Exhibit 10.3

CHANGE IN CONTROL SEVERANCE PLAN FOR

CHIEF EXECUTIVE OFFICER

Pursuant to a resolution of its Board of Directors (the “Board”), this Change in
Control Severance Plan for Chief Executive Officer (the “Plan”) is adopted by
PostRock Energy Corporation (the “Company”) and its subsidiaries effective as of
the 20th day of February, 2012 (the “Effective Date”).

The CEO (as defined below) as of the date of a Change in Control (as defined
herein) shall be entitled to the benefits set forth herein (the “Severance
Benefits”) upon the occurrence of (a) a Change in Control and (b) Termination of
Employment (as defined herein) (together, a “Severance Event”).

1. Definitions. For purposes of this Plan, the following terms shall have the
meanings set forth below:

“Acting as a group” shall have the same meaning as defined in Code Section 409A.

“Cash Compensation” means base salary in effect immediately prior to the
effective date of termination (without regard to any reduction in salary that
constitutes a Termination of Employment) plus any cash bonus compensation paid
by the Company in the most recently completed four fiscal quarters of the
Company as of the effective date of termination.

“Cause” for termination means:

 

  (i) CEO’s conviction of, plea of guilty to, or plea of nolo contendere to a
felony or other crime that involves fraud or dishonesty;

 

  (ii) Any willful action or omission by CEO which would constitute grounds for
immediate dismissal under the employment policies of the Company;

 

  (iii) CEO’s habitual neglect of duties, including, but not limited to,
repeated absences from work without reasonable excuse; or

 

  (iv) CEO’s willful and intentional material misconduct in the performance of
his duties that results in financial detriment to the Company or any subsidiary
of the Company;

In the event that CEO agrees to resign from his affiliation with the Company or
a subsidiary of the Company in lieu of being terminated for Cause, he may be
deemed to have been terminated for Cause for purposes of this Plan.

“CEO” means the Company’s President and Chief Executive Officer. As of the
Effective Date, the CEO of the Company is Terry W. Carter.

 

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“Change in Control” shall be consistent with regulations issued under Code
Section 409A and shall mean the occurrence of a “Change in the Ownership of the
Company” or a “Change in the Ownership of a Substantial Portion of the Company’s
Assets.”

 

  (i) “Change in the Ownership of the Company” means the acquisition by any one
person, or more than one person acting as a group, of the outstanding and issued
shares of common stock (“Shares”) of the Company that, together with Shares held
by such person or group, constitutes more than 50 percent of the total voting
power of the Shares (however, if any one person, or more than one person acting
as a group, is considered to own more than 50 percent of the total voting power
of the Shares, the acquisition of additional Shares by the same person or group
shall not constitute a Change in the Ownership of the Company).

 

  (ii) “Change in the Ownership of a Substantial Portion of the Company’s
Assets” occurs when any one person, or more than one person acting as a group,
acquires (or has acquired during the 12-month period ending on the date of the
most recent acquisition by such person or persons) assets from the Company that
have a total gross fair market value equal to or more than 40 percent of the
total gross fair market value of all of the assets of the Company immediately
prior to such acquisition or acquisitions.

Notwithstanding the foregoing, (a) in no event shall any acquisition of Shares
or other securities of the Company by White Deer Energy L.P. or any of its
affiliates, whether occurring before or after the date of this Plan or (b) the
sale by the Company of all or part of the membership interest in PostRock KPC
Pipeline, LLC (“KPC”) and/or all or part of the assets held by KPC constitute a
Change in Control hereunder.

“Code” means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.

“Code Section 409A” means Section 409A of the Code and the Treasury regulations
and other interpretive rulings and guidance issued thereunder.

“Gross fair market value” means the value of the assets of the Company, or the
value of the assets being disposed of, determined without regard to any
liabilities associated with such assets).

“Termination of Employment” means:

 

  (i) an involuntary termination of CEO’s employment by the Company, other than
for Cause, within one year after a Change in Control; or

 

  (ii) a material diminution in CEO’s compensation in the aggregate within one
year after a Change in Control; or

 

  (iii) a material diminution or other material adverse change in CEO’s
position, authority or duties within one year after a Change in Control; or

 

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  (iv) a change in CEO’s assigned office or location of employment by greater
than 50 miles within one year after a Change in Control.

2. Severance. Upon the occurrence of a Severance Event, subject to the execution
of the Waiver and Release, attached hereto as Exhibit A (“Waiver”), without
revocation (as described below). CEO shall be entitled to the following
Severance Benefits:

(a) The Company shall pay CEO in a single lump sum within thirty (30) days of
the effective date of termination the value of any accrued but unused paid time
off (PTO);

(b) All unvested equity awards previously granted to CEO, including, but not
limited to, awards granted under the Company’s 2010 Long-Term Incentive Plan or
its successor, shall immediately vest in full;

(c) The Company shall pay CEO in a single lump sum within thirty (30) days of
the Waiver Effective Date (as defined below) severance pay equal to 150% of his
Cash Compensation; and

(d) CEO and his spouse and/or his dependents, as applicable who are enrolled in
a medical, dental, or vision plan sponsored by the Company immediately prior to
the effective date of termination may be eligible to continue coverage under
such medical, dental, or vision plan, at the time of his termination of
employment under the Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”). The Company will notify CEO of any such right to continue such
coverage at the time of termination pursuant to COBRA. If CEO timely elects
COBRA coverage for himself (and his spouse and/or his dependents, as
applicable), the Company will pay the COBRA premiums for CEO (and his spouse
and/or his dependents, as applicable) that exceed the cost of the active
employee premium cost for a similarly situated active employee for the period of
such COBRA coverage, provided that any such premiums paid by the Company will be
treated as taxable income to CEO. No provision of this Plan will affect the
continuation coverage rules under COBRA, except that the Company’s payment of
applicable insurance premiums will be credited as payment by CEO for purposes of
his premium payment required under COBRA. For purposes of this Section 2, any
applicable premiums that may be paid by the Company shall not include any
amounts payable by CEO under a Code Section 125 health care reimbursement plan,
which amounts, if any, are the sole responsibility of CEO.

CEO’s entitlement to the payments and benefits in this Section 2, other than PTO
in clause (a) above, is subject to and contingent upon CEO’s binding execution
of the Waiver within thirty (30) days of the date of CEO’s Termination of
Employment (and not before such date), without revocation during the seven-day
period following execution of the Waiver (“Waiver Effective Date”). If CEO fails
to timely execute and return the Waiver or revokes the Waiver prior to the
Waiver Effective Date, then CEO shall not be entitled to any payments or
benefits under the Plan (other than PTO).

3. Certain Excise Taxes. Notwithstanding anything to the contrary in this Plan,
if CEO is a “disqualified individual” (as defined in Code Section 280G(c)), and
the payments and benefits

 

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provided for in this Plan, together with any other payments and benefits which
CEO has the right to receive from the Company or any of its affiliates, would
constitute a “parachute payment” (as defined in Code Section 280G(b)(2)), then
the payments and benefits provided for in this Plan shall be either (a) reduced
(but not below zero) so that the present value of such total amounts and
benefits received by CEO from the Company and its affiliates will be one dollar
($1.00) less than three (3) times CEO’s “base amount”(as defined in Code
Section 280G(b)(3)) and so that no portion of such amounts and benefits received
by CEO shall be subject to the excise tax imposed by Code Section 4999 or
(b) paid in full, whichever produces the better net after tax position to CEO
(taking into account any applicable excise tax under Code Section 4999 and any
other applicable taxes). The reduction of payments and benefits hereunder, if
applicable, shall be made by reducing, first, payments or benefits to be paid in
cash hereunder in the order in which such payment or benefit would be paid or
provided (beginning with such payment or benefit that would be made last in time
and continuing, to the extent necessary, through to such payment or benefit that
would be made first in time) and, then, reducing any benefit to be provided in
kind hereunder in a similar order. The determination as to whether any such
reduction in the amount of the payments and benefits provided hereunder is
necessary shall be made by the Company in good faith. If a reduced payment or
benefit is made or provided and through error or otherwise that payment or
benefit, when aggregated with other payments and benefits from the Company (or
its affiliates) used in determining if a parachute payment exists, exceeds one
dollar ($1.00) less than three (3) times CEO’s base amount, then CEO shall
immediately repay such excess to the Company upon notification that an
overpayment has been made. Nothing in this Section 3 shall require the Company
to be responsible for, or have any liability or obligation with respect to,
CEO’s excise tax liabilities under Code Section 4999.

4. Amendment or Termination. The Board may amend (in whole or in part) or
terminate this Plan at any time; provided, however, that this Plan cannot be
amended or terminated during the one year period following the occurrence of a
Change in Control. Notwithstanding the foregoing, no termination shall reduce or
terminate CEO’s right to receive, or continue to receive, any payments and
benefits that became payable in respect of a termination of employment that
occurred prior to the date of such termination of this Plan.

5. Successors and Assigns. This Plan shall be binding upon and inure to the
benefit of the Company and its successors and assigns. This Plan and all rights
of CEO shall inure to the benefit of and be enforceable by CEO and his personal
or legal representatives, executors, administrators, heirs and permitted
assigns. If CEO should die while any amounts are due and payable to CEO
hereunder, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Plan to the legal representative of CEO’s
estate. No payments, benefits or rights arising under this Plan may be assigned
or pledged by CEO, except under the laws of descent and distribution.

6. Tax Withholding. The Company shall have the right to deduct from any payment
hereunder all taxes (federal, state or other) which it is required to withhold
therefrom.

 

7. Section 409A.

(a) It is intended that the payments and benefits provided under this Plan shall
be exempt from or comply with the application of the requirements of Code
Section 409A.

 

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This Plan shall be construed, administered and governed in a manner that affects
such intent. Specifically, any taxable benefits or payments provided under this
Plan are intended to be separate payments that qualify for the “short-term
deferral” exception to Code Section 409A to the maximum extent possible, and to
the extent they do not so qualify, are intended to qualify for the separation
pay exceptions to Code Section 409A, to the maximum extent possible. To the
extent that none of these exceptions (or any other available exception) applies,
then notwithstanding anything contained herein to the contrary, and to the
extent required to comply with Code Section 409A, if CEO is a “specified
employee,” as determined by the Company, as of the date of the Severance Event,
then all amounts due under this Plan that constitute a “deferral of
compensation” within the meaning of Code Section 409A, that are provided as a
result of a “separation from service” within the meaning of Code Section 409A,
and that would otherwise be paid or provided during the first six months
following date of the Severance Event, shall be accumulated through and paid or
provided on the first business day that is more than six months after the date
of the Severance Event (or, if CEO dies during such six -month period, within 90
days after CEO’s death).

(b) All reimbursements or provision of in-kind benefits pursuant to this Plan
shall be made in accordance with Treasury Regulation § 1.409A-3(i)(1)(iv) such
that the reimbursement or provision will be deemed payable at a specified time
or on a fixed schedule relative to a permissible payment event. Specifically,
the amount reimbursed or in-kind benefits provided under this Plan during CEO’s
taxable year may not affect the amounts reimbursed or provided in any other
taxable year (except that total reimbursements may be limited by a lifetime
maximum under a group health plan), the reimbursement of an eligible expense
shall be made on or before the last day of CEO’s taxable year following the
taxable year in which the expense was incurred, and the right to reimbursement
or provision of in-kind benefit is not subject to liquidation or exchange for
another benefit.

(c) No vesting of any equity awards shall trigger an acceleration of payment of
such equity award that results in noncompliance with the requirements of Code
Section 409A, to the extent applicable

8. No Employment Rights Conferred. This Plan shall not be deemed to create a
contract of employment between CEO and the Company and/or its affiliates.
Nothing contained in this Plan shall (a) confer upon CEO any right with respect
to continuation of employment with the Company or (b) subject to the rights and
benefits of CEO hereunder, interfere in any way with the right of the Company to
terminate CEO’s employment at any time.

9. Governing Law. This Plan and the Waiver will be construed and enforced in
accordance with the laws of the State of Oklahoma.

 

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Exhibit A

WAIVER AND RELEASE

In exchange for the Severance Benefits under the Change in Control Severance
Plan for Chief Executive Officer (the “Plan”), CEO hereby releases, acquits and
forever discharges PostRock Energy Corporation (the “Company”), its
subsidiaries, affiliates, shareholders, directors, officers, agents, employees,
predecessors, successors and assigns (collectively, the “Released Parties”) of
and from any and all claims, demands, actions and causes of action and
liabilities of any kind or nature whatsoever, whether in tort or equity, known
or unknown, accrued or unaccrued (collectively “Claims”) that CEO has or may
have as of the date hereof against the Released Parties, or any of them, arising
out of or related to CEO’s employment by the Company and/or the termination
thereof, including, but not limited to, any Claims arising under the following
statutes and all applicable amendments thereto, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Civil Rights Acts of 1866 and
1871, the Age Discrimination in Employment Act, the Family Medical Leave Act,
the Fair Labor Standards Act, the Employee Retirement Income Security Act of
1974, the Americans With Disabilities Act, the Equal Pay Act, the Older Workers
Benefit Protection Act, the Rehabilitation Act, the Worker Adjustment and
Retraining Notification Act, and the Sarbanes-Oxley Act.

CEO understands that signing this Waiver and Release is an important legal act
and acknowledges that the Company has advised CEO in writing by means of this
Waiver and Release to consult an attorney before signing this Waiver and
Release. CEO understands that CEO (a) may take up to twenty-one (21) days to
consider whether to execute this General Release, and (b) may revoke his/her
execution and acceptance of this General Release by providing written notice
thereof to Company within seven (7) days from the date upon which he/she
executes this General Release. Upon execution of this Waiver and Release,
Employee shall return the same to the Company’s General Counsel by first-class
mail or by hand delivery in order for it to be effective to the following
address: PostRock Energy Corporation, 210 Park Avenue, Suite 2750, Oklahoma
City, OK 73102.

CEO expressly represents that no promise or agreement which is not expressed in
the Plan or this Waiver and Release has been made to CEO in executing this
Waiver and Release, and that CEO is relying on CEO’s own judgment in executing
this Waiver and Release, and that CEO is not relying on any statement or
representation of the Company or its Related Parties or any of their agents. CEO
agrees that this Waiver and Release is valid, fair, adequate and reasonable, is
with CEO’s full knowledge and consent, was not procured through fraud, duress or
mistake and has not had the effect of misleading, misinforming or failing to
inform CEO.

This Waiver and Release includes a release of claims of discrimination or
retaliation on the basis of workers’ compensation status, but does not include
workers’ compensation claims. Excluded from this Waiver and Release are any
claims which by law cannot be waived in a private agreement between an employer
and employee, including, but not limited to, claims under the Fair Labor
Standards Act and the right to file a charge with or participate in an
investigation conducted by the Equal Employment Opportunity Commission

 

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(“EEOC”) or any state or local fair employment practices agency. CEO waives,
however, the right to any monetary recovery or other relief should the EEOC or
any other agency pursue a claim on CEO’s behalf. CEO does not release and
expressly retains (a) all rights to indemnity, contribution, advancement of
expenses and a defense, and directors and officers and other liability coverage
that CEO may have under any statute, the bylaws of the Company or by other
agreement; and (b) the right to any unpaid reasonable business expenses and any
accrued benefits payable under any Company welfare plan, tax-qualified/401(k)
plan or other benefit plans.

Should any of the provisions set forth in this Waiver and Release be determined
to be invalid by a court, agency or other tribunal of competent jurisdiction, it
is agreed that such determination shall not affect the enforceability of other
provisions of this Waiver and Release.

CEO understands that for a period of seven calendar days following CEO’s
execution of this Waiver and Release (the “Waiver Revocation Period”), CEO may
revoke this Waiver and Release by delivering a written statement to the Company
by hand or by registered mail, addressed to the Company’s General Counsel, in
which case the Waiver and Release will not become effective and in turn the
Company shall have no obligation to provide any payments or benefits (other than
PTO) under the Plan. CEO understands that failure to revoke acceptance of the
Waiver and Release within the Waiver Revocation Period will result in this
Waiver and Release being permanent and irrevocable.

CEO acknowledges that CEO has read this Waiver and Release, has had an
opportunity to ask questions, have it explained and had the opportunity to seek
independent legal advice with respect to the matters addressed in this Waiver
and Release and that CEO understands that this Waiver and Release will have the
effect of knowingly and voluntarily waiving any action CEO might pursue,
including breach of contract, personal injury, retaliation, discrimination on
the basis of race, age, sex, national origin or disability and any other claims
arising prior to the date of this Waiver and Release, except for those claims
specifically not released by CEO herein.

AGREED TO AND ACCEPTED this

            day of             , 20    

 

  Name:       (please print)

 

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