Exhibit 10.18
EXECUTION
RELEASE AND TERMINATION OF GUARANTIES
     THIS RELEASE AND TERMINATION OF GUARANTIES (this “Release”) by Royal Bank
of Canada, as administrative agent and collateral agent under the Bluestem
Credit Agreement (as defined below) and as administrative agent and collateral
agent under the Borrowing Base Facility (as defined below)(in such capacities,
the “Releasing Party”) is effective as of September 21, 2010 (the “Effective
Date”) and is made in favor of, and for the benefit of, each of PostRock Energy
Services Corporation, a Delaware corporation formerly known as Quest Resource
Corporation (“PostRock”), Quest Transmission Company, LLC, a Delaware limited
liability company (“QTC”), and PostRock KPC Pipeline, LLC, a Delaware limited
liability company, successor in interest by conversion to Quest Pipelines
(KPC) and by merger to Quest Kansas Pipeline, L.L.C. and Quest Kansas General
Partner, L.L.C. (“KPC”).
     WHEREAS, pursuant to the terms of that certain Amended and Restated Credit
Agreement among PostRock Midstream, LLC, formerly known as Quest Midstream
Partners, L.P., and Bluestem Pipeline, LLC, as Borrowers, Releasing Party, as
Administrative Agent and Collateral Agent, and the lenders party thereto, dated
November 1, 2007 (the “Bluestem Credit Agreement”), each of PostRock, QTC, Quest
Pipelines (KPC), Quest Kansas Pipeline, L.L.C. (“Quest Pipeline”) and Quest
Kansas General Partner, L.L.C. (“Quest GP”) executed and delivered a guaranty in
favor of the Secured Parties (as defined in the Bluestem Credit Agreement)
guaranteeing the obligations of PostRock Midstream, LLC and Bluestem Pipeline,
LLC (the “Guaranties”);
     WHEREAS, in order to effect a restructuring of debt obligations, the
parties to (i) the Bluestem Credit Agreement, (ii) the Amended and Restated
Credit Agreement by and among the Releasing Party, as Collateral and
Administrative Agent, and PostRock, as initial co-borrower, Quest Cherokee, LLC,
as Borrower, and the lenders party thereto, dated as of November 15, 2007 (as
further amended and supplemented from time to time, the “First Lien Credit
Agreement”) and (iii) the Second Lien Senior Term Loan Agreement among Releasing
Party, as Administrative Agent and Collateral Agent, Quest Cherokee, LLC, as
Borrower, KeyBank National Association, as syndication agent, Société Générale,
as documentation agent, and the lenders party thereto, dated as of July 11, 2008
(as further amended and supplemented from time to time, the “Second Lien Credit
Agreement”) have agreed to restructure their respective indebtedness under the
Bluestem Credit Agreement, First Lien Credit Agreement and Second Lien Credit
Agreement (the “Existing Credit Agreements”);
     WHEREAS, in order to effect the restructure of debt obligations referred to
in the preceding recital (the “Restructure”), the parties to the Existing Credit
Agreements are entering into a Loan Transfer Agreement (the “Loan Transfer
Agreement”), dated as of the date hereof, to transfer certain debt obligations
under the Bluestem Credit Agreement to the lenders under the First Lien Credit
Agreement, as amended by the Second Amended and Restated Credit Agreement, dated
September 21, 2010, among PostRock Energy Services Corporation and PostRock
MidContinent Production, LLC, as Borrowers, Royal Bank of Canada, as

             
 
          Release and Termination of
 
          Guaranties – Bluestem Facility

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Administrative Agent and Collateral Agent and the lenders party thereto
(“Borrowing Base Facility”);
     WHEREAS, pursuant to the Loan Transfer Agreement, the Guaranties are
transferred in part to the lenders under the Borrowing Base Facility;
     WHEREAS, this Release is related to and a part of the Restructure; and
     WHEREAS, in connection with, and in consideration of, the Restructure, the
Releasing Party and Royal Bank of Canada, as the Administrative Agent and
Collateral Agent for the Secured Parties (as defined in the Borrowing Base
Facility) under the Borrowing Base Facility, each wishes to forever terminate
the Guaranties and release the guarantors of such Guaranties;
     NOW THEREFORE, for good and valuable consideration, the existence and
sufficiency of which is expressly recognized by all of the parties hereto, the
parties agree as set forth below.
SECTION 1. Release.
     As of the Effective Date, the Releasing Party does hereby release, remise
and forever discharge each of PostRock, QTC and KPC (as successor in interest to
Quest Pipelines (KPC), Quest Pipeline and Quest GP) from any and all duties,
covenants, obligations and liabilities (of every kind and character and
howsoever arising) under, in connection with, arising out of, relating to, or
attributable to the Guaranties. As of the Effective Date, the Releasing Party
shall have no rights against any of PostRock, QTC and KPC under, in connection
with, arising out of, relating to, or attributable to the Guaranties.
SECTION 2. Termination.
     As of the Effective Date, the Guaranties are hereby terminated.
SECTION 3. Governing Law.
     THIS RELEASE SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE
WITH AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF THE STATE
OF NEW YORK, WITHOUT REGARD TO PRINCIPLES REGARDING THE CHOICE OF LAW.
SECTION 4. Valid Obligation.
     The Releasing Party hereby represents and warrants that the execution,
delivery and performance of this Release by it are within its powers and have
been duly authorized by all necessary action, and that this Release constitutes
its legal, valid and binding obligation.

             
 
          Release and Termination of
 
          Guaranties – Bluestem Facility

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SECTION 5. Amendments.
     The provisions of this Release may be waived, amended or modified only in a
writing signed by all of the parties hereto.
SECTION 6. Further Assurances.
     The Releasing Party covenants and agrees that it will 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 this Release.
SECTION 7. Headings.
     The headings contained in this Release are for reference purposes only and
shall not affect in any way the interpretation or construction of this Release.
SECTION 8. Binding Effect and Inurement.
     This Release shall be binding on the Releasing Party and shall inure to the
benefit of PostRock, QTC, KPC and their respective beneficiaries, receivers,
trustees, successors and assigns.
SECTION 9. Severability.
     If any term or provision of this Release or the application thereof to any
circumstance shall, in any jurisdiction and to any extent, be invalid or
unenforceable, such term or such provision shall be ineffective as to such
jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable (i) such term or provision in any other
jurisdiction or the application thereof to any other circumstance in any
jurisdiction or the same application in any other jurisdiction or (ii) any other
term or provision of this Release or the application thereof to any circumstance
in any jurisdiction. With respect to the term or provision held invalid or
unenforceable, the Releasing Party shall negotiate in good faith with the other
parties hereto to amend this Release so as to effect its original intent as
closely as possible.
[Signature page follows]

             
 
          Release and Termination of
 
          Guaranties – Bluestem Facility

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     IN WITNESS WHEREOF, the Releasing Party, Royal Bank of Canada, PostRock,
KPC and QTC have executed this Release as of the Effective Date.

                      ROYAL BANK OF CANADA         as Administrative Agent and
Collateral Agent under the     Bluestem Credit Agreement    
 
               
 
      By:   /s/ Susan Khokher    
 
         
 
   
 
      Name:   Susan Khokher    
 
         
 
   
 
      Title:   Manager, Agency    
 
         
 
   

                      ROYAL BANK OF CANADA         as Administrative Agent and
Collateral Agent under the         Borrowing Base Facility    
 
               
 
      By:   /s/ Susan Khokher    
 
         
 
   
 
      Name:   Susan Khokher    
 
         
 
   
 
      Title:   Manager, Agency    
 
         
 
   

Signature page 1 to Release and Termination of
Guaranties – Bluestem Facility

 

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                  POSTROCK ENERGY SERVICES CORPORATION,
 
           
 
  By   /s/ David C. Lawler    
 
     
 
David C. Lawler    
 
      President and Chief Executive Officer    
 
                POSTROCK KPC PIPELINE, LLC,     successor in interest by
conversion to Quest Pipelines     (KPC) and by merger to Quest Kansas General
Partner     L.L.C. and Quest Kansas Pipeline, L.L.C.

                  By PostRock Energy Services Corporation,
      its sole member
 
           
 
           
 
  By   /s/ David C. Lawler    
 
   
 
David C. Lawler    
 
      President and Chief Executive Officer    

                QUEST TRANSMISSION COMPANY, LLC
 
                By PostRock Energy Services Corporation,
      its sole member
 
           
 
           
 
  By   /s/ David C. Lawler    
 
   
 
David C. Lawler    
 
      President and Chief Executive Officer    

Signature page 2 to Release and Termination of
Guaranties – Bluestem Facility