Exhibit 10.1

 

WAIVER AND AGREEMENT

 

This WAIVER AND AGREEMENT (“Agreement”), dated as of November 23, 2009, is by
and among PINNACLE GAS RESOURCES, INC., a Delaware corporation, the Lenders from
time to time party hereto, and THE ROYAL BANK OF SCOTLAND plc, as Administrative
Agent and as Lender.

 

WHEREAS, the Borrower, the Lenders and the Administrative Agent are parties to
that certain Credit Agreement (as amended by that certain Letter Regarding
Waiver and Amendment to Credit Agreement dated March 9, 2007, the Second
Amendment to Credit Agreement dated as of August 4, 2008, the Third Amendment to
Credit Agreement dated as of September 30, 2008, the Fourth Amendment to Credit
Agreement dated as of April 14, 2009, the Fifth Amendment and Waiver to Credit
Agreement dated as of August 26, 2009 (the “Fifth Amendment”), the Sixth
Amendment to Credit Agreement dated as of October 20, 2009, and as further
amended and supplemented from time to time, the “Credit Agreement”);

 

WHEREAS, THE Borrower wishes to advise the Lenders and the Administrative Agent
that it is not in compliance with certain requirements of the Credit Agreement
for its fiscal quarter ending September 30, 2009, and as of the date hereof;

 

WHEREAS, the parties hereto desire to further extend certain waivers with
respect to certain provisions of the Credit Agreement and to make certain
agreements as set forth herein; and

 

WHEREAS, the Borrower has provided certain information to the Lenders and
Administrative Agent and the parties hereto desire to further extend certain
waivers heretofore granted and to grant certain waivers herein with respect to
certain provisions of the Credit Agreement and to make certain agreements as set
forth herein in order to provide additional time for the Lenders and
Administrative Agent to consider such information and any requests of the
Borrower in connection therewith;

 

NOW THEREFORE, in consideration of the premises and the mutual covenants,
representations and warranties contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

 

AGREEMENT

 

Section 1.                                    Definitions.  Capitalized terms
used herein but not defined herein shall have the meanings as given them in the
Credit Agreement, unless the context otherwise requires.

 

Section 2.                                    Waivers.

 

(a)                                  The Administrative Agent and the Lenders
hereby waive for the period ending on the earlier of December 1, 2009 and the
date of any Default or Event of Default arising out of any breach of or
non-compliance with the Credit Agreement not expressly waived hereunder (the
“Waiver Date”), the requirement in Section 7.15.2 of the Credit Agreement that

 

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the Borrower not permit the ratio of its Current Assets to its Current
Liabilities to be less than 1.00 to 1.00 for the fiscal quarters ending June 30,
2009 and September 30, 2009.  The waiver in this Section 2 is effective only for
the period ending on the Waiver Date and only for the fiscal quarters ending
June 30, 2009 and September 30, 2009, and not any other period or fiscal
quarter.

 

(b)                                 The Administrative Agent and the Lenders
hereby waive for the period ending on the Waiver Date the requirements of
Section 7.6.2 of the Credit Agreement to the extent and only to the extent that
(i) the failure to pay accounts payable within ninety (90) days of the date of
the invoice therefor would cause such accounts not to be Permitted Debt and
(ii) that the aggregate amount of all such accounts payable not so paid within
ninety (90) days of the date of the invoice therefor does not exceed
$6,000,000.  The waiver in this Section 2(b) is effective only to the extent
that such failure to pay accounts payable causes such accounts payable not to be
Permitted Debt and only with respect to the period ending on the Waiver Date and
not any other period and only to the extent that the aggregate of all such
accounts payable not so paid within ninety (90) days of the date of the invoice
therefor does not exceed $6,000,000.

 

(c)                                  The Administrative Agent and the Lenders
hereby waive for the period ending on the Waiver Date the requirements of
Section 7.6.3 of the Credit Agreement that the Borrower pay the trade and other
accounts payable within 90 days after the invoice date therefore, provided that
this waiver is only effective with respect to trade and other accounts not
exceeding $6,000,000 in the aggregate at any time outstanding.  The waiver in
this Section 2(c) is effective only with respect to (i) the period ending on the
Waiver Date and not any other period and (ii) trade and other accounts not
exceeding $6,000,000 in the aggregate at any time outstanding.

 

(d)                                 The Administrative Agent and the Lenders
hereby waive for the period ending on the Waiver Date the requirements of
Section 7.7 of the Credit Agreement that the Borrower and its Subsidiaries not
allow Liens on any of its Property to the extent but only to the extent of Liens
not securing amounts in excess in the aggregate of $2,500,000.  The waiver in
this Section 2(d) is effective only with respect to (i) the period ending on the
Waiver Date and not any other period and (ii) only with respect to Liens not
securing amounts in excess in the aggregate of $2,500,000.

 

Section 3.                                    Modification of Certain Dates. 
The Borrower, Agent and Lenders agree that the references to each of
“November 23, 2009” and “November 30, 2009” in Section 4 of the Fifth Amendment,
as amended by the Waiver and Agreement dated October 26, 2009, and the “Waiver
and Agreement” dated November 16, 2009, shall be amended and restated to read
“December 1, 2009”.  As amended by the preceding sentence, the provisions of
such Section 4 of the Fifth Amendment, as heretofore amended, shall continue to
be effective from and after the date of this Agreement.

 

Section 4.                                    Condition to Effectiveness.  This
Agreement shall be deemed effective as of November 23, 2009 (the “Effective
Date”) when the Administrative Agent shall have received counterparts hereof
duly executed by the Borrower, the Administrative Agent, and the Required
Lenders.

 

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Section 5.                                    Representations and Warranties. 
The Borrower hereby represents and warrants that after giving effect hereto:

 

(a)                                  the representations and warranties of the
Borrower and each Subsidiary contained in the Loan Documents are true and
correct in all material respects on and as of the date hereof, other than those
representations and warranties that expressly relate solely to a specific
earlier date, which shall remain correct in all material respects as of such
earlier date;

 

(b)                                 the execution, delivery and performance by
the Borrower and each Subsidiary of this Agreement has been duly authorized by
all necessary corporate action required on their part and this Agreement, along
with the Credit Agreement as amended hereby and other Loan Documents,
constitutes the legal, valid and binding obligation of each Obligor party
thereto enforceable against them in accordance with its terms, except as its
enforceability may be affected by the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting the rights or remedies of creditors generally;

 

(c)                                  neither the execution, delivery and
performance of this Agreement by the Borrower and each Subsidiary, the
performance by them of the Credit Agreement nor the consummation of the
transactions contemplated hereby does or shall contravene, result in a breach
of, or violate (i) any provision of the Borrower or any Subsidiary’s certificate
or articles of incorporation or bylaws or other similar documents, or
agreements, (ii) any law or regulation, or any order or decree of any court or
government instrumentality, or (iii) any indenture, mortgage, deed of trust,
lease, agreement or other instrument to which the Borrower or any of its
Subsidiaries is a party or by which the Borrower or any of its Subsidiaries or
any of their property is bound, except in any such case to the extent such
conflict or breach has been waived herein or by a written waiver document, a
copy of which has been delivered to Administrative Agent on or before the date
hereof;

 

(d)                                 no Material Adverse Effect has occurred and
is continuing; and

 

(e)                                  no Default or Event of Default that the
Administrative Agent and the Lenders have not waived in writing or that has not
otherwise been disclosed to the Administrative Agent has occurred and is
continuing.

 

Section 6.                                    Ratification.

 

(a)                                  This Agreement is a Loan Document.  The
Credit Agreement and all Obligations thereunder or in connection therewith are
hereby ratified, approved, and confirmed in each and every respect.

 

(b)                                 The Borrower and each of its Subsidiaries
hereby ratifies, approves and confirms in every respect all the terms,
provisions, conditions and obligations of each of the Security Documents,
including without limitation all Mortgages, Pledge and Security Agreements, and
Guaranties, to which it is a party.

 

Section 7.                                    Costs and Expenses.  As provided
in Section 9.4 of the Credit Agreement, the Borrower agrees to reimburse
Administrative Agent for all fees, costs, and expenses,

 

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including the reasonable fees, costs, and expenses of counsel or other advisors
for advice, assistance, or other representation in connection with this
Agreement.

 

Section 8.                                    GOVERNING LAW. THIS AGREEMENT HAS
BEEN NEGOTIATED, IS BEING EXECUTED AND DELIVERED, AND WILL BE PERFORMED IN WHOLE
OR IN PART, IN THE STATE OF NEW YORK, AND THE SUBSTANTIVE LAWS OF SUCH STATE AND
THE APPLICABLE FEDERAL LAWS OF THE UNITED STATES OF AMERICA SHALL GOVERN THE
VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION OF THE LOAN DOCUMENTS,
EXCEPT TO THE EXTENT THE LAWS OF ANY JURISDICTION WHERE COLLATERAL IS LOCATED
REQUIRE APPLICATION OF SUCH LAWS WITH RESPECT TO SUCH COLLATERAL.

 

Section 9.                                    Severability.  Any provision of
this Agreement that is prohibited or unenforceable in any jurisdiction shall, as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or affecting the validity or enforceability of such provision in
any other jurisdiction.

 

Section 10.                              Counterparts.  This Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument, and any party hereto may execute this
Agreement by signing one or more counterparts.  Any signature hereto delivered
by a party by facsimile transmission shall be deemed to be an original signature
hereto.

 

Section 11.                              No Waiver.  Except as expressly set
forth in this Agreement, the execution, delivery and effectiveness of this
Agreement shall not operate as a waiver of any default of the Borrower or any
other Obligor or any right, power or remedy of the Administrative Agent or the
other Secured Parties under any of the Loan Documents, nor constitute a waiver
of any provision of any of the Loan Documents.

 

Section 12.                              Successors and Assigns.  This Agreement
shall be binding upon the Borrower and its successors and permitted assigns and
shall inure, together with all rights and remedies of each Lender hereunder, to
the benefit of each Lender and the respective successors, transferees and
assigns.

 

Section 13.                              Entire Agreement.  THIS AGREEMENT, THE 
CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE AGREEMENT
BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND SHALL
SUPERSEDE ANY PRIOR AGREEMENT BETWEEN THE PARTIES HERETO, WHETHER WRITTEN OR
ORAL, RELATING TO THE SUBJECT HEREOF.  FURTHERMORE, IN THIS REGARD, THIS
AGREEMENT  REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF SUCH PARTIES.

 

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THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
date hereof.

 

 

BORROWER:

 

 

 

PINNACLE GAS RESOURCES, INC.

 

 

 

 

 

By:

/s/ Peter G. Shoonmaker

 

Name:

Peter G. Schoonmaker

 

Title:

Chief Executive Officer and President

 

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ADMINISTRATIVE AGENT:

 

 

 

THE ROYAL BANK OF SCOTLAND plc,

 

 

 

 

 

By:

/s/ Charles Greer

 

Name:

Charles Greer

 

Title:

Senior Vice President

 

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LENDER:

 

 

 

THE ROYAL BANK OF SCOTLAND plc,

 

 

 

 

 

By:

/s/ Charles Greer

 

Name:

Charles Greer

 

Title:

Senior Vice President

 

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