Exhibit
10.1


 


EXECUTION VERSION


 


FIFTH AMENDMENT AND WAIVER TO CREDIT AGREEMENT


 


This FIFTH AMENDMENT AND
WAIVER TO CREDIT AGREEMENT (“Amendment”), dated as of August 26, 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, 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.               Waiver.  The
Administrative Agent and the Lenders hereby waive for the period ending October 26,
2009, 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 October 26, 2009 and only for the
fiscal quarter ending June 30, 2009, and not any other period or fiscal
quarter.


 


Section 3.               Amendments to Credit Agreement.


 


(a)           Section 7.9.2 of the Credit Agreement is amended by inserting the
parenthetical “(or in the case of net sales proceeds received during the period
from June 30, 2009 through October 26, 2009 5%)” in clause (v) thereof
after the percentage 10% and inserting the phrase “(or in the case of any such
sale between the determination of the Borrowing Base on April 14, 2009 and
the scheduled redetermination of the Borrowing Base in respect of the Reserve
Report to be delivered within ninety (90) days after June 30, 2009, 21⁄2%)
after the percentage 5% in the proviso of clause (v) thereof.


 


(b)           The Administrative Agent and the Lenders hereby waive
for the period ending on October 26, 2009 (herein 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 4.               Weekly Cash Flow Reports and Projections. 
In addition to financial reports and other certificates, instruments and
deliveries the Borrower is required to deliver to the Administrative Agent
pursuant to the Credit Agreement, commencing on the date of this Agreement, the
Borrower shall (i) deliver to the Administrative Agent on a weekly basis,
in form and substance satisfactory to the Administrative Agent, (1) a
rolling 13-week cash flow projection that shall detail all sources and uses of
cash on a weekly basis and (2) a comparison of actual payments to projected
line items for the previous period in reasonable detail, (ii) participate
in bi-weekly (or more frequently as the Administrative Agent may reasonably
request) conference calls with the Administrative Agent, during which a
Financial Officer of the Borrower shall provide the Administrative Agent with
an overview of the financial condition of the Borrower and a status report as
to the status of the Borrower’s attempts to sell assets, and raise debt and
equity and (iii) shall promptly deliver to the Administrative Agent copies
of:  (A) any signed agreements for
the sale of any assets or properties of the Borrower or any of its Subsidiaries
for an aggregate sale price of $5,000,000 or more; (B) any commitments or
underwriting agreements for any equity or subordinated debt financings, which
commitments and underwritings shall be in amounts and upon terms previously
approved by the Administrative Agent, such approval not to be unreasonably
withheld; and (C) commitments from lenders approved by the Administrative
Agent, such approval not to be unreasonably withheld, for financing to replace
the Credit Agreement in full.  If the
Borrower shall not have delivered one or more signed agreements for the sale of
assets or properties, commitments or underwritings for equity or subordinated
debt financings approved by the Administrative Agent 


 


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as provided in (iii) (A) or
(B) of the preceding sentence, as the case may be, or a signed commitment
for financing to replace the Credit Agreement in full as provided in (iii)(C) of
the preceding sentence on or before October 26, 2009, the Borrower shall
pay to the Administrative Agent for the account of the Lenders on or before October 30,
2009, a fee of $150,000.


 


Section 5.               Conditions to Effectiveness. 
This Amendment shall be deemed effective as of June 29, 2009 (the “Effective
Date”) following the satisfaction of the following condition:


 


(a)           the Administrative Agent shall have received
counterparts hereof duly executed by the Borrower, the Administrative Agent,
and the Required Lenders; and


 


(b)           The Borrower shall have paid to the Administrative
Agent a fee of $25,000.


 


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 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.


 


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Section 7.               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 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 Amendment.


 


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 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 11.             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 12.             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 


 


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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 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 14.             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/
  Mark Lumpkin, Jr.

  
	
   

  	
   

  	
  Name:

  	
  Mark
  Lumpkin, Jr.

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  



 


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  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE
  ROYAL BANK OF SCOTLAND plc,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Mark Lumpkin, Jr.

  
	
   

  	
   

  	
  Name:

  	
  Mark
  Lumpkin, Jr.

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  



 


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