the Obligations, any amount in excess of the Maximum Rate,
and, if any Lender ever does so, then such excess shall be deemed a partial
prepayment of principal and treated hereunder as such and any remaining excess
shall be refunded to the Borrowers. In determining if the interest paid or
payable exceeds the Maximum Rate, the Borrowers and the Lenders shall, to the
maximum extent permitted under applicable Law, (a) treat all Borrowings as but a
single extension of credit (and the Lenders and the Borrowers agree that such is
the case and that provision herein for multiple Borrowings is for convenience
only), (b) characterize any nonprincipal payment as an expense, fee, or premium
rather than as interest, (c) exclude voluntary prepayments and the effects
thereof, and (d) amortize, prorate, allocate, and spread the total amount of
interest throughout the entire contemplated term of the Obligations. However, if
the Obligations are paid and performed in full prior to the end of the full
contemplated term thereof, and if the interest received for the actual period of
existence thereof exceeds the Maximum Amount, the Lenders shall refund such
excess, and, in such event, the Lenders shall not, to the extent permitted by
Law, be subject to any penalties provided by any Laws for contracting for,
charging, taking, reserving or receiving interest in excess of the Maximum
Amount.

10.11. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page of this Agreement by telecopy, facsimile, photocopy or by sending
a scanned copy by electronic mail shall be effective as delivery of a manually
executed counterpart of this Agreement. Any signature page of a counterpart may
be detached therefrom without impairing the legal effect of the signatures
thereon and attached to another counterpart identical in form thereto but having
attached to it one or more additional signature pages signed by other parties.

10.12. Integration. This Agreement, together with the other Loan Documents,
comprises the complete and integrated agreement of the parties on the subject
matter hereof and thereof and supersedes all prior agreements, written or oral,
on such subject matter. In the event of any conflict between the provisions of
this Agreement and those of any other Loan Document, the provisions of this
Agreement shall control; provided that the inclusion of supplemental rights or
remedies in favor of the Administrative Agent or the Lenders in any other Loan
Document shall not be deemed a conflict with this Agreement. Each Loan Document
was drafted with the joint participation of the respective parties thereto and
shall be construed neither against nor in favor of any party, but rather in
accordance with the fair meaning thereof.

 

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10.13. Survival of Representations and Warranties. All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default or Event of Default at the time of any Borrowing, and shall continue
in full force and effect as long as any Revolving Loan or any other Obligation
shall remain unpaid or unsatisfied.

10.14. Severability. Any provision of this Agreement and the other Loan
Documents to which any Borrower is a party that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions thereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

10.15. Replacement of Lenders. If Required Lenders and the Administrative Agent
have approved an identical increase of the Borrowing Base, the Borrowers shall
have the right to replace any Lenders that have failed to approve such Borrowing
Base increase pursuant to the provisions of the following sentence. If (i) any
Lender fails or refuses to consent to any requested amendment or waiver pursuant
to Section 10.01, (ii) any Lender requests compensation under Section 3.04, or
if the Borrowers are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 3.01,
(iii) any Lender is in breach of any of its obligations under this Agreement or
is otherwise a Defaulting Lender, or (iv) any other circumstance exists
hereunder that gives the Borrowers the right to replace a Lender as a party
hereto, then the Borrowers may, at their sole expense and effort, upon notice to
such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in, and consents required by, Section 10.07), all of its interests,
rights and obligations under this Agreement and the related Loan Documents to an
Eligible Assignee that shall assume such obligations (which assignee may be
another Lender, if a Lender accepts such assignment); provided that:

(a) the Borrowers shall have paid to the Administrative Agent the assignment fee
specified in Section 10.07(b)(iii);

(b) such Lender shall have received payment of an amount equal to the
outstanding principal of its Revolving Loans, L/C Advances, L/C Borrowings,
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder and under the other Loan Documents (including any amounts under
Section 3.05) from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrowers (in the case of all other amounts)
such payment being at par, with no premium or discount;

(c) in the case of any such assignment resulting from a claim for compensation
under Section 3.04 or payments required to be made pursuant to Section 3.01,
such assignment will result in a reduction in such compensation or payments
thereafter; and

(d) such assignment does not conflict with applicable Laws.

 

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A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrowers to require such assignment and delegation
cease to apply.

10.16. Defaulting Lender.

(a) Notwithstanding anything to the contrary contained in this Agreement, if any
Lender becomes a Defaulting Lender, then, until such time as that Lender is no
longer a Defaulting Lender, to the extent permitted by applicable Law:

(i) That Defaulting Lender’s right to approve or disapprove any amendment,
waiver or consent with respect to this Agreement shall be restricted as provided
in the proviso to the definition of “Required Lenders”.

(ii) Any payment of principal, interest, fees or other amounts received by the
Administrative Agent for the account of that Defaulting Lender (whether
voluntary or mandatory, at maturity, pursuant to Section 2.04 (Prepayments) or
otherwise, and including any amounts made available to the Administrative Agent
by the Defaulting Lender pursuant to a right of set-off, shall be applied at
such time or times as may be determined by the Administrative Agent as follows:

first, to the payment of any amounts owing by that Defaulting Lender to the
Administrative Agent hereunder;

second, to the payment on a pro rata basis of any amounts owing by that
Defaulting Lender to an L/C Issuer hereunder;

third, if so determined by the Administrative Agent or requested by the L/C
Issuer, to be held as cash collateral for future funding obligations of that
Defaulting Lender of any participation in any Letter of Credit;

fourth, as the Borrowers may request (so long as no Default or Event of Default
exists), to the funding of any Revolving Loan in respect of which that
Defaulting Lender has failed to fund its portion thereof as required by this
Agreement, as determined by the Administrative Agent;

fifth, if so determined by the Administrative Agent and the Borrowers, to be
held in a deposit account and released in order to satisfy obligations of that
Defaulting Lender to fund Revolving Loans under this Agreement;

sixth, to the payment of any amounts owing to the Lenders or the L/C Issuer as a
result of any judgment of a court of competent jurisdiction obtained by any
Lender or the L/C Issuer against that Defaulting Lender as a result of that
Defaulting Lender’s breach of its obligations under this Agreement;

seventh, so long as no Default or Event of Default exists, to the payment of any
amounts owing to the Borrowers as a result of any judgment of a court of
competent jurisdiction obtained by the Borrowers against that Defaulting Lender
as a result of that Defaulting Lender’s breach of its obligations under this
Agreement; and

 

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eighth, to that Defaulting Lender or as otherwise directed by a court of
competent jurisdiction; provided that if (x) such payment is a payment of the
principal amount of any Revolving Loans or reimbursement obligations in respect
of which that Defaulting Lender has not fully funded its appropriate share and
(y) such Revolving Loans or reimbursement obligations were made at a time when
the conditions set forth in Section 4.02 were satisfied or waived, such payment
shall be applied solely to pay the Revolving Loans of, and reimbursement
obligations owed to, all non-Defaulting Lenders on a pro rata basis prior to
being applied to the payment of any Revolving Loans of, or reimbursement
obligations owed to, that Defaulting Lender.

Any payments prepayments or other amounts paid or payable to a Defaulting Lender
that are applied (or held) to pay amounts owed by a Defaulting Lender or to post
cash collateral pursuant to this Section 10.16 shall be deemed paid to and
redirected by that Defaulting Lender, and each Lender irrevocably consents
hereto.

(iii) That Defaulting Lender (x) shall not be entitled to receive any commitment
fee for any period during which that Lender is a Defaulting Lender (and the
Borrowers shall not be required to pay any such fee that otherwise would have
been required to have been paid to that Defaulting Lender) and (y) shall be
limited in its right to receive fees in respect of Letters of Credit (if any).

(iv) During any period in which there is a Defaulting Lender, for purposes of
computing the amount of the obligation of each non-Defaulting Lender to acquire,
refinance or fund participations in Letters of Credit, the ratable portion of
each non-Defaulting Lender shall be computed without giving effect to the
Revolving Commitments of that Defaulting Lender; provided, that, (i) each such
reallocation shall be given effect only if, at the date the Lender becomes a
Defaulting Lender, no Default or Event of Default exists; and (ii) the aggregate
obligation of each non-Defaulting Lender to acquire, refinance or fund
participations in Letters of Credit shall not exceed the positive difference, if
any, of (1) the Revolving Commitments of that non-Defaulting Lender minus
(2) the aggregate Outstandings of that Lender.

(b) If the Borrowers, the Administrative Agent, and the L/C Issuer agree in
writing in their sole discretion that a Defaulting Lender should no longer be
deemed to be a Defaulting Lender, the Administrative Agent will so notify the
parties hereto, whereupon as of the effective date specified in such notice and
subject to any conditions set forth therein (which may include arrangements with
respect to any cash collateral), that Lender will, to the extent applicable,
purchase that portion of outstanding Revolving Loans of the other Lenders or
take such other actions as the Administrative Agent may determine to be
necessary to cause the Revolving Loans and participations in Letters of Credit
to be held on a pro rata basis by the Lenders in accordance with their ratable
portions (without giving effect to clause (a)(iv) above), whereupon that Lender
will cease to be a Defaulting Lender; provided that no adjustments will be made
retroactively with respect to fees accrued or payments made by or on behalf of
the Borrowers while that Lender was a Defaulting Lender; and provided, further,
that except to the extent otherwise expressly agreed by the affected parties, no
change hereunder from Defaulting Lender to Lender will constitute a waiver or
release of any claim of any party hereunder arising from that Lender’s having
been a Defaulting Lender.

(c) If any Lender is a Defaulting Lender, then the Borrowers may, at their sole
expense and effort, upon notice to such Lender and the Administrative Agent,
require such Lender to be replaced in accordance with Section 10.15.

 

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10.17. Governing Law.

(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH
LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER UNITED STATES FEDERAL LAW.

(b) EACH BORROWER AND OTHER PARTY HERETO, AND EACH GUARANTOR, BY EXECUTION OF A
GUARANTY, AGREES TO THIS SECTION 10.17(b). ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF NEW YORK OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK AND APPELLATE COURTS FROM
ANY THEREOF, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWERS, THE
ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, AND BY EXECUTION OF A GUARANTY,
EACH GUARANTOR CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWERS, EACH GUARANTOR, THE
ADMINISTRATIVE AGENT AND EACH LENDER (1) IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER
DOCUMENT RELATED THERETO, AND (2) IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE
PREPAID, AT ITS ADDRESS FOR NOTICES DESIGNATED HEREIN. THE BORROWERS, EACH
GUARANTOR, THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF
ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY THE LAW OF SUCH STATE.

10.18. Waiver of Right to Trial by Jury, Etc. EACH PARTY TO THIS AGREEMENT AND
EACH GUARANTOR, BY EXECUTION OF A GUARANTY, HEREBY (a) EXPRESSLY AND IRREVOCABLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED
OR INCIDENTAL TO THE DEALINGS OF THE PARTIES TO THE LOAN DOCUMENTS OR ANY OF
THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN
CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF EACH PARTY TO THIS AGREEMENT AND EACH GUARANTOR TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY; AND (b) EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY SUCH ACTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR

 

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DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; PROVIDED THAT THE WAIVER
CONTAINED IN THIS SECTION 10.18 SHALL NOT APPLY TO THE EXTENT THAT THE PARTY
AGAINST WHOM DAMAGES ARE SOUGHT HAS ENGAGED IN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.

10.19. Release. As additional consideration for the execution, delivery and
performance of this Agreement by the parties hereto and to induce the
Administrative Agent, the Collateral Agent and the Lenders to enter into this
Agreement, the Borrowers warrant and represent to the Administrative Agent, the
Collateral Agent and the Lenders that no facts, events, statuses or conditions
exist or have existed which, either now or with the passage of time or giving of
notice, or both, constitute or will constitute a basis for any claim or cause of
action against the Administrative Agent, the Collateral Agent or any Lender or
any defense to (i) the payment of Obligations under the Revolving Notes and/or
the Loan Documents, or (ii) the performance of any of its obligations with
respect to the Revolving Notes and/or the Loan Documents. In the event any such
facts, events, statuses or conditions exist or have existed, Borrowers
unconditionally and irrevocably hereby RELEASE, RELINQUISH and forever DISCHARGE
Administrative Agent, the Collateral Agent and the Lenders, as well as their
predecessors, successors, assigns, agents, officers, directors, shareholders,
employees and representatives, of and from any and all claims, demands, actions
and causes of action of any and every kind or character, past or present, which
any Borrower may have against any of them or their predecessors, successors,
assigns, agents, officers, directors, shareholders, employees and
representatives arising out of or with respect to (a) any right or power to
bring any claim for usury or to pursue any cause of action based on any claim of
usury, and (b) any and all transactions relating to the Loan Documents occurring
prior to the date hereof, including any loss, cost or damage, of any kind or
character, arising out of or in any way connected with or in any way resulting
from the acts, actions or omissions of any of them, and their predecessors,
successors, assigns, agents, officers, directors, shareholders, employees and
representatives, including any breach of fiduciary duty, breach of any duty of
fair dealing, breach of confidence, breach of funding commitment, undue
influence, duress, economic coercion, conflict of interest, negligence, bad
faith, malpractice, intentional or negligent infliction of mental distress,
tortious interference with contractual relations, tortious interference with
corporate governance or prospective business advantage, breach of contract,
deceptive trade practices, libel, slander or conspiracy, but in each case only
to the extent permitted by applicable Law.

10.20. Time of the Essence. Time is of the essence of the Loan Documents.

10.21. Resignation of Administrative Agent, Collateral Agent and L/C Issuer;
Appointment of Successor Administrative Agent, Collateral Agent and L/C Issuer;
Assignment.

(a) Pursuant to and in accordance with Section 9.10 of the Original Credit
Agreement, effective upon the Closing Date, (i) Royal Bank of Canada resigns as
Administrative Agent and Collateral Agent under the Original Credit Agreement
and Loan Documents, (ii) the Borrowers and the Lenders waive the requirement of
30 days’ prior notice of such resignation, (iii) Citibank is appointed successor
administrative agent (and in that capacity as successor collateral agent) for
the Lenders under this Agreement (in such capacity, the “Successor
Administrative Agent”), (iv) the Borrowers consent to the appointment of the
Successor Administrative Agent as “Administrative Agent” and “Collateral Agent”
under this Agreement and the Loan Documents, and (v) Citibank accepts its
appointment as Successor Administrative Agent and Collateral Agent, and Royal
Bank of Canada is relieved of all duties and obligations as Administrative Agent
and Collateral Agent.

 

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(b) Pursuant to and in accordance with Section 10.07(h) of the Original Credit
Agreement, effective upon the Closing Date, (i) Royal Bank of Canada resigns as
L/C Issuer under the Original Credit Agreement, (ii) the Borrowers and the
Lenders waive the requirement of 30 days’ prior notice of such resignation,
(iii) Citibank is appointed successor L/C Issuer for the Lenders under this
Agreement (in such capacity, the “Successor L/C Issuer”), (iv) the Borrowers
consent to the appointment of the Successor L/C Issuer as “ L/C Issuer “ under
this Agreement, and (v) Citibank accepts its appointment as Successor L/C
Issuer, and Royal Bank of Canada is relieved of all duties and obligations as
L/C Issuer. With respect to each RBC Letter of Credit, Borrowers agree to cash
collateralize the full amount of the RBC Letters of Credit on the Closing Date
pursuant to a cash collateral agreement mutually acceptable to RBC and the
Borrowers.

(c) Effective as of the Closing Date, Royal Bank of Canada assigns all of the
Liens held by it in its capacity as Administrative Agent and/or Collateral Agent
under the Original Credit Agreement to Citibank, as Successor Administrative
Agent. The Lenders authorize Royal Bank of Canada to execute such documents as
may be required to effectuate such assignment. In furtherance of the foregoing,
following the Closing Date, Royal Bank of Canada agrees to promptly deliver all
possessory collateral held by it to Citibank and execute and deliver all
agreements and documents as may be reasonably requested by Citibank or Borrowers
to evidence such assignment of the Collateral and the associated Collateral
Documents.

(d) Royal Bank of Canada’s rights to be indemnified and to be reimbursed for
costs pursuant to this Agreement, including Sections 9.08 and 10.04, shall
extend to actions taken in its capacity as resigning Administrative Agent.

10.22. Amendment and Restatement; Release of Constellation Equity. Pursuant to
the Master Note Assignment, on the Closing Date the outstanding amount of
principal and interest owing by the Borrowers under the Original Credit
Agreement and the notes issued pursuant thereto have been refinanced, renewed,
rearranged and extended by Revolving Loans under this Agreement.

(a) This Agreement amends and restates in its entirety the Original Credit
Agreement. The Revolving Notes amend, restate, rearrange, extend and renew the
Indebtedness under the Original Credit Agreement. The Lenders are subrogated to
the rights of the lenders under the Original Credit Agreement to the extent of
the Indebtedness rearranged hereby. Except as provided in subsection (b) below,
all Liens created and existing under the Original Credit Agreement shall
continue in force and effect to secure the Obligations of the Borrowers to the
Lenders pursuant to the Revolving Notes and this Agreement, and each Borrower
hereby ratifies, adopts and confirms all such prior liens and security
interests.

(b) Effective as of the Closing Date, the following described Liens granted in
connection with the Original Credit Agreement are hereby terminated and released
and shall cease to be of any force or effect: (i) the Lien on the Equity
Interests in CEPM and (ii) the Lien on the Constellation Equity. Lenders hereby
authorize and direct the Administrative Agent to (i) take any actions,
including, without limitation, execution and delivery of any documents, required
to effect such release of Lien, and (ii) do, execute and deliver, or cause to be
done, executed and delivered all such further acts, instruments, documents and
agreements as may be reasonably requested by any of the parties hereto (at the
expense of such requesting party), which may be necessary or desirable in order
to evidence or effectuate these releases.

 

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10.23. Termination of Revolving Commitments Under Original Credit Agreement. As
of the Closing Date, the Revolving Commitments under the Original Credit
Agreement are hereby terminated and the Original Administrative Agent and the
Lenders hereby waive any right to receive prior notice of such termination. Each
Lender agrees upon the Closing Date to return to the Borrowers within 30 days
all “Revolving Notes” as defined under the Original Credit Agreement which were
delivered by the Borrowers in exchange for new Revolving Notes to be issued
pursuant to this Agreement, and, to the extent such Revolving Notes are not
returned within such time period, the Borrowers shall be entitled to receive a
lost note affidavit containing customary indemnities in favor of the Borrowers.

10.24. No Novation, Etc. To the extent of the Aggregate Revolving Commitment
outstanding under the Original Credit Agreement in the amount of $98,000,000,
nothing contained herein shall be deemed a novation of or a repayment or new
advance of any obligation of the Borrowers thereunder. Only to the extent of an
increase in the Aggregate Revolving Commitment over that amount shall there be
deemed to be a new advance by the Lenders to the Borrowers under this Agreement.
The Indebtedness owing under the Original Credit Agreement is renewed,
rearranged, extended and carried forward by this Agreement and all of the Liens
securing the “Obligations” as defined in the Original Credit Agreement are
carried forward and secure, without interruption or loss or priority, the
Obligations under this Agreement.

10.25. Joint and Several Liability. (a) Each of the Borrowers acknowledges and
agrees that it is the intent of the parties that each such Borrower be primarily
liable for the Obligations as a joint and several obligor. It is the intention
of the parties that with respect to liability of any Borrower hereunder arising
solely by reason of its being jointly and severally liable for Credit
Extensions, the obligations of such Borrower shall be absolute, unconditional
and irrevocable irrespective of:

(i) any lack of validity, legality or enforceability of this Agreement, any
Revolving Note, or any other Loan Document as to any Borrower, as the case may
be;

(ii) the failure of the Administrative Agent, Collateral Agent, the L/C Issuer
or any Lender or any holder of any Revolving Note;

(a) to enforce any right or remedy against any Borrower, as the case may be, or
any other Person (including any Guarantor) under the provisions of this
Agreement, such Revolving Note, any other Loan Document or otherwise; or

(b) to exercise any right or remedy against any Guarantor of, or Collateral
securing, the Obligations;

(iii) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Obligations, or any other extension, compromise or
renewal of any Obligations;

(iv) any reduction, limitation, impairment or termination of any Obligations
with respect to any Borrower, as the case may be, for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to (and each of the Borrowers hereby waives any right to or claim of)
any defense (other than the defense of payment in full of the Obligations) or
setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, any Obligations
with respect to any Borrower, as the case may be;

 

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(v) any addition, exchange, release, surrender or nonperfection of any
Collateral, or any amendment to or waiver or release or addition of, or consent
to departure from, any Guaranty, held by any Lender or any holder of the
Revolving Notes or any security interest or Lien securing any of the
Obligations; or

(vi) any other circumstance which might otherwise constitute a defense (other
than the defense of payment in full of the Obligations) available to, or a legal
or equitable discharge of, any Borrower, as the case may be, or any Guarantor.

(b) Each of the Borrowers agrees that its joint and several liability hereunder
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment (in whole or in part) of any of the Obligations is rescinded or
must be restored by any Lender or any holder of any Revolving Note, upon the
insolvency, bankruptcy or reorganization of any Borrower, as the case may be, as
though such payment had not been made;

(c) Each of the Borrowers hereby expressly waives: (i) notice of the Lenders’
acceptance of this Agreement; (ii) notice of the existence or creation or
non-payment of all or any of the Obligations other than notices expressly
provided for in this Agreement; (iii) presentment, demand, notice of dishonor,
protest, and all other notices whatsoever other than notices expressly provided
for in this Agreement; (iv) any claim or defense based on an election of
remedies; and (v) all diligence in collection or protection of or realization
upon the Obligations or any part thereof, any obligation hereunder, or any
security for or guaranty of any of the foregoing.

(d) No delay on any of the Administrative Agent’s, Collateral Agent’s, L/C
Issuer’s or any Secured Party’s part in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by any of
the foregoing of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy. No action of any of the
Administrative Agent, Collateral Agent, L/C Issuer or Secured Parties permitted
hereunder shall in any way affect or impair any such party’s rights or any
Obligations under this Agreement.

(e) Each of the Borrowers hereby represents and warrants to each of the
Administrative Agent and Lenders that it now has and will continue to have
independent means of obtaining information concerning the other Borrower’s
affairs, financial condition and business. Neither the Administrative Agent nor
any Lender shall have any duty or responsibility to provide any Borrower with
any credit or other information concerning such other Borrower’s affairs,
financial condition or business which may come into the Administrative Agent’s
or Lender’s possession.

(f) Each of the Borrowers represents and warrants (i) that the business
operations of the Borrowers are interrelated and that the business operations of
the Borrowers complement one another, and such entities have a common business
purpose, and (ii) that, to permit their uninterrupted and continuous operations,
such entities now require and will from time to time hereafter require funds and
credit accommodations for general business purposes and (iii) that the proceeds
of Credit Extensions hereunder will directly or indirectly benefit the Borrowers
hereunder, severally and jointly, regardless of which Borrower receives part or
all of the proceeds of such Credit Extension.

(g) Notwithstanding anything to the contrary contained herein, it is the
intention of the Borrowers, the Administrative Agent, L/C Issuer and the Lenders
that the amount of the respective Borrower’s obligations hereunder shall be in,
but not in excess of, the maximum amount thereof not

 

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subject to avoidance or recovery by operation of any applicable Debtor Relief
Law. To that end, but only in the event and to the extent that the Borrowers’
respective obligations hereunder or any payment made pursuant thereto would, but
for the operation of the foregoing proviso, be subject to avoidance or recovery
under any applicable Debtor Relief Law, the amount of the Borrowers’ respective
obligations hereunder shall be limited to the largest amount which, after giving
effect thereto, would not, under applicable Debtor Relief Laws, render the
Borrower’s respective obligations hereunder unenforceable or avoidable or
subject to recovery under applicable Debtor Relief Laws. To the extent any
payment actually made hereunder exceeds the limitation contained in this
Section 10.25(g), then the amount of such excess shall, from and after the time
of payment by the Borrowers (or any of them), be reimbursed by the Lenders upon
demand by such Borrowers. The foregoing proviso is intended solely to preserve
the rights of the Administrative Agent, L/C Issuer and the Lenders hereunder
against the Borrowers to the maximum extent permitted by applicable Debtor
Relief Laws and neither any Borrower nor any Guarantor nor any other Person
shall have any right or claim under this Section 10.25(g) that would not
otherwise be available under applicable Debtor Relief Laws.

10.26. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.

SIGNATURE PAGES FOLLOW.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 

BORROWERS:

  

POSTROCK ENERGY SERVICES CORPORATION,

as a Borrower

   By:   

/s/ David J. Klvac

      David J. Klvac       Chief Financial Officer and Chief Accounting Officer
  

POSTROCK MIDCONTINENT PRODUCTION, LLC,

as a Borrower,

   By:   

POSTROCK ENERGY SERVICES CORPORATION,

Its sole member

      By:   

/s/ David J. Klvac

         David J. Klvac         

Chief Financial Officer and Chief Accounting

Officer

OTHER LOAN PARTIES:

   POSTROCK ENERGY CORPORATION, as a Loan Party    By:   

/s/ David J. Klvac

      David J. Klvac      

Executive Vice President, Chief Financial Officer and

Chief Accounting Officer

  

POSTROCK EASTERN PRODUCTION, LLC,

as a Loan Party,

   By:    POSTROCK ENERGY SERVICES CORPORATION,       Its sole member       By:
  

/s/ David J. Klvac

         David J. Klvac          Chief Financial Officer and Chief Accounting
Officer

 

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Credit Agreement

 

Signature Page 1

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POSTROCK HOLDCO, LLC,

as a Loan Party,

   By:   

POSTROCK ENERGY SERVICES CORPORATION,

Its sole member

      By:   

/s/ David J. Klvac

         David J. Klvac         

Chief Financial Officer and Chief Accounting

Officer

  

STP NEWCO, INC.,

as a Loan Party

   By:   

/s/ David J. Klvac

      David J. Klvac       Chief Financial Officer

 

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Credit Agreement

 

Signature Page 2

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CITIBANK, N.A., as Successor Administrative Agent and Collateral Agent By:  

/s/ Ryan Watson

  Ryan Watson   Senior Vice President

CITIBANK, N.A.,

as Successor L/C Issuer and Lender

By:  

/s/ Ryan Watson

  Ryan Watson   Senior Vice President

 

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Credit Agreement

 

Signature Page 3

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ROYAL BANK OF CANADA, as Resigning Administrative Agent By:  

/s/ Susan Khokher

Name: Susan Khokher Title: Manager, Agency ROYAL BANK OF CANADA, as Resigning
L/C Issuer By:  

/s/ Leslie P. Vowell

Name: Leslie P. Vowell Title: Attorney-in-Fact

 

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Credit Agreement

 

Signature Page 4

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CADENCE BANK, N.A.,

as Lender

By:   /s/ Eric Broussard Name: Eric Broussard Title: Senior Vice President

 

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Credit Agreement

 

Signature Page 5

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COMPASS BANK, as Lender By:  

/s/ Kathleen J. Bowen

Name:   Kathleen J. Bowen Title:   Senior Vice President

 

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Credit Agreement

 

Signature Page 6

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ONEWEST BANK, FSB,

as Lender

By:   /s/ Sean Murphy Name: Sean Murphy Title: Executive Vice President

 

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Credit Agreement

 

Signature Page 7

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TEXAS CAPITAL BANK, N.A.,

as Lender

By:  

/s/ Grant W. Leigh

Name: Grant W. Leigh Title: Vice President

 

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Credit Agreement

 

Signature Page 8

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SCHEDULE 2.01

REVOLVING COMMITMENTS

 

Lender

   Revolving Commitment      Pro Rata Share of
Initial  Borrowing
Base      Pro Rata Share  

Citibank, N.A.

   $ 57,777,777.78       $ 26,000,000.00         28.888888889 % 

Cadence Bank, N.A.

   $ 40,000,000.00       $ 18,000,000.00         20.000000000 % 

Compass Bank

   $ 40,000,000.00       $ 18,000,000.00         20.000000000 % 

OneWest Bank, FSB

   $ 40,000,000.00       $ 18,000,000.00         20.000000000 % 

Texas Capital Bank, N.A.

   $ 22,222,222.22       $ 10,000,000.00         11.111111111 % 

TOTAL:

   $ 200,000,000.00       $ 90,000,000.00         100.000000000 % 

 

PostRock Energy Services Corp.

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Credit Agreement

 

Schedule 2.01

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

SCHEDULE 5.06

LITIGATION

None.

 

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PostRock MidContinent Production, LLC

Credit Agreement

 

Schedule 5.06

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SCHEDULE 5.12

ERISA

None.

 

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PostRock MidContinent Production, LLC

Credit Agreement

 

Schedule 5.12

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SCHEDULE 5.13

SUBSIDIARIES AND EQUITY INVESTMENTS

Parent owns 100% of the outstanding equity interests in PESC and CEPM. PESC owns
100% of the outstanding equity interests in Eastern, MidContinent and PR Holdco.
MidContinent owns 100% of the outstanding equity interests in STP. The Loan
Parties have no other Subsidiaries or equity Investments in any other Person.

 

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PostRock MidContinent Production, LLC

Credit Agreement

 

Schedule 5.13

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SCHEDULE 5.21

TAKE-OR PAY AND GAS BALANCING OBLIGATIONS

None.

 

PostRock Energy Services Corp.

PostRock MidContinent Production, LLC

Credit Agreement

 

Schedule 5.21

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SCHEDULE 5.23

PURCHASERS OF PRODUCTION

 

• Atmos Energy Marketing, LLC, 13430 Northwest Freeway, Suite 700, Houston, TX
77040-6091

 

• B. D. Oil Gathering Corp., 649 Mitchell’s Lane, Marietta, OH 45750

 

• BP Energy Company, P.O. Box 3092, Houston, TX 77253-3092

 

• Central Trading, P.O. Box 3612, Ponte Vedra Beach, FL 32004-3612

 

• Clearfield Appalachian, P.O. Box 430, Frazeysburg, OH 43822

 

• Cherokee Basin Pipeline, LLC (Dart), 600 Dart Road, Mason, MI 48854

 

• Coffeyville Resources, 10 East Cambridge Circle, Drive, Suite 250, Kansas
City, KS 66103

 

• ConocoPhillips, P.O. Box 2197, Houston, TX 77252-2197

 

• Dominion Field Services, Inc., 2539 Washington Road, Suite 1010, Upper St.
Clair, PA 15241

 

• Earlsboro Energies Corporation, 3007 NW 63rd, Suite 205, Oklahoma City, OK
73116

 

• Endeavor Energy Resources L.P., 110 N. Marienfeld, Suite 200, Midland, TX
79701

 

• EQT Corporation, P.O. Box 23535, Pittsburgh, PA 15212-6535

 

• Hays & Company, P.O. Box 649, Spencer, WV 25276

 

• Hess Corporation, One Hess Plaza, Woodbridge, NJ 07095-6364

 

• HG Energy LLC, 2200 Georgetowne Drive, Suite 500, Sewickley, PA 15143

 

• Kelly Maclaskey Oilfield Services, Inc., P.O. Box 222, El Dorado, KS 67042

 

• Layne Energy, 1675 Broadway, Suite 2260, Denver, CO 80202

 

• LR Energy, Inc., 8150 N. Central Expressway, Suite 1605, Dallas, TX 75206

 

• Micro-Lite LLC, 3731 S. Santa Fe, Chanute, KS 66720

 

• Millennium Energy, LLC, 243 Purdy Rd. Ext, Burgettstown, PA 15021

 

• Oneok Energy Services, 100 West Fifth Street, Tulsa, OK 74103

 

• Samson Resources Company, Two West Second Street, Tulsa, OK 74103-3103

 

• Seminole Energy Services, LLC, 1323 E. 71st Street, Suite 300, Tulsa, OK 74136

 

• Seminole Gas Company, LLC, 1323 E. 71st Street, Suite 300, Tulsa, OK 74136

 

• Show Me Ethanol, LLC, c/o U.S. Energy Services, Inc., 605 North Highway 169,
Suite 1200, Plymouth, MN 55441

 

• South Jersey Resources Group, LLC, 2350 Airport Freeway, Suite 505, Bedford,
TX 76022

 

• Sunoco, Inc. (R&M), P.O. Box 5090, Sugar Land, TX 77487-5090

 

• Tenaska Marketing Ventures, 11718 Nicholas Street, Omaha, NE 68154

 

• United Energy Trading LLC, 215 Union Blvd., Suite 425, Lakewood, CO 80228

 

• Victory Energy Corporation, 220 Airport Road, Indiana, PA 15701

 

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PostRock MidContinent Production, LLC

Credit Agreement

 

Schedule 5.23

Page 1

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Schedule 5.24

SWAP CONTRACTS

 

        Effective     Termination     Hedged Price     Volume     Net MTM      
Gas Swaps   Type of Contract   Date     Date     Floor $     Ceiling $     MMcf
    Value     Counterparty

Southern Star

  Financial Fixed-Float Swap     41244        41274        6.97        6.97     
  167        570668      KeyBank

NYMEX—HH

  Financial Fixed-Float Swap     41244        41274        7.5        7.5       
762        2895959      BP

S. Star Basis

  Financial Fixed-Float Swap     41244        41274        -0.71        -0.71   
    762        -423074      BP

S. Star Basis

  Financial Fixed-Float Swap     41275        41364        -0.59        -0.59   
    2219        -927179.4297      BP

S. Star Basis

  Financial Fixed-Float Swap     41365        41578        -0.74        -0.74   
    5277        -2904642.203      BP

S. Star Basis

  Financial Fixed-Float Swap     41579        41639        -0.76        -0.76   
    1504        -851089.1406      BP

NYMEX—HH

  Financial Fixed-Float Swap     41365        41639        3.95        3.95     
  3747.285        (a )    BP

NYMEX—HH

  Financial Fixed-Float Swap     41640        42004        3.95        3.95     
  4324.032        (a )    BP

NYMEX—HH

  Financial Fixed-Float Swap     42005        42369        3.95        3.95     
  3755.184        (a )    BP

NYMEX—HH

  Financial Fixed-Float Swap     42370        42429        4        4       
1047        -456192      BP

NYMEX—HH

  Financial Fixed-Float Swap     42430        42735        3.95        3.95     
  2718.84        (a )    BP

 

PostRock Energy Services Corp.

PostRock MidContinent Production, LLC

Credit Agreement

 

Schedule 5.24

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

         Effective     Termination     Hedged Price     Volume     Net MTM      
Oil Swaps    Type of Contract   Date     Date     Floor $     Ceiling $     Bbls
    Value     Counterparty

NYMEX—WTI

   Financial Fixed-Float Swap     41244        41274        87.9        87.9   
    3500        -4222      BP

NYMEX—WTI

   Financial Fixed-Float Swap     41244        41274        104        104     
  2057        30455      BP

NYMEX—WTI

   Financial Fixed-Float Swap     41275        41639        101.7        101.7
       65892        661672      BP

NYMEX—WTI

   Financial Fixed-Float Swap     41640        42004        97        97       
61680        344180      BP

NYMEX—WTI

   Financial Fixed-Float Swap     42005        42369        93.4        93.4   
    58164        215365      BP

NYMEX—WTI

   Financial Fixed-Float Swap     42370        42735        91.1        91.1   
    53892        144699      BP

 

(a) The following contracts were placed in December 2012 and were therefore not
included in the mark-to-market as of November 30, 2012.

 

PostRock Energy Services Corp.

PostRock MidContinent Production, LLC

Credit Agreement

 

Schedule 5.24

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

Schedule 7.01

EXISTING LIENS

None.

 

PostRock Energy Services Corp.

PostRock MidContinent Production, LLC

Credit Agreement

 

Schedule 7.01

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

Schedule 7.04

INDEBTEDNESS

None.

 

PostRock Energy Services Corp.

PostRock MidContinent Production, LLC

Credit Agreement

 

Schedule 7.04

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

SCHEDULE 7.11

TRANSACTIONS WITH AFFILIATES

 

• PostRock Energy Corporation 2010 Long-Term Incentive Plan

 

PostRock Energy Services Corp.

PostRock MidContinent Production, LLC

Credit Agreement

 

Schedule 7.11

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

SCHEDULE 10.02

ADDRESSES FOR NOTICES TO BORROWERS,

GUARANTORS AND ADMINISTRATIVE AGENT

ADDRESS FOR NOTICES TO BORROWERS

POSTROCK ENERGY SERVICES CORPORATION

POSTROCK MIDCONTINENT PRODUCTION, LLC

c/o PostRock Energy Corporation

210 Park Avenue, Suite 2750

Oklahoma City, Oklahoma 73102

Attn: President and Chief Executive Officer

Telephone: (405) 702-7487

Facsimile: (405) 702-7756

ADDRESS FOR NOTICES TO GUARANTORS

c/o PostRock Energy Corporation

210 Park Avenue, Suite 2750

Oklahoma City, Oklahoma 73102

Attn: President and Chief Executive Officer

Telephone: (405) 702-7487

Facsimile: (405) 702-7756

ADDRESSES FOR CITIBANK

Citibank’s Lending Office:

Citibank, N.A.

2001 Ross Avenue, Suite 4300

Dallas, Texas 75201

Attention: Ryan Watson

Telephone: (214) 647-0824

Facsimile: (866) 940-8177

 

PostRock Energy Services Corp.

PostRock MidContinent Production, LLC

Credit Agreement

 

Schedule 10.02

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

EXHIBIT A-1

FORM OF BORROWING NOTICE

Date:                     ,         

 

To: Citibank, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Third Amended and Restated Credit Agreement,
dated as of December 20, 2012 (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the “Agreement;” the terms
defined therein being used herein as therein defined), among PostRock Energy
Services Corporation, a Delaware corporation, and PostRock MidContinent
Production, LLC, a Delaware limited liability company (collectively, the
“Borrowers”), and Citibank, N.A., as Administrative Agent, and the Lenders from
time to time party thereto.

The undersigned hereby requests:

 

1. Status Information for the Revolving Loans

 

  (a) Amount of Facility: $200,000,000

 

  (b) Revolving Loans outstanding prior to the Borrowing requested herein:
$                

 

  (c) Letters of Credit outstanding prior to the Borrowing requested herein;
$                

 

  (d) Principal amount of Revolving Loans available to be borrowed is (A) the
lesser of 1(a) and the Borrowing Base as of the most recent determination date
minus (B) the sum of (1(b) and 1(c): $                

 

2. Amount of Borrowing: $                

 

  3(a) Initial Borrowing Base as of Closing Date: $90,000,000

 

  3(b) Borrowing Base as of most recent redetermination: $                
(after taking into account any automatic or other required reduction)”

 

  4. Requested date of Borrowing:                     , 201        ; must be
prior to Maturity Date.

 

  5. Requested Type of Loan and applicable Dollar amount:

 

  (a) Base Rate Loan for $                

 

  (b) Eurodollar Rate Loan with Interest Period of:

 

  (i) one month for                     $                

 

  (ii) two months for                   $                

 

  (iii) three months for                 $                

 

  (iv) six months for                     $                

 

  6. Purpose of Revolving Loan:

 

Exhibit A-1

Form of Borrowing Notice

 

Page 1

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

           To finance working capital and general company purposes of the
Borrowers, including the acquisition, development, exploitation and exploration
of Oil and Gas Properties and the Midstream Businesses

 

           To pay fees, costs and expenses owed pursuant to the Agreement

 

           To finance Permitted Acquisitions

 

           To issue Letters of Credit

The undersigned hereby certifies that the following statements will be true on
the date of the proposed Borrowing(s) after giving effect thereto and to the
application of the proceeds therefrom:

(a) the representations and warranties of the Borrowers contained in Article V
of the Agreement are true and correct in all material respects as though made on
and as of such date (except such representations and warranties which expressly
refer to an earlier date, which are true and correct in all material respects as
of such earlier date);

(b) the amount of the requested Borrowing, when added to Revolving Loans
outstanding prior to the Borrowing and Letters of Credit will not exceed the
lesser of (i) Borrowing Base and (ii) the Aggregate Revolving Commitment; and

(c) no Default or Event of Default has occurred and is continuing, or would
result from such proposed Borrowing(s).

 

Exhibit A-1

Form of Borrowing Notice

 

Page 2

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

The Borrowing requested herein complies with Sections 2.01, 2.02 and 2.03 of the
Agreement, as applicable.

 

POSTROCK ENERGY SERVICES CORPORATION,

as a Borrower

By:

        David J. Klvac     Chief Financial Officer and Chief Accounting Officer

POSTROCK MIDCONTINENT PRODUCTION, LLC,

as a Borrower,

By:

 

POSTROCK ENERGY SERVICES CORPORATION,

Its sole member

 

By:

        David J. Klvac     Chief Financial Officer and Chief Accounting Officer

 

Exhibit A-1

Form of Borrowing Notice

 

Page 3

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

EXHIBIT A-2

FORM OF CONVERSION/CONTINUATION NOTICE

Date:                 ,     

 

TO: Citibank, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Third Amended and Restated Credit Agreement,
dated as of December 20, 2012 (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the “Agreement;” the terms
defined therein being used herein as therein defined), among PostRock Energy
Services Corporation, a Delaware corporation, and PostRock MidContinent
Production, LLC, a Delaware limited liability company (collectively, the
“Borrowers”), and Citibank, N.A., as Administrative Agent, and the Lenders from
time to time party thereto.

The undersigned hereby requests:

 

  1. Amount of [conversion] [continuation]: $                

 

  2. Existing rate:             Check applicable blank

 

  (a) Base Rate                                  

 

  (b) Eurodollar Rate Loan with

Interest Period of:

 

    (i)    one month    ________________     (ii)    two months   
________________     (iii)    three months    ________________     (iv)    six
months    ________________

 

  3. If a Eurodollar Rate Loan, date of the last day of the Interest Period for
such Loan:                 , 201        .

The Revolving Loan described above is to be [converted] [continued] as follows:

 

  4. Requested date of [conversion] [continuation]:                     ,
201        .

 

  5. Requested Type of Loan and applicable Dollar amount:

 

  (a) Base Rate Loan for $                    

 

  (b) Eurodollar Rate Loan with Interest Period of:

 

    (i)    one month for    $                         (ii)    two months for   
$                         (iii)    three months for    $                        
(iv)    six months for    $                    

 

Exhibit A-2

Form of Conversion/Continuation Notice

 

Page 1

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

The [conversion] [continuation] requested herein complies with Sections 2.01 and
2.03 of the Agreement, as applicable.

 

POSTROCK ENERGY SERVICES CORPORATION, as a
Borrower

By:

     

David J. Klvac

 

Chief Financial Officer and Chief Accounting Officer

POSTROCK MIDCONTINENT PRODUCTION, LLC,

as a Borrower,

By:

 

POSTROCK ENERGY SERVICES CORPORATION,

Its sole member

 

By:

       

David J. Klvac

    Chief Financial Officer and Chief Accounting Officer

 

Exhibit A-2

Form of Conversion/Continuation Notice

 

Page 2

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

EXHIBIT A-3

FORM OF REPAYMENT NOTICE

Date:                 ,         

 

To: Citibank, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Third Amended and Restated Credit Agreement,
dated as of December 20, 2012 (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the “Agreement;” the terms
defined therein being used herein as therein defined), among PostRock Energy
Services Corporation, a Delaware corporation, and PostRock MidContinent
Production, LLC, a Delaware limited liability company (collectively, the
“Borrowers”), and Citibank, N.A., as Administrative Agent, and the Lenders from
time to time party thereto.

The undersigned applicable Borrower/s hereby are repaying the Revolving Loans as
follows:

 

  1. Revolving Loans outstanding prior to the repayment referred to herein:
$                    

 

  2. Amount of repayment: $                    

 

  3. Date of repayment:                     , 201    .

 

  4. Type of Loan and amount to which repayment applies:

 

  (a) Base Rate Loan for $                    

 

  (b) Eurodollar Rate Loan with Interest Period of:

 

  (i)    one month      $                         (ii)    two months     
$                         (iii)    three months      $                        
(iv)    six months      $                      

The repayment referred to herein complies with Section 2.04 of the Agreement.

 

POSTROCK ENERGY SERVICES CORPORATION, as a Borrower By:       David J. Klvac  
Chief Financial Officer and Chief Accounting Officer

 

Exhibit A-3

Form of Repayment Notice

 

Page 1

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

POSTROCK MIDCONTINENT PRODUCTION, LLC,as a Borrower, By:  

POSTROCK ENERGY SERVICES

CORPORATION, Its sole member

  By:         David J. Klvac     Chief Financial Officer and Chief Accounting
Officer

 

Exhibit A-3

Form of Repayment Notice

 

Page 2

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

EXHIBIT B

FORM OF REVOLVING NOTE

 

$                                                         , 201_

FOR VALUE RECEIVED, the undersigned (the “Borrowers”), hereby jointly and
severally promise to pay to the order of                      (the “Lender”), on
the Maturity Date (as defined in the Credit Agreement referred to below) the
principal amount of                      Dollars ($            ), or such lesser
principal amount of Revolving Loans made by Lender due and payable by the
Borrowers to the Lender on the Maturity Date under that certain Third Amended
and Restated Credit Agreement, dated as of December 20, 2012 (as amended,
restated, extended, supplemented or otherwise modified in writing from time to
time, the “Credit Agreement”; the terms defined therein being used herein as
therein defined), among PostRock Energy Services Corporation, a Delaware
corporation, and PostRock MidContinent Production, LLC, a Delaware limited
liability company, as Borrowers and Citibank, N.A., as Administrative Agent and
Collateral Agent, and the Lenders from time to time party thereto.

The Borrowers promise to pay interest on the unpaid principal amount of each
Revolving Loan from the date of such Revolving Loan until such principal amount
is paid in full, at such interest rates, and at such times as are specified in
the Credit Agreement. All payments of principal and interest shall be made to
the Administrative Agent for the account of the Lender in Dollars in immediately
available funds to the account designated by the Administrative Agent. If any
amount is not paid in full when due hereunder, such unpaid amount shall bear
interest, to be paid upon demand, from the due date thereof until the date of
actual payment (and before as well as after judgment) computed at the per annum
rate set forth in the Credit Agreement.

This Revolving Note is one of the Revolving Notes referred to in the Credit
Agreement, is entitled to the benefits thereof and is subject to optional and
mandatory prepayment in whole or in part as provided therein. This Revolving
Note is also entitled to the benefits of each Guaranty and the Collateral
Documents. Upon the occurrence and continuation of one or more of the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on
this Revolving Note shall become, or may be declared to be, immediately due and
payable all as provided in the Credit Agreement. Revolving Loans made by the
Lender shall be evidenced by one or more loan accounts or records maintained by
the Lender in the ordinary course of business. The Lender may also attach
schedules to this Revolving Note and endorse thereon the date, amount and
maturity of its Revolving Loans and payments with respect thereto.

This Revolving Note is a Loan Document and is subject to Section 10.10 of the
Credit Agreement, which is incorporated herein by reference the same as if set
forth herein verbatim.

Each Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, notice of intent to
accelerate, notice of acceleration, demand, dishonor and non-payment of this
Revolving Note.

 

Exhibit B

Form of Revolver Note

 

Page 1

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

THIS REVOLVING NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.

 

POSTROCK ENERGY SERVICES CORPORATION, as a Borrower

By:

      David J. Klvac   Chief Financial Officer and Chief Accounting Officer

POSTROCK MIDCONTINENT PRODUCTION, LLC,

as a Borrower,

By:

 

POSTROCK ENERGY SERVICES CORPORATION,

Its sole member

 

By:

        David J. Klvac,     Chief Financial Officer and Chief Accounting Officer

 

Exhibit B

Form of Revolver Note

 

Page 2

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

EXHIBIT C

FORM OF COMPLIANCE CERTIFICATE

(Pursuant to Section 6.02 of the Agreement)

Financial Statement Date:                         ,         

To: Citibank, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Third Amended and Restated Credit Agreement,
dated as of December 20, 2012 (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the “Agreement;” the terms
defined therein being used herein as therein defined), among PostRock Energy
Services Corporation, a Delaware corporation, and PostRock MidContinent
Production, LLC, a Delaware limited liability company (collectively, the
“Borrowers”), and Citibank, N.A., as Administrative Agent, and the Lenders from
time to time party thereto.

Capitalized terms used herein but not defined herein shall have the meaning set
forth in the Agreement.

The undersigned Responsible Officers hereby certify as of the date hereof that
they are the                     of the Borrowers, and that, as such, they are
authorized to execute and deliver this Certificate to the Administrative Agent
on the behalf of the Borrowers, and that:

[Use the following for fiscal year-end financial statements]

Attached hereto as Schedule 1 are the year-end audited consolidated financial
statements of Parent and its Subsidiaries and the consolidating financial
statements of Parent and its Subsidiaries required by Section 6.01(a) of the
Agreement for the fiscal year of Parent ended as of the above date, together
with the report and opinion of an independent certified public accountant
required by such section; and

[Use the following for fiscal quarter-end financial statements]

Attached hereto as Schedule 1 are the unaudited consolidated financial
statements of Parent and its Subsidiaries and the consolidating financial
statements of Parent and its Subsidiaries required by Section 6.01(b) of the
Agreement for the fiscal quarter of Parent ended as of the above date and the
portion of Parent’s fiscal year then ended, together with a certificate of a
Responsible Officer of Parent, stating that such financial statements fairly
present in all material respects the financial condition, results of operations
and cash flows of Parent and its Subsidiaries (including the Borrowers), as
applicable, in accordance with GAAP (except as otherwise noted in the
Agreement), subject only to normal year-end audit adjustments and the absence of
footnotes.

[Use the following for both fiscal year-end and quarter-end financial
statements]

1. The undersigned has reviewed and is familiar with the terms of the Agreement
and has made, or has caused to be made under his/her supervision, a detailed
review of the transactions and condition (financial or otherwise) of Parent and
the Borrowers during the accounting period covered by the attached financial
statements.

 

Exhibit C

Form of Compliance Certificate

 

Page 1

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

2. A review of the activities of Parent and the Borrowers during such fiscal
period has been made under the supervision of the undersigned with a view to
determining whether during such fiscal period Parent and the Borrowers performed
and observed, in all material respects, all their respective Obligations under
the Loan Documents, and no Default or Event of Default has occurred and is
continuing except as follows (list of each such Default or Event of Default and
include the information required by Section 6.03 of the Credit Agreement):

3. The covenant analyses and information set forth on Schedule 2 attached hereto
are true and accurate on and as of the date of this Certificate.

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
                    ,             .

 

POSTROCK ENERGY SERVICES CORPORATION, as a Borrower

By:

      David J. Klvac   Chief Financial Officer and Chief Accounting Officer

POSTROCK MIDCONTINENT PRODUCTION, LLC,

as a Borrower,

By:

 

POSTROCK ENERGY SERVICES CORPORATION,

Its sole member

 

By:

        David J. Klvac,     Chief Financial Officer and Chief Accounting Officer

 

Exhibit C

Form of Compliance Certificate

 

Page 2

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

For the Quarter/Year ended

                     (“Statement Date”)

SCHEDULE 2

to the Compliance Certificate

($ in 000’s)

 

I. Section 7.16(a) – Current Ratio

  

A. Consolidated current assets (plus unused Borrowing Base availability) of
Parent and its Subsidiaries on a consolidated basis (excluding the Excluded
Subsidiaries) as at most recent Financial Statement Date:

   $                        

B. Consolidated current liabilities as at most recent Financial Statement Date:

   $                        

C. Is ratio of I.A. to I.B greater than to 1.0 to 1.0

     Yes/No   

II. Section 7.16(b) – Interest Coverage Ratio.

  

A. Consolidated EBITDAX for four consecutive fiscal quarters ending on the
Statement Date (“Subject Period”) (see Credit Agreement definition of
“Consolidated EBITDAX”):

  

1. Consolidated EBITDAX for Subject Period:

   $                        

B.

  

1. Consolidated Interest Charges:

   $                        

2. Imputed interest charges on Synthetic Lease Obligations of Borrowers and
their Subsidiaries for the Subject Period

   $                        

3. Interest Coverage Ratio: (Line II.A.1) divided by (Lines II.B.2 + II.B.3):

              to 1.0   

Is the Interest Coverage Ratio greater than 3.0 to 1.0?

     Yes/No   

III. Section 7.16(c) – Leverage Ratio.

  

A. Consolidated Funded Debt

  

1. Consolidated Funded Debt on Statement Date (borrowed money Indebtedness,
letter of credit reimbursement obligations, Capital Leases, Synthetic Leases,
Guaranty Obligations less cash on deposit under control agreement)

   $                        

B. Consolidated EBITDAX

  

1. Consolidated EBITDAX (Line II.A.1 above)

  

2 Total Leverage Ratio: (Line III.A.1) divided by (Line III.B.1):

              to 1.0   

3. Is the Leverage Ratio less than 3.5 to 1.0?

     Yes/No   

 

Exhibit C

Form of Compliance Certificate

 

Page 3

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

EXHIBIT D

FORM OF ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as may be
amended, the “Credit Agreement”), receipt of a copy of which is hereby
acknowledged by the Assignee. The Standard Terms and Conditions set forth in
Annex I attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment and Assumption as if set forth
herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the respective facilities
identified below and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender) against any Person, whether known or
unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing
including, but not limited to, contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity related to the rights
and obligations sold and assigned pursuant to clause (i) above (the rights and
obligations sold and assigned pursuant to clauses (i) and (ii) above being
referred to herein collectively as the “Assigned Interest”). Such sale and
assignment is without recourse to the Assignor and, except as expressly provided
in this Assignment and Assumption, without representation or warranty by the
Assignor.

 

        1.

   Assignor:   

        2.

   Assignee:         

[and is an Affiliate/Approved Fund of [identify Lender]

        3.

   Borrowers:    PostRock Energy Services Corporation, a Delaware corporation,
and PostRock MidContinent Production, LLC, a Delaware limited liability company

        4.

   Administrative Agent:    Citibank, N.A., as the administrative agent under
the Credit Agreement

        5.

   Credit Agreement:    Third Amended and Restated Credit Agreement, dated as of
December 20, 2012 among the Borrowers and Citibank, N.A., as Administrative
Agent, and the Lenders from time to time party thereto

        6.

   Assigned Interest:   

 

Exhibit D

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

     Aggregate
Amount of
Commitment/Loans for
all Lenders*      Amount of
Commitment/Loans
Assigned*      Percentage
Assigned of
Commitment/Loans  

Revolving Loans:

   $         $           %   

Total:

   $         $           %   

 

[7. Trade Date:                           ]

Effective Date:                      , 201     [TO BE INSERTED BY ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR [NAME OF ASSIGNOR] By:  

 

Name:   Title:   ASSIGNEE [NAME OF ASSIGNEE] By:  

 

Name:   Title:  

 

* Amount to be adjusted by the counterparties to take into account any payments
or prepayments made between the Trade Date and the Effective Date.

Consented to and Accepted:

 

[NAME OF ADMINISTRATIVE AGENT], as Administrative Agent       [NAME OF L/C
ISSUER], as L/C Issuer By   

 

      By    

 

Name:          Name:    Title:          Title:   

 

Exhibit D

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

[Consented to:]

 

    POSTROCK ENERGY SERVICES CORPORATION,     as a Borrower     By:  

 

    Name:         Title:         POSTROCK MIDCONTINENT PRODUCTION, LLC,as a
Borrower,     By:   POSTROCK ENERGY SERVICES CORPORATION,       Its sole member
      By:  

 

        Name:         Title:

 

Exhibit D

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

ANNEX 1

TO ASSIGNMENT AND ASSUMPTION

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1 Assignor. The Assignor: (a) represents and warrants that (i) it is the legal
and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is
free and clear of any lien, encumbrance or other adverse claim and (iii) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of the
Borrowers, any of their Subsidiaries or Affiliates or any other Person obligated
in respect of any Loan Document or (iv) the performance or observance by the
Borrowers, any of their Subsidiaries or Affiliates or any other Person of any of
their respective obligations under any Loan Document.

1.2. Assignee. The Assignee: (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) it meets all
requirements of an Eligible Assignee under the Credit Agreement (subject to
receipt of such consents as may be required under the Credit Agreement),
(iii) from and after the Effective Date, it shall be bound by the provisions of
the Credit Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 6.01 thereof, as applicable,
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase the Assigned Interest on the basis of which it has
made such analysis and decision independently and without reliance on the
Administrative Agent or any other Lender, and (v) if it is a Foreign Lender,
attached to the Assignment and Assumption is any documentation required to be
delivered by it pursuant to the terms of the Credit Agreement, duly completed
and executed by the Assignee; and (b) agrees that (i) it will, independently and
without reliance on the Administrative Agent, the Assignor or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.

2. Payments. From and after the Effective Date, the Administrative Agent shall
make all payments in respect of the Assigned Interest (including payments of
principal, interest, fees and other amounts) to the Assignor for amounts which
have accrued to but excluding the Effective Date and to the Assignee for amounts
which have accrued from and after the Effective Date.

3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of New York.

 

Exhibit D