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


 

















 


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)           The definition “Final Maturity Date” or “Final Maturity”
in Section 1.1 of the Credit Agreement is hereby amended to read in
its entirety as follows:


 


““Final Maturity Date”
or “Final Maturity” means the earlier of (i) June 15, 2010 or (ii) the
date that is thirty (30) days following the Transaction Termination Date.”


 


2

















 


(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:


 


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


 


(d)           Section 1.1 of the Credit Agreement is hereby amended by adding
the following definition of Transaction in proper alphabetical order in such
Section:


 


““Transaction” means
the potential transaction described in the letter dated January 13, 2010
from the Borrower to the Administrative Agent.”


 


(e)           Section 1.1 of the Credit Agreement is hereby amended by adding
the following definition of Transaction Termination Date in proper alphabetical
order in such Section:


 


““Transaction Termination
Date” means the date which is the earliest of (i) unless the
Transaction shall have commenced on or before February 15, 2010, (ii) the
date when the Transaction is withdrawn or terminated in whole or in part or (iii) the
date that the Borrower has been advised that the Transaction will not proceed.”


 


(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)            Section 7.2.3 of the Credit Agreement is hereby amended by adding
the following clause (x) at the end thereof:


 


“(x) immediately upon
the occurrence of the Transaction Termination Date written notice to the
Administrative Agent of such occurrence.”


 


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):


 


3

















 


	
  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

  	
   

  



 


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.               Sales and Marketing.  Upon the
Final Maturity Date, the Borrower shall immediately commence and diligently and
promptly pursue the marketing and sale of sufficient assets to generate
sufficient proceeds to satisfy in full the Borrower’s creditors, in one or more
arms-length transactions, with purchasers that to Borrower’s reasonable belief
are able, capable and willing to complete and consummate such transactions
promptly.  The Borrower agrees to
promptly (i) prepare all agreements, contracts and documents necessary and
shall provide such information, reports and analysis to perspective purchasers
as shall be required in order to sell its assets, (ii) undertake such
actions, applications and filings as shall be necessary to sell and convey such
assets to one or more purchasers, (iii) at its expense retain such
advisers, brokers and experts as required to effectuate such sales, (iv) negotiate,
execute and deliver such sale agreements, assignments, conveyances and bills of
sale as required to effectuate such sale, and (v)  advise the
Administrative Agent of any offers received for any assets and provide the
Administrative Agent with copies of any such offers and any related documents
or information about such offer or offers or the proposed purchaser or
purchasers.  For the avoidance of doubt
the agreements in this Section 7 are in addition to the other agreements
in the Credit Agreement as amended hereby and the other Loan Documents and
nothing in this Section 7 is intended to amend or modify the Borrower’s
obligations to make payments as provided in the Credit Agreement and the other
Loan Documents, including, without limitation, the provisions of Section 2.9.2
of the Credit Agreement.


 


4

















 


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 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.


 


5

















 


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 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 


 


6

















 


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]


 


7

















 


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

  



 


8

















 


	
   

  	
  ADMINISTRATIVE
  AGENT:

  
	
   

  	
   

  
	
   

  	
  THE
  ROYAL BANK OF SCOTLAND plc,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Charles Greer 

  
	
   

  	
  Name:

  	
  Charles
  Greer

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  



 


9

















 


	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  THE
  ROYAL BANK OF SCOTLAND plc,

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Charles Greer

  
	
   

  	
  Name:

  	
  Charles Greer

  
	
   

  	
  Title:

  	
  Senior Vice President

  



 


10