Exhibit 10.1

 

EXECUTION COPY

 

SEVENTH AMENDMENT AND WAIVER TO CREDIT AGREEMENT

 

This SEVENTH AMENDMENT AND WAIVER TO CREDIT AGREEMENT (“Amendment”), dated as of
January 13, 2010, 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 and 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); and

 

WHEREAS, the parties hereto desire to amend the Credit Agreement in certain
respects as set forth herein;

 

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 June 15, 2010 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 or any
breach of the agreements in this Agreement (the “Waiver Date”), the requirement
in Section 7.15.2 of the Credit Agreement that 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, September 30, 2009, December 31,
2009 and March 31, 2010.  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, September 30, 2009, December 31, 2009 and March 31, 2010, 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

 

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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 “January 5,
2010”, in Section 4 of the Fifth Amendment, as amended by the Waiver and
Agreement dated October 26, 2009, the Waiver and Agreement dated November 16,
2009, the Waiver and Agreement dated November 23, 2009, the Waiver and Agreement
dated December 1, 2009 and the Waiver and Agreement dated January 5, 2010, shall
be amended and restated to read “June 15, 2010”.  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.                                            Amendments to Credit
Agreement.

 

(a)                                         The definition of “Applicable
Margin” in Section 1.1 of the Credit Agreement is hereby amended to read as
follows:

 

““Applicable Margin” means 2.25% for Eurodollar Loans and 1.25% for ABR Loans.”

 

(b)                                       
*                                         CONFIDENTIAL TREATMENT REQUESTED.  THE
UNREDACTED AGREEMENT HAS BEEN FILED WITH THE SEC WITH THE CONFIDENTIAL TREATMENT
REQUEST.

 

(c)                                         The definition of “Letter of Credit
Commitment Termination Date” in Section 1.1 of the Credit Agreement is hereby
amended to read as follows:

 

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““Letter of Credit Commitment Termination Date” means January 13, 2010.”

 

(d)                                       
*                                         CONFIDENTIAL TREATMENT REQUESTED.  THE
UNREDACTED AGREEMENT HAS BEEN FILED WITH THE SEC WITH THE CONFIDENTIAL TREATMENT
REQUEST.

 

(e)                                        
*                                         CONFIDENTIAL TREATMENT REQUESTED.  THE
UNREDACTED AGREEMENT HAS BEEN FILED WITH THE SEC WITH THE CONFIDENTIAL TREATMENT
REQUEST.

 

(f)                                           Section 2.1.1(a) of the Credit
Agreement is hereby amended by deleting the phrase “the Final Maturity Date” and
inserting in lieu thereof the date “January 13, 2010.”

 

(g)                                        Section 2.9.1 of the Credit Agreement
is hereby amended to read in its entirety as follows:

 

“Section 2.9.1.  The Loan Commitments shall terminate on January 13, 2010 and
the Letter of Credit Commitment shall terminate on January 13, 2010.”

 

(h)                                        Section 2.9.2 of the Credit Agreement
is hereby amended by adding the phrase “the date which is thirty (30) days
following” after the word “on” and before the phrase “the Final Maturity Date.”

 

(i)                                           
*                                         CONFIDENTIAL TREATMENT REQUESTED.  THE
UNREDACTED AGREEMENT HAS BEEN FILED WITH THE SEC WITH THE CONFIDENTIAL TREATMENT
REQUEST.

 

Section 5.                                            Borrowing Base. 
Notwithstanding the provisions of Section 2.8 of the Credit Agreement, the
Administrative Agent, the Lenders and the Borrower hereby agree that the
Borrowing Base under the Credit Agreement has been designated at the following
amounts for the following applicable periods (and the Borrowing Base shall not
be redetermined at any time after January 13, 2010, except pursuant to
Section 2.8.4 of the Credit Agreement):

 

APPLICABLE PERIOD

 

BORROWING BASE

 

January 1, 2010 through January 31, 2010

 

$6,100,000

 

February 1, 2010 through February 28, 2010

 

$5,900,000

 

March 1, 2010 through March 31, 2010

 

$5,700,000

 

April 1, 2010 through April 30, 2010

 

$5,500,000

 

Each calendar month thereafter commencing May 1, 2010

 

the Borrowing Base for the preceding calendar month reduced by $200,000

 

 

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Notwithstanding the provisions of Sections 2.8.8 and 3.4.1(c) of the Credit
Agreement, if at any time during any of the foregoing applicable periods, the
aggregate Credit Exposure of all Lenders exceeds the Borrowing Base set forth
above with respect to such applicable period, then the Borrower shall
immediately prepay the Advances in an aggregate principal amount equal to such
excess.  Failure to make any such prepayment shall constitute an immediate Event
of Default for all purposes of the Credit Agreement and the other Loan
Documents.

 

Section 6.               Assignments.  Notwithstanding anything to the contrary
in the Credit Agreement, on and after the Final Maturity Date (i) any Lender may
at any time, without the consent of the Borrower, assign all or any portion of
its Loans and its rights under this Agreement, its Note and the other Loan
Documents to any other Person and (ii) the Administrative Agent may resign at
any time, effective immediately upon notice to the Borrowers and the Lenders,
and upon such resignation shall have the right to designate any Person as
successor Administrative Agent.

 

Section 7.               * CONFIDENTIAL TREATMENT REQUESTED.  THE UNREDACTED
AGREEMENT HAS BEEN FILED WITH THE SEC WITH THE CONFIDENTIAL TREATMENT REQUEST.

 

Section 8.               Interest Elections and Conversions.  Notwithstanding
any provisions of the Credit Agreement commenting, commencing on the Effective
Date all Advances shall be Base Rate Advances and Borrower shall not have the
right to elect to convert any Advance into, or continue any Advance as, a
Eurodollar Advance.

 

Section 9.               Conditions to Effectiveness.  This Amendment shall be
deemed effective as of January 13, 2010 (the “Effective Date”) when the
Administrative Agent shall have received counterparts hereof duly executed by
the Borrower, the Administrative Agent, and the Required Lenders.

 

Section 10.             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 Amendment has been duly authorized by all necessary
corporate action required on their part and this Amendment, 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
Amendment by the Borrower and each Subsidiary, the performance by them of the
Credit Agreement nor the

 

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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 11.             Ratification.

 

(a)               This Amendment shall be deemed to be an amendment to the
Credit Agreement, and the Credit Agreement, as hereby amended, and all
Obligations in connection therewith, are hereby ratified, approved and confirmed
in each and every respect.  On and after the effectiveness of this Amendment in
accordance with Section 4 above, each reference in the Credit Agreement to “this
Agreement”, “hereunder”, “hereof” or words of like import, referring to the
Credit Agreement, and each reference in each other Loan Document to “the Credit
Agreement”, “thereunder”, “thereof” or words of like import referring to the
Credit Agreement, shall mean and be a reference to the Credit Agreement as
amended or otherwise modified by this Amendment.  This Amendment is a Loan
Document.

 

(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 12.             Costs and Expenses.  As provided in Section 9.4 of the
Credit Agreement, the Borrower agrees to reimburse Administrative Agent on
demand for all fees, costs, and expenses, including the reasonable fees, costs,
and expenses of counsel or other advisors for advice, assistance, or other
representation in connection with the Credit Agreement and this Amendment.

 

Section 13.             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

 

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WHERE COLLATERAL IS LOCATED REQUIRE APPLICATION OF SUCH LAWS WITH RESPECT TO
SUCH COLLATERAL.

 

Section 14.             Severability.  Any provision of this Amendment 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 Amendment
or affecting the validity or enforceability of such provision in any other
jurisdiction.

 

Section 15.             Counterparts.  This Amendment 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 Amendment 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 16.             No Waiver.  Except as expressly set forth in this
Amendment, the execution, delivery and effectiveness of this Amendment 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 17.             Successors and Assigns.  This Amendment 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 18.             Entire Agreement.  THIS AMENDMENT, 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.

 

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 Amendment 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. Schoonmaker

 

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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