Exhibit
10.1


 


WAIVER AND AGREEMENT


 


This WAIVER AND AGREEMENT (“Agreement”),
dated as of December 1, 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 January 5, 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 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 “December 1,
2009”, 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, and the Waiver and Agreement dated November 23, 2009 shall be
amended and restated to read “January 5, 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.               Additional Agreement regarding Financial Advisor and
Legal Counsel.  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 have elected to engage the services of PA
Consulting Group as a financial consultant and advisor (the “Advisor”) to
assist the Administrative Agent and the Lenders in the review of the financial
condition and operations of the Borrower and certain possible proposals by the
Borrower in connection therewith, and with 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: (i) the reasonable fees and
expenses of the Advisor shall be paid directly 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; (ii) that the Administrative Agent and the Lenders shall be
permitted to provide to the Advisor all information concerning the Borrower
which they or the Advisor deems appropriate in connection with the Advisor’s
services; (iii) the Borrower will


 


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provide to the Advisor
such information as the Administrative Agent, the Lenders or the Advisor deem
necessary for the Advisor to perform its services; (iv) the Borrower will
provide such reasonable cooperation as the Administrative Agent, the Lenders or
the Advisor shall request in connection with the Advisor providing its
services; and (v) the fees and expenses of the Administrative Agent’s
counsel incurred previously in connection with the Credit Agreement and not
heretofore reimbursed by the Borrower shall be paid in full on or before December 10,
2009.


 


Section 5.               Condition to Effectiveness. 
This Agreement shall be deemed effective as of December 1, 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.


 


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.


 


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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, 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.


 


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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.


 


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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