Exhibit
10.1


 


WAIVER AND AGREEMENT


 


This WAIVER AND AGREEMENT (“Agreement”),
dated as of November 16, 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”);
and


 


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;


 


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 November 23, 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 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 quarter ending June 30,
2009.  The waiver in this Section 2
is effective only for the period ending on the Waiver Date and only for the
fiscal quarter ending June 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 “November 16,
2009”, in Section 4 of the Fifth Amendment, as amended by the Waiver and
Agreement dated October 26, 2009, shall be amended and restated to read “November 23,
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.                                            Agreement regarding Financial Advisor. 
The Borrower acknowledges and agrees that in connection with the waivers
granted herein, and in connection with such additional waivers and agreements
as the Borrower may anticipate requesting, the Administrative Agent and Lenders
may elect to engage the services of a financial consultant to assist in the
review of the financial condition and operations of the Borrower and any
request for a waiver, amendment or other action which the Borrower may
hereafter make in connection with the Credit Agreement.  In consideration of the waivers hereunder and
the Administrative Agent’s and Lenders’ consideration of any such request, the
Borrower agrees that notwithstanding any contrary provision of the Credit
Agreement, that the reasonable fees and expenses of any such financial advisor
incurred by the Administrative Agent and the Lenders shall be paid by the
Borrower on demand and shall constitute an amount payable under Section 9.4
of the Credit Agreement whether or not an Event of Default shall then exist or
have been waived.


 


Section 5.                                            Condition to Effectiveness. 
This Agreement shall be deemed effective as of November 16, 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 6.                                            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 7.                                            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 8.                                            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 9.                                            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 10.                                      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 11.                                      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 12.                                      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 13.                                      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 14.                                      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. 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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