Exhibit 10.3
EXECUTION
FIRST AMENDMENT TO
AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT
     THIS FIRST AMENDMENT TO AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT
(herein referred to as this “Amendment”) is executed as of August 1, 2011, by
POSTROCK ENERGY SERVICES CORPORATION, a Delaware corporation (“PESC”), for
itself and as successor by merger to Quest Transmission Company, LLC, a Delaware
limited liability company (“QTC”), POSTROCK MIDCONTINENT PRODUCTION, LLC, a
Delaware limited liability company (“MidContinent”), and STP NEWCO, INC., an
Oklahoma corporation(“STP”; STP, MidContinent and PESC, individually a “Debtor”
and collectively the "Debtors”), each of whose address is 210 Park Avenue,
Suite 2750, Oklahoma City, Oklahoma 73102, in favor of ROYAL BANK OF CANADA as
Collateral Agent (hereafter defined) for the benefit of the Beneficiaries (as
defined in the Security Agreement referred to below) (the Collateral Agent, in
such capacity, the “Secured Party”) whose address is Royal Bank Plaza, P.O. Box
50, 200 Bay Street, 12th Floor, South Tower, Toronto, Ontario M5J 2W7.
RECITALS
     WHEREAS, pursuant to that certain Second Amended and Restated Credit
Agreement, dated as of September 21, 2010 (the “Credit Agreement”, among PESC
and MidContinent, as borrowers (collectively, the “Borrowers”), the various
financial institutions that are, or may from time to time become, parties
thereto (individually an “Lender” and collectively the “Lenders”) and Royal Bank
of Canada, as administrative agent (in such capacity, the “Administrative
Agent”), and collateral agent (in such capacity, the “Collateral Agent”), the
Lenders agreed to make Revolving Loans (as defined in the Credit Agreement) for
the account of the Borrowers; and
     WHEREAS, to secure, on a first lien basis, loans made by the Lenders to the
Borrowers pursuant to the Credit Agreement, and to secure, on a second lien
basis, obligations owing pursuant to the Secured Pipeline Loan (as defined in
the Credit Agreement), Debtors and QTC entered into that certain Amended and
Restated Pledge and Security Agreement dated as of September 21, 2010 in favor
of the Secured Party for the benefit of the Beneficiaries (the “Security
Agreement”) pursuant to which the Debtors and QTC granted security interests in
substantially all of their personal property excluding, in the case of PESC, its
limited liability company membership interest in Quest Eastern Resource LLC, a
Delaware limited liability company; and
     WHEREAS, effective as of July 13, 2011, Quest Eastern Resource LLC changed
it name to PostRock Eastern Production, LLC (“Eastern”); and
     WHEREAS, effective as of July 26, 2011 pursuant to an Agreement and Plan of
Merger dated July 14, 2011 between QTC and PESC and the filing of a Certificate
of Merger with the Delaware Secretary of State, QTC was merged into PESC with
PESC being the surviving corporation; and
     WHEREAS, to permit certain Oil and Gas Properties (as defined in the Credit
Agreement) currently owned by MidContinent to be conveyed, subject to an
existing first lien in favor of the Secured Party securing the Obligations under
the Credit Agreement and subject to the existing second lien
PostRock First
Amendment to Pledge
and Security Agreement

 

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securing the obligations owing pursuant to the Secured Pipeline Loan, to
Eastern, Eastern has of even date herewith executed a Guaranty of the
Obligations under the Credit Agreement; and
     WHEREAS, because Eastern is now a Guarantor, PESC is required pursuant to
Section 6.14 of the Credit Agreement to pledge its limited liability company
membership interest in Eastern as Collateral (as defined in the Security
Agreement) to secure the Obligations (as defined in the Security Agreement); and
     WHEREAS, the Debtors and Secured Party are entering into this Amendment to
amend Part 1 of Annex B-1 to the Security Agreement relating to PESC to reflect
the addition of the equity interests of PostRock Eastern Production, LLC, as
Pledged Limited Liability Company Interests (as defined in the Security
Agreement); and
     WHEREAS, PESC has duly authorized the execution, delivery and performance
of this Amendment; and
     WHEREAS, this Amendment is integral to the transactions contemplated by the
Loan Documents (as defined in the Credit Agreement).
     ACCORDINGLY, for valuable consideration, the receipt and adequacy of which
are hereby acknowledged, Debtors and Secured Party hereby agree as follows:
     1. REFERENCE TO AND EFFECT ON CREDIT AGREEMENT. The terms, conditions, and
provisions of the Credit Agreement are incorporated herein by reference, the
same as if set forth herein verbatim, which terms, conditions, and provisions
shall continue to be in full force and effect hereunder so long as the Lenders
are obligated to lend under the Credit Agreement and thereafter until the
Obligations (as defined in the Credit Agreement) are paid and performed in full.
From and after the date hereof, it is agreed that:
     (i) the term “Collateral” as defined in the Credit Agreement shall no
longer exclude the limited liability company membership interest in Eastern;
     (ii) the term “Eastern” as defined in the Credit Agreement shall mean
PostRock Eastern Production, LLC, formerly known as Quest Eastern Resource LLC;
     (iii) the term “Excluded Subsidiaries” as defined in the Credit Agreement
shall no longer include Eastern or any Subsidiary (as defined in the Credit
Agreement) of Eastern; and
     (iv) PESC shall not permit Eastern to grant a Lien upon any of Eastern’s
property, assets or revenues except Permitted Liens.
     2. Part 1 of Annex B-1 relating to PESC attached to the Security Agreement
is hereby replaced and Part 1 of Annex B-1 relating to PESC attached hereto is
substituted therefor.
     THIS AMENDMENT 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.
PostRock First
Amendment to Pledge
and Security Agreement

 

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Remainder of page Intentionally Blank
Signature Page to Follow.
PostRock First
Amendment to Pledge
and Security Agreement

 

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     IN WITNESS WHEREOF, the Debtors and Secured Party have caused this
Amendment to be duly executed and delivered by an officer duly authorized as of
the date first above written.

               DEBTORS:  POSTROCK ENERGY SERVICES CORPORATION,
a Delaware corporation, for itself and as successor
by merger to Quest Transmission Company, LLC
      By:   /s/ Stephen L. DeGiusti         Stephen L. DeGiusti       
Secretary        POSTROCK MIDCONTINENT PRODUCTION, LLC,
a Delaware limited liability company
      By:   POSTROCK ENERGY SERVICES         CORPORATION, its sole member     

  By:   /s/ Stephen L. DeGiusti         Stephen L. DeGiusti        Secretary   
 

            STP NEWCO, INC.,
an Oklahoma corporation
      By:   /s/ Stephen L. DeGiusti         Name:   Stephen L. DeGiusti       
Title:   Secretary and Treasurer     

Signature Page 1
PostRock First
Amendment to Pledge
and Security Agreement

 

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               SECURED PARTY:  ROYAL BANK OF CANADA,
as Administrative Agent and Collateral Agent
      By:   /s/ Susan Khokher         Name:   Susan Khokher        Title:  
Manager, Agency     

Signature Page 2
PostRock First
Amendment to Pledge
and Security Agreement

 

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ANNEX B-1 TO SECURITY AGREEMENT

COLLATERAL DESCRIPTIONS
1. POSTROCK ENERGY SERVICES CORPORATION

         
A.
  Collateral Notes and Collateral Note Security: None.    
 
       
B.
  Pledged Shares: None.    
 
       
C.
  Partnership/Limited Liability Company Interests:   100% of the membership
interests in PostRock MidContinent Production, LLC
 
       
 
      100% of the membership interest in PostRock Eastern Production, LLC, f/k/a
Quest Eastern Resource LLC*
 
  *    There is specifically excluded from the pledge pursuant to this Security
Agreement the limited liability company membership interest owned by PESC in
PostRock KPC Pipeline, LLC.
 
        D.   Partnership/Limited Liability Company Agreement:
 
            For PostRock MidContinent Production, LLC Agreement: Limited
Liability Company Agreement of Bluestem Pipeline, LLC, dated December 15, 2003,
as amended on September 14, 2010.
 
            For PostRock Eastern Production, LLC: Limited Liability Company
Agreement of Quest Eastern Resource LLC, dated July 11, 2008.
 
        E.   Commercial Tort Claims: None.
 
        F.   Deposit Accounts (including name of bank address and account
number):
 
            Quest Resource Corporation Operating, Comerica Bank, Dallas, TX,
Acct #: 1881237372
 
            Quest Resource Corporation Operating, Bank of Oklahoma, Oklahoma
City, OK, Acct #: 814172369
 
            Quest Resource Corporation Disbursement, Comerica Bank, Dallas, TX,
Acct #: 1881338378
 
            Quest Resource Corporation Payroll, Comerica Bank, Dallas, TX, Acct
#: 1881338428
 
            Quest Cherokee Oilfield Service, LLC Operating, Comerica Bank,
Dallas, TX, Acct #: 1881237141

AUS01:619478                                                             Annex
B-1 — Page 1
PostRock First
Amendment to Pledge
and Security Agreement