Document:

Exhibit 10.2

 

SECURITIES PURCHASE AGREEMENT

 

This
Securities Purchase Agreement (this “Agreement”) is dated as of August 25,
2009, between Pacwest Bancorp, a Delaware corporation (the “Company”),
and each purchaser identified on the signature pages hereto (each,
including its successors and assigns, a “Purchaser” and collectively the
“Purchasers”).

 

WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
an effective registration statement under the Securities Act (as defined
below), the Company desires to issue and sell to each Purchaser, and each
Purchaser, severally and not jointly, desires to purchase from the Company,
securities of the Company as more fully described in this Agreement.

 

NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree
as follows:

 

ARTICLE I.

DEFINITIONS

 

1.1           Definitions.  For all purposes of this Agreement, the
following terms have the meanings set forth in this Section 1.1:

 

“Agreement” shall have the meaning
ascribed to such term in the Preamble.

 

“Action” shall have the meaning
ascribed to such term in Section 3.1(j).

 

“Affiliate” means any Person that,
directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person as such terms are used
in and construed under Rule 405 under the Securities Act.

 

“Bank” shall have the meaning ascribed
to such term in the Section 3.1(a).

 

“Board of Directors”
means the board of directors of the Company.

 

“Business Day” means any day except
any Saturday, any Sunday, any day which is a federal legal holiday in the
United States or any day on which banking institutions in the State of New York
or the State of California are authorized or required by law or other
governmental action to close.

 

“Closing” means the closing of the
purchase and sale of the Securities pursuant to Section 2.1.

 

“Closing Date” shall have the meaning
ascribed to such term in Section 2.1.

 

“Commission” means the United States
Securities and Exchange Commission.

 

 

“Common Stock” means the common stock
of the Company, par value $0.01 per share, and any other class of securities
into which such securities may hereafter be reclassified or changed.

 

“Common Stock Equivalents” means any
securities of the Company or its Subsidiaries which would entitle the holder
thereof to acquire at any time Common Stock, including, without limitation, any
debt, preferred stock, rights, options, warrants or other instrument that is at
any time convertible into or exercisable or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.

 

“Company” shall have
the meaning ascribed to such term in the Preamble.

 

“Company Counsel”
means Sullivan & Cromwell LLP, with offices located at 1888 Century
Park East, Suite 2100, Los Angeles, California  90067.

 

“DWAC” shall have the meaning ascribed
to such term in Section 2.2(a)(iii).

 

“Exchange Act” means the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

 

“Exempt Issuance” means the issuance
of (a) shares of Common Stock or options to employees, officers or
directors of the Company pursuant to any 401(k), stock or option plan duly
adopted for such purpose by a majority of the non-employee members of the Board
of Directors or a majority of the members of a committee of non-employee
directors established for such purpose, (b) securities upon the exercise
or exchange of or conversion of any Securities issued hereunder and/or other
securities exercisable or exchangeable for or convertible into shares of Common
Stock issued and outstanding on the date of this Agreement; provided, however,
that such securities have not been amended since the date of this Agreement to
increase the number of such securities or to decrease the exercise price,
exchange price or conversion price of such securities, (c) securities
pursuant to stock splits, stock dividends or distributions, recapitalizations
and similar events affecting the Common Stock and (d) securities pursuant
to acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company; provided, however, that
any such issuance shall only be to a Person (or to the equityholders of a
Person) which is, itself or through its subsidiaries, an operating company or
the holder of assets in a business synergistic with the business of the
Company; provided, further, that, any such transaction shall not
include a transaction in which the Company is issuing securities primarily for
the purpose of raising capital or to an entity whose primary business is
investing in securities.

 

“GAAP” shall have the meaning ascribed
to such term in Section 3.1(h).

 

“Liens” means a lien, charge, security
interest, encumbrance, right of first refusal, preemptive right or other
restriction, other than restrictions imposed by securities laws.

 

“Material Adverse Effect” means: (a) a
material adverse effect on the Company’s ability to perform in any material
respect its obligations under any Transaction Document, or (b) a material
adverse effect on the results of operations, assets, business or

 

2

 

financial condition of the Company and its Subsidiaries, taken as a
whole; provided, however, that none of the following, in and of
itself or themselves, shall constitute a Material Adverse Effect:  (i) changes in the economy or financial
markets generally in the United States or changes that are the result of acts
of war or terrorism; (ii) changes that are the result of factors generally
affecting the banking industry in which the Company and its Subsidiaries
operate; and (iii) a decline in the price of the Company’s Common Stock on
the Trading Market; provided, that, the exception in this clause (iii) shall
not prevent or otherwise affect a determination that any change, effect,
circumstance or development underlying such decline has resulted in, or
contributed to, a Material Adverse Effect.

 

“Material Permits” shall have the
meaning ascribed to such term in Section 3.1(m).

 

“Per Share Exercise Price” equals
$20.20 (being 110% of the Per Share Purchase Price), subject to adjustment as
set forth in the Warrant.

 

“Per Share Purchase Price” equals
$18.36, subject to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions of the Common
Stock that occur after the date of this Agreement and on or prior to the
Closing Date.

 

“Person” means an individual or
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or
an agency or subdivision thereof) or other entity of any kind.

 

“Proceeding” means an action, claim,
suit, investigation or proceeding (including, without limitation, an informal
investigation or partial proceeding, such as a deposition), whether commenced
or threatened.

 

“Prospectus” means the base prospectus
filed with the Registration Statement.

 

“Prospectus Supplement” means the
supplement to the Prospectus complying with Rule 424(b) of the
Securities Act that is filed with the Commission and delivered by the Company
to each Purchaser prior to or at the Closing.

 

“Purchaser” shall have the meaning
ascribed to such term in the Preamble.

 

“Purchaser Party” shall have the
meaning ascribed to such term in Section 4.5.

 

“Registration Statement” means the
effective registration statement, as amended, filed with the Commission (File No. 333-159999),
which registers the sale of the Securities to the Purchasers.

 

“Required Approvals” shall have the
meaning ascribed to such term in Section 3.1(e).

 

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“Rule 144” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such Rule.

 

“Rule 424” means Rule 424
promulgated by the Commission pursuant to the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same purpose and effect as such
Rule.

 

“SEC Reports” shall have the meaning
ascribed to such term in Section 3.1(h).

 

“Securities” means the Shares, the
Warrants and the Warrant Shares.

 

“Securities Act” means the Securities
Act of 1933, as amended, and the rules and regulations promulgated
thereunder.

 

“Series A Warrants” means,
collectively, the Series A Common Stock greenshoe warrants delivered to
the Purchasers at the Closing in accordance with Section 2.2(a) hereof,
which shall be exercisable commencing on the Closing Date and have a term of
exercise equal to six months from the Closing Date, in the form of Exhibit A
attached hereto.

 

“Series B Warrants” means,
collectively, the Series B Common Stock greenshoe warrants delivered to
the Purchasers at the Closing in accordance with Section 2.2(a) hereof,
which shall be exercisable commencing on the Closing Date and have a term of
exercise equal to one year from the Closing Date, in the form of Exhibit A
attached hereto.

 

“Shares” means the shares of Common
Stock issued or issuable to each Purchaser pursuant to this Agreement.

 

“Short Sales” means all “short sales”
as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include the location and/or reservation of borrowable shares
of Common Stock).

 

“Subscription Amount” means, as to
each Purchaser, the aggregate amount in cash to be paid for the Shares and
Warrants purchased hereunder as specified below such Purchaser’s name on the
signature page hereto executed by such Purchaser and next to the heading “Subscription
Amount,” in United States dollars.

 

“Subsidiary” means any subsidiary of
the Company as set forth in the SEC Reports, and shall, where applicable, also
include any direct or indirect subsidiary of the Company formed or acquired
after the date hereof.

 

“Trading Day” means a day on which the
Trading Market is open for trading.

 

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“Trading Market” means the Nasdaq
Global Select Market, (or any successors thereto).

 

“Transaction Documents” means this
Agreement, the Warrants and any other documents or agreements executed in
connection with the transactions contemplated hereunder.

 

“Transfer Agent” means Wells Fargo
Shareowner Services, the current transfer agent of the Company, with a mailing
address of P.O. Box 64874, St. Paul, MN 55164-0874 and a facsimile number
of (651) 450-4078, and any successor transfer agent of the Company.

 

“Warrants” means the Series A
Warrants and the Series B Warrants.

 

“Warrant Shares” means the shares of
Common Stock issuable upon exercise of the Warrants.

 

“WS” means Weinstein Smith LLP, with
offices located at 420 Lexington Avenue, Suite 2620, New York, New York
10170-0002.

 

ARTICLE II.

PURCHASE AND SALE

 

2.1           Closing.  At the Closing, upon the terms and subject to
the conditions set forth herein, substantially concurrent with the execution
and delivery of this Agreement by the parties hereto, the Company agrees to
sell, and the Purchasers, severally and not jointly, agree to purchase, (a) up
to an aggregate of $50,000,000 Shares and (ii) Warrants to purchase such
number of additional shares of Common Stock as determined in accordance with Section 2.2(a),
as to each Purchaser for such Subscription Amount as is specified below such
Purchaser’s name on the signature page hereto.  As soon as practicable, but in no event more
than 24 hours, after the satisfaction or waiver of the conditions set forth in Section 2.3
(other than those conditions that by their nature are to be satisfied at the
Closing but subject to the fulfillment or waiver of those conditions), the
Closing shall occur at the offices of Sullivan & Cromwell LLP,
1888 Century Park East, Los Angeles, California 90067, or such other
location as the parties shall mutually agree. 
The date on which the Closing occurs is referred to herein as the “Closing
Date.”

 

2.2           Deliveries.

 

(a)           On or prior to the
Closing Date, the Company shall deliver or cause to be delivered to each
Purchaser the following:

 

(i)            this
Agreement duly executed by the Company;

 

(ii)           a
legal opinion of Company Counsel, substantially in the form of Exhibit B-1
attached hereto;

 

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(iii)          a
legal opinion of Jared M. Wolff, General Counsel to the Company, substantially
in the form of Exhibit B-2 attached hereto;

 

(iv)          a
copy of the irrevocable instructions to the Transfer Agent instructing the
Transfer Agent to deliver via the Depository Trust Company Deposit Withdrawal
Agent Commission System (“DWAC”) that number of Shares equal to such
Purchaser’s Subscription Amount divided by the Per Share Purchase Price,
registered in the name of such Purchaser;

 

(v)           a
Series A Warrant registered in the name of such Purchaser to purchase up
to a number of shares of Common Stock equal to 50% of the Shares issuable to the Purchaser on the Closing Date,
with an exercise price equal to the Per Share Exercise Price (such Warrant
certificate may be delivered within three Trading Days of the Closing Date);

 

(vi)          a
Series B Warrant registered in the name of such Purchaser to purchase up
to a number of shares of Common Stock equal to 50% of the Shares issuable to the Purchaser on the Closing Date,
with an exercise price equal to the Per Share Exercise Price (such Warrant
certificate may be delivered within three Trading Days of the Closing Date);
and

 

(vii)         the
Prospectus and Prospectus Supplement (which may be delivered in accordance with
Rule 172 under the Securities Act).

 

(b)       On or
prior to the Closing Date, each Purchaser shall deliver or cause to be
delivered to the Company the following:

 

(i)            this
Agreement duly executed by such Purchaser; and

 

(ii)           such
Purchaser’s Subscription Amount by wire transfer of immediately available funds
to the account as specified in writing by the Company.

 

2.3           Closing Conditions.

 

(a)           The obligations of the Company
hereunder in connection with the Closing are subject to the following
conditions being met:

 

(i)            the
accuracy in all material respects, when made and on the Closing Date (unless as
of a specific date therein), of the representations and warranties of the
Purchasers contained herein;

 

(ii)           the
performance in all material respects of all obligations, covenants and
agreements of each Purchaser hereunder required to be performed on or prior to
the Closing Date; and

 

(iii)          the
delivery by each Purchaser of the item set forth in Section 2.2(b)(i) of
this Agreement.

 

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(b)       The
respective obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being met:

 

(i)            the
accuracy in all material respects, when made and on the Closing Date (unless as
of a specific date therein), of the representations and warranties of the
Company contained herein;

 

(ii)           the
performance in all material respects of all obligations, covenants and
agreements of the Company hereunder required to be performed at or prior to the
Closing Date; and

 

(iii)          the
delivery by the Company of the items set forth in Section 2.2(a)(i), (ii) and
(iii) of this Agreement.

 

ARTICLE III.

REPRESENTATIONS AND
WARRANTIES

 

3.1           Representations and Warranties of
the Company.  Except as disclosed in
reasonable detail in the SEC Reports, the Company hereby represents and
warrants to each Purchaser as of the date hereof:

 

(a)           Subsidiaries.  All of the direct and indirect significant
subsidiaries (as defined in Rule 1-02(w) of Regulation S-X) of the
Company are set forth in the SEC Reports. 
The Company owns, directly or indirectly, all of the capital stock or
other equity interests of Pacific Western Bank, a California state-chartered
bank (the “Bank”), free and clear of any Liens, and all of the issued
and outstanding shares of capital stock of the Bank are validly issued and are
fully paid, non-assessable and were issued free of preemptive and similar rights
to subscribe for or purchase securities.

 

(b)           Organization and
Qualification.  The Company and each
of its Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, with the requisite power and authority to own
and use its properties and assets and to carry on its business as currently
conducted.  Neither the Company nor any
Subsidiary is in violation or default of any of the provisions of its
respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. 
Each of the Company and its Subsidiaries is duly qualified to conduct
business and is in good standing as a foreign corporation or other entity in
each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, would not reasonably be
expected to result in a Material Adverse Effect and, to the Company’s actual
knowledge, no Proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing or seeking to revoke, limit or curtail such power and
authority or qualification.

 

(c)           Authorization;
Enforcement.  The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and otherwise to
carry out its obligations hereunder

 

7

 

and
thereunder.  The execution and delivery
of each of the Transaction Documents by the Company and the consummation by it
of the transactions contemplated hereby and thereby have been duly authorized
by all necessary action on the part of the Company and no further action is
required by the Company, the Board of Directors or the Company’s stockholders
in connection therewith other than in connection with the Required
Approvals.  Each Transaction Document to
which it is a party has been (or upon delivery will have been) duly executed by
the Company and, when delivered in accordance with the terms hereof and
thereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law or public policy.

 

(d)           No Conflicts.  The execution, delivery and performance by
the Company of the Transaction Documents, the issuance and sale of the
Securities and the consummation by it of the transactions contemplated hereby
and thereby to which it is a party do not and will not (i) conflict with
or violate any provision of the Company’s or any Subsidiary’s certificate or
articles of incorporation, bylaws or other organizational or charter documents,
or (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of the Company or any
Subsidiary, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both)
of, any agreement, credit facility, debt or other instrument (evidencing a
Company or Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (iii) subject to the
Required Approvals, conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any
property or asset of the Company or a Subsidiary is bound or affected; except
in the case of each of clauses (ii) and (iii), such as would not reasonably
be expected to result in a Material Adverse Effect.

 

(e)           Filings, Consents
and Approvals.  The Company is not
required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in connection with
the execution, delivery and performance by the Company of the Transaction
Documents, other than: (i) the filings required pursuant to Section 4.2
of this Agreement, (ii) the filing with the Commission of the Prospectus
Supplement, (iii) application(s) to the Trading Market for the
listing of the Securities for trading thereon in the time and manner required
thereby, (iv) such filings as are required to be made under applicable
state securities laws and (v) such consents, waivers, authorizations or
orders, or such filings, as have been obtained or made (collectively, the “Required
Approvals”).

 

8

 

(f)            Issuance of the
Securities; Registration.  The Shares
and Warrants are duly authorized and, when issued and paid for in accordance
with the applicable Transaction Documents, will be duly and validly issued,
fully paid and, in the case of the Shares, nonassessable, free and clear of all
Liens imposed by the Company.  The
Warrant Shares, when issued in accordance with the terms of the Warrants, will
be validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company.  The Company has
reserved from its duly authorized capital stock the maximum number of shares of
Common Stock issuable pursuant to this Agreement and the Warrants.  The Registration Statement was declared
effective under the Securities Act on June 30, 2009 and no stop order
preventing or suspending the effectiveness of the Registration Statement or
suspending or preventing the use of the Prospectus has been issued by the
Commission and no proceedings for that purpose have, to the actual knowledge of
the Company, been instituted or are threatened by the Commission.  The Company, if required by the rules and
regulations of the Commission, proposes to file the Prospectus Supplement with
the Commission pursuant to Rule 424(b). 
At the time the Registration Statement and any amendments thereto became
effective, at the date of this Agreement and at the Closing Date, the
Registration Statement and any amendments thereto conformed or will conform in
all material respects to the requirements of the Securities Act and did not and
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Prospectus and any amendments or supplements
thereto, at the time the Prospectus or any amendment or supplement thereto was
issued and at the Closing Date, conformed or will conform in all material
respects to the requirements of the Securities Act and did not and will not
contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.

 

(g)           Capitalization.  The capitalization of the Company is
substantially as set forth in the Prospectus Supplement, as updated by the SEC
Reports.  As of the date of this
Agreement, the Company has not issued any capital stock since its most recently
filed periodic report under the Exchange Act, other than pursuant to the
exercise of employee stock options under the Company’s stock option plans, the
issuance of shares of Common Stock to employees pursuant to the Company’s
employee stock purchase plans and pursuant to the conversion and/or exercise of
Common Stock Equivalents outstanding as of the date of the most recently filed
periodic report under the Exchange Act. 
No Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. 
As a result of the purchase and sale of the Securities or pursuant to
equity compensation plans or agreements filed as exhibits to the SEC Reports,
there are no outstanding options, warrants, script rights to subscribe for,
calls or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exercisable or exchangeable for, or
giving any Person any right to subscribe for or acquire, any shares of Common
Stock, or contracts, commitments, understandings or arrangements by which the Company
or any Subsidiary is bound to issue additional shares of Common Stock or Common
Stock Equivalents, in each case issued by the Company.  The issuance and sale of the Securities will
not obligate the Company to issue shares of Common Stock or other securities to
any Person (other than the Purchasers) and

 

9

 

will
not result in a right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under any of such securities. All
of the outstanding shares of capital stock of the Company are validly issued,
fully paid and nonassessable, have been issued in compliance in all material
respects with all federal and state securities laws, and none of such
outstanding shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities. 
There are no stockholders agreements, voting agreements or other similar
agreements with respect to the Company’s capital stock to which the Company is
a party or, to the actual knowledge of the Company, between or among any of the
Company’s stockholders.

 

(h)           SEC Reports;
Financial Statements.  The Company
has complied in all material respects with requirements to file or furnish, as
applicable, all reports, schedules, forms, statements and other documents under
the Securities Act and the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, for the one year preceding the date hereof (or such shorter
period as the Company was required by law or regulation to file or furnish, as
applicable, such material) (the foregoing materials, including the exhibits
thereto and documents incorporated by reference therein, together with the
Prospectus and the Prospectus Supplement, being collectively referred to herein
as the “SEC Reports”) on a timely basis or has received a valid
extension of such time and has filed or furnished, as applicable, any such SEC
Reports prior to the expiration of any such extension.  As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act, as applicable, and none of the SEC Reports, when filed or
furnished, as applicable, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The Company has never been an issuer
subject to the disqualification provisions set forth in Rule 144(i) under
the Securities Act.  The financial
statements of the Company included in the SEC Reports have been prepared in
accordance with United States generally accepted accounting principles (“GAAP”)
applied on a consistent basis during the periods involved (except as may be
otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes
required by GAAP), and fairly present in all material respects the financial
position of the Company and its consolidated Subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.

 

(i)            Material
Changes; Undisclosed Events, Liabilities or Developments.  Since the date of the latest audited
financial statements included within the SEC Reports, (i) there has been
no event, occurrence or development that has had or that would reasonably be
expected to result in a Material Adverse Effect, (ii) the Company has not
materially altered its method of accounting, (iii) the Company has not
declared or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or
redeem any shares of its capital stock and (iv) the Company has not issued
any equity securities to any officer, director or Affiliate, except pursuant to
existing Company stock option or compensation plans.

 

10

 

(j)                                     Litigation.  There is no action, suit, inquiry, notice of
violation, Proceeding or investigation pending or, to the actual knowledge of
the Company, threatened against or affecting the Company, any Subsidiary or any
of their respective properties before or by any court, arbitrator, governmental
or administrative agency or regulatory authority (federal, state, county, local
or foreign) (collectively, an “Action”) which (i) adversely affects
or challenges the legality, validity or enforceability of any of the
Transaction Documents or the Securities or (ii) would reasonably be
expected to result in a Material Adverse Effect if there were an unfavorable
decision.

 

(k)                                  Labor Relations.  No material labor dispute exists or, to the
actual knowledge of the Company, is imminent with respect to any of the
employees of the Company which would reasonably be expected to result in a
Material Adverse Effect.

 

(l)                                     Compliance.  Neither the Company nor any Subsidiary: (i) is
in default under or in violation of (and no event has occurred that has not
been waived that, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the Company or any
Subsidiary received notice of a claim that it is in default under or that it is
in violation of, any indenture, loan or credit agreement or any other agreement
or instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is
in violation of any judgment, decree or order of any court, arbitrator or
governmental body or (iii) is or has been in violation of any statute,
rule, ordinance or regulation of any governmental authority, including, without
limitation, all foreign, federal, state and local laws applicable to its
business and all such laws that affect the environment, except in each case as
would not reasonably be expected to result in a Material Adverse Effect.

 

(m)                               Material Permits.  The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits would not reasonably be expected to result in a
Material Adverse Effect (“Material Permits”), and neither the Company
nor any Subsidiary has received any notice of proceedings relating to the
revocation or modification of any Material Permit, except where such potential
revocation or modification would not reasonably be expected to result in a
Material Adverse Effect.

 

(n)                                 Sarbanes-Oxley.  The Company is in compliance in all material
respects with all provisions of the Sarbanes-Oxley Act of 2002 which are
applicable to it as of the date hereof and of the Closing Date.

 

(o)                                 Certain Fees.  Except as set forth in the Prospectus
Supplement, no brokerage or finder’s fees or commissions are or will be payable
by the Company to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by the Transaction Documents.  The Purchasers shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section 3.1(o) that
may be due from the Company in connection with the transactions contemplated by
the Transaction Documents.

 

11

 

(p)                                 Trading Market Rules.  The issuance and sale of the Securities
hereunder does not contravene the rules and regulations of the Trading
Market.

 

(q)                                 Investment Company. The
Company is not, and immediately after receipt of payment for the Securities,
will not be, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.

 

(r)                                    Registration Rights.  No Person has any right to cause the Company
to effect the registration under the Securities Act of any securities of the
Company.

 

(s)                                  Listing and Maintenance Requirements.  The Common Stock is
registered pursuant to Section 12(b) of the Exchange Act, and the
Company has taken no action designed to, or which to its actual knowledge is
likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act nor has the Company received any notification that the
Commission is contemplating terminating such registration.  The Company has not, in the 12 months
preceding the date hereof, received notice from the Trading Market that the
Company is not in compliance in any material respect with the listing or
maintenance requirements of the Trading Market. 
The Company is in compliance in all material respects with all such
listing and maintenance requirements.

 

(t)                                    Application of Takeover Protections.  The Company and the
Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s certificate of incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Purchasers solely as a result of the Company’s
issuance of the Securities and the Purchasers’ ownership of the Securities.

 

(u)                                 Disclosure.  Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company confirms that neither it nor any other Person acting on its behalf has
provided any of the Purchasers or their agents or counsel with any information
other than the SEC Reports, the Prospectus, the Prospectus Supplement and any
free writing prospectus provided to the Purchasers.  The Company understands and confirms that the
Purchasers will rely on the foregoing representation in effecting transactions
in securities of the Company.

 

(v)                                 No Integrated Offering.
Assuming the accuracy of the Purchasers’ representations and warranties set forth
in Section 3.2, neither the Company, nor any of its Subsidiaries, nor any
Person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of any applicable
shareholder approval provisions of the Trading Market on which any of the
securities of the Company are listed or designated.

 

12

 

(w)                               Acknowledgment Regarding Purchasers’ Purchase of Securities.  The Company
acknowledges and agrees that each of the Purchasers is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents
and the transactions contemplated thereby. 
The Company further acknowledges that no Purchaser is acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to the Transaction Documents and the transactions contemplated thereby
and no advice has been given by any Purchaser or any of their respective
representatives or agents in connection with the Transaction Documents.  The Company further represents to each
Purchaser that the Company’s decision to enter into this Agreement and the
other Transaction Documents has been based solely on the independent evaluation
of the transactions contemplated hereby by the Company and its representatives.

 

(x)                                   Acknowledgement Regarding Purchaser’s Trading Activity.  Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for
Sections 3.2(g) and 4.10 hereof), it is understood and acknowledged by the
Company that: (i) none of the Purchasers have been asked by the Company to
agree, nor has any Purchaser agreed, to desist from purchasing or selling, long
and/or short, securities of the Company, or “derivative” securities based on
securities issued by the Company or to hold the Securities for any specified
term; (ii) past or future open market or other transactions by any
Purchaser, specifically including, without limitation, Short Sales or “derivative”
transactions, before or after the Closing, may negatively impact the market
price of the Company’s publicly traded securities; (iii) any Purchaser,
and counterparties in “derivative” transactions to which any such Purchaser is
a party, directly or indirectly, presently may have a “short” position in the
Common Stock, and (iv) each Purchaser shall not be deemed to have any
affiliation with or control over any arm’s length counterparty in any “derivative”
transaction.  The Company further
understands and acknowledges that (y) one or more Purchasers may engage in
hedging activities at various times during the period that the Securities are outstanding,
including, without limitation, during the periods that the value of the Warrant
Shares deliverable with respect to Securities are being determined, and (z) such
hedging activities (if any) could reduce the value of the existing stockholders’
equity interests in the Company at and after the time that the hedging
activities are being conducted.  The Company acknowledges that such
aforementioned hedging activities do not constitute a breach of any of the
Transaction Documents.

 

(y)                                 Regulation M Compliance. 
The Company has not, and to its actual knowledge no one acting on its behalf
has, (i) taken, directly or indirectly, any action designed to cause or to
result in the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of any of the Securities, (ii) sold,
bid for, purchased, or, paid any compensation for soliciting purchases of, any
of the Securities, or (iii) during the time that such activity would be
prohibited under Regulation M as a result of the issuance and sale of the
Securities contemplated hereby, paid or agreed to pay to any Person any
compensation for soliciting another to purchase any other securities of the
Company, other than, in the case of clauses (ii) and (iii), compensation paid
to the Company’s placement agent in connection with the placement of the
Securities.

 

13

 

Each
Purchaser acknowledges and agrees that the Company does not make and has not
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.1.

 

3.2                                 Representations and Warranties of the Purchasers.  Each Purchaser, for
itself and for no other Purchaser, hereby represents and warrants to the
Company as of the date hereof:

 

(a)                                  Organization; Authority.  Such Purchaser is either an individual or an
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization with full right, corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement and
performance by such Purchaser of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate, partnership,
limited liability company or similar action, as applicable, on the part of such
Purchaser.  Each Transaction Document to
which it is a party has been duly executed by such Purchaser, and when
delivered by such Purchaser in accordance with the terms hereof, will
constitute the valid and legally binding obligation of such Purchaser,
enforceable against it in accordance with its terms, except: (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or
other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.

 

(b)                                 No Conflicts.  The execution, delivery and performance by
such Purchaser of the Transaction Documents and the consummation by it of the
transactions contemplated hereby and thereby to which it is a party do not and
will not (i) conflict with or violate any provision of such Purchaser’s
certificate or articles of incorporation, bylaws or other organizational or
charter documents, or (ii) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
result in the creation of any Lien upon any of the properties or assets of such
Purchaser, or give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of, any
agreement, credit facility, debt or other instrument (evidencing a Purchaser
debt or otherwise) or other understanding to which such Purchaser is a party or
by which any property or asset of such Purchaser is bound or affected, or (iii) conflict
with or result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which such Purchaser is subject (including federal and state securities laws
and regulations), or by which any property or asset of such Purchaser is bound
or affected except in the case of each of clauses (ii) and (iii),
such as would not reasonably be expected to have a material adverse effect on
such Purchaser’s ability to perform in any material respect its obligations
under any Transaction Documents.

 

14

 

(c)                                  Filings, Consents and Approvals.  Neither such
Purchaser nor any of its Affiliates or related companies is required to obtain
any consent, waiver, authorization, approval or order of, give any notice to,
or make any filing or registration with, any court or other federal, state,
local or other governmental authority or other Person (including, without
limitation, any approval, notice and/or filing with federal or state bank
regulatory authorities, under the Hart-Scott-Rodino Antitrust Improvement Act
of 1976, as amended, or otherwise) in connection with the execution, delivery
and performance by such Purchaser of the Transaction Documents, other than, to
the extent such Purchaser’s beneficial ownership of shares of Common Stock
(determined in accordance with in accordance with the Exchange Act and the rules and
regulations promulgated thereunder) after giving effect to the purchase and
sale to all Purchasers contemplated hereby, would exceed 5%, the filing with
the Commission of a Schedule 13G with respect to its purchase of Securities
hereunder.

 

(d)                                 Independent Investment Decision.  Such Purchaser (i) is
not affiliated with any other Purchaser, investor or proposed investor in the
Company, (ii) reached its decision to invest in the Company independently
from each other Purchaser, investor or proposed investor in the Company, and (iii) has
entered into no agreements with the other Purchasers, investors or proposed
investors in the Company for the purpose of controlling the Company.

 

(e)                                  Own Account.  Such Purchaser is acquiring the Securities as
principal for its own account and not with a view to or for distributing or
reselling such Securities or any part thereof in violation of the Securities
Act or any applicable state securities law, has no present intention of
distributing any of such Securities in violation of the Securities Act or any
applicable state securities law and has no direct or indirect arrangement or
understandings with any other persons to distribute or regarding the distribution
of such Securities in violation of the Securities Act or any applicable state
securities law (this representation and warranty not limiting such Purchaser’s
right to sell the Securities in compliance with applicable federal and state
securities laws).  Such Purchaser is
acquiring the Securities hereunder in the ordinary course of its business,
solely for the purpose of passive investment, and has no present or future plan
or intent to control the Company, to influence the management or board of
directors of the Company or to take any other action that would require such
Purchaser to file a Schedule 13D with respect to any securities of the Company.

 

(f)                                    Purchaser Status.  At the time such Purchaser was offered the
Securities, it was, and as of the date hereof it is, and on each date on which
it exercises any Warrants, it will be either: (i) an “accredited investor”
as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under
the Securities Act or (ii) a “qualified institutional buyer” as defined in
Rule 144A(a) under the Securities Act.  Such Purchaser is not required to be
registered as a broker-dealer under Section 15 of the Exchange Act.

 

(g)                                 Experience of Such Purchaser.  Such Purchaser, either alone or together with
its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment. 
Such Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of such
investment.

 

15

 

(h)                                 Information.  Such Purchaser and its advisors, if any, have
been furnished with all materials relating to the business, financial condition
and results of operations of the Company, and materials relating to the offer
and sale of the Securities, that have been requested by such Purchaser or its
advisors, if any.  Such Purchaser
acknowledges and understands that its investment in the Securities involves a
significant degree of risk.

 

(i)                                     Certain Transactions and Confidentiality.  Other than
consummating the transactions contemplated hereunder, such Purchaser has not,
nor has any Person acting on behalf of or pursuant to any understanding with
such Purchaser, directly or indirectly executed any purchases or sales,
including Short Sales, of the securities of the Company during the period
commencing as of the time that such Purchaser first became aware of the
proposed transactions contemplated hereunder and ending immediately prior to
the execution hereof.  Notwithstanding
the foregoing, in the case of a Purchaser that is a multi-managed investment
vehicle whereby separate portfolio managers manage separate portions of such
Purchaser’s assets and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other portions of
such Purchaser’s assets, the representation set forth above shall only apply
with respect to the portion of assets managed by the portfolio manager that
made the investment decision to purchase the Securities covered by this
Agreement.  Other than to other Persons
party to this Agreement, such Purchaser has maintained the confidentiality of
all disclosures made to it in connection with this transaction (including the
existence and terms of this transaction). Notwithstanding the foregoing, for
avoidance of doubt, nothing contained herein shall constitute a representation
or warranty, or preclude any actions, with respect to the identification of the
availability of, or securing of, available shares to borrow in order to effect
Short Sales or similar transactions in the future.

 

The Company acknowledges and
agrees that each Purchaser does not make or has not made any representations or
warranties with respect to the transactions contemplated hereby other than
those specifically set forth in this Section 3.2.

 

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1                                 Warrant Shares.  If all or any portion of a Warrant is
exercised at a time when there is an effective registration statement to cover
the issuance of the Warrant Shares or if the Warrant is exercised via cashless
exercise, the Warrant Shares issued pursuant to any such exercise shall be
issued free of all legends.  If at any
time following the date hereof the Registration Statement (or any subsequent
registration statement registering the sale of the Warrant Shares) is not
effective or is not otherwise available for the sale of the Warrant Shares, the
Company shall immediately notify the holders of the Warrants in writing that
such registration statement is not then effective and thereafter shall promptly
notify such holders when the registration statement is effective again and
available for the sale of the Warrant Shares (it being understood and agreed
that the foregoing shall not limit the ability of the Company to issue, or any
Purchaser to sell, any of the Warrant Shares in compliance with applicable
federal and state securities laws).  The
Company shall use reasonable best efforts to keep a registration statement
(including the Registration Statement) registering the issuance of the Warrant
Shares effective during the term of the Warrants.  Additionally, until the Warrants have expired
(or have been earlier exercised), the Company covenants to use its commercially
reasonable efforts to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to the Exchange Act.

 

16

 

4.2                                 Securities Laws Disclosure; Publicity.  The Company shall,
before the opening of trading on the Trading Market on the Trading Day
immediately following the date hereof, issue a press release disclosing the
material terms of the transactions contemplated hereby.  The Company shall, within four Business Days
following the date hereof, file a Current Report on Form 8-K disclosing
the material terms of the transactions contemplated hereby and including the
Transaction Documents as exhibits thereto. 
From and after the issuance of such press release, the Company shall
have publicly disclosed all material, non-public information delivered to any
of the Purchasers by the Company or any of its subsidiaries, or any of their
respective officers, directors, employees or agents in connection with the
transactions contemplated by the Transaction Documents.  Notwithstanding the foregoing, the Company
shall not publicly disclose the name of any Purchaser, or include the name of
any Purchaser in any filing with the Commission or any regulatory agency or
Trading Market, without the prior written consent of such Purchaser, except (a) as
required by federal securities law in connection with the filing of final
Transaction Documents (including signature pages thereto) with the
Commission and (b) to the extent such disclosure is required by law, by
Trading Market rules or regulations or pursuant to an investigation
conducted by the Financial Industry Regulatory Authority, in which case the
Company shall, to the extent permissible and practicable, provide the
Purchasers with prior notice of such disclosure permitted under this clause (b).

 

4.3                                 Non-Public Information.  Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company covenants and agrees that neither it, nor any other Person acting on
its behalf will provide any Purchaser or its agents or counsel with any
information that the Company believes constitutes material non-public
information, unless prior thereto such Purchaser shall have executed a written
agreement with the Company regarding the confidentiality and use of such
information.  The Company understands and
confirms that each Purchaser shall be relying on the foregoing covenant in
effecting transactions in securities of the Company.

 

4.4                                 Use of Proceeds.  The Company shall use the net proceeds from the
sale of the Securities hereunder as set forth in the Prospectus Supplement.

 

4.5                                 Indemnification.  Subject to the provisions of this Section 4.5
and to the extent permitted by law, the Company will indemnify and hold each
Purchaser and its directors, officers, shareholders, members, partners,
employees, agents and controlling persons (within the meaning of Section 15
of the Securities Act and Section 20 of the Exchange Act) (each, a “Purchaser
Party”) harmless from any and all losses, liabilities, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur due to a claim by a third party as a result of or
relating to any action instituted against a Purchaser Party by any stockholder
of the Company who is not an Affiliate of such Purchaser, with respect to any
of the transactions contemplated by the Transaction Documents, except to the
extent that that a loss, liability, damage, cost or expense is attributable to
a breach of such Purchaser’s representations, warranties or covenants under the
Transaction Documents or any agreements or understandings 

 

17

 

such
Purchaser may have with such stockholder or any violations by such Purchaser of
state or federal securities laws or any conduct by such Purchaser which
constitutes fraud, gross negligence, willful misconduct or malfeasance.  If any claim, action or proceeding shall be
brought against any Purchaser Party in respect of which indemnity may be sought
pursuant to this Agreement, such Purchaser Party shall promptly notify the
Company in writing; provided, however, that the failure timely to
give such notice shall affect the rights of such Purchaser Party hereunder only
to the extent that such failure has a material prejudicial effect on the
defenses or other rights available to the Company with respect to such claim,
action or proceeding.  At the election of
the Company, the Company shall have the right to assume the defense thereof
with counsel of its own choosing reasonably acceptable to the Purchaser
Party.  Any Purchaser Party shall have
the right to employ separate counsel in any such claim, action or proceeding
and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Purchaser Party except to the extent
that (i) the employment thereof has been specifically authorized by the
Company in writing, (ii) the Company has failed after a reasonable period
of time to assume such defense and to employ counsel or (iii) in such
claim, action or proceeding there is, in the reasonable opinion of counsel, a
material conflict on any material issue between the position of the Company and
the position of such Purchaser Party, in which case the Company shall be
responsible for the reasonable fees and expenses of no more than one such
separate counsel.  The Company will have
the exclusive right to settle any claim, action or proceeding; provided,
however, that the Company will not settle any such claim, action or
proceeding without the prior written consent of the Purchaser Party, which will
not be unreasonably withheld or delayed; provided, however, that
such consent shall not be required if the settlement includes a full and
unconditional release from all liability arising or that may arise out of such
claim or proceeding and does not include a statement as to or an admission of
fault, culpability or a failure to act by or on behalf of any Purchaser Party.

 

4.6                                 Reservation of Common Stock.
As of the date hereof, the Company has reserved and the Company shall continue
to reserve and keep available at all times, free of preemptive rights, a
sufficient number of shares of Common Stock for the purpose of enabling the
Company to issue Shares pursuant to this Agreement and Warrant Shares pursuant
to any exercise of the Warrants.

 

4.7                                 Listing of Common Stock.
The Company hereby agrees to use commercially reasonable efforts to list or
quote all of the Shares and Warrant Shares on the Trading Market and promptly
secure the listing of all of the Shares and Warrant Shares on the Trading
Market.  The Company further agrees, if
the Company applies to have the Common Stock traded on any other trading market,
it will then include in such application all of the Shares and Warrant Shares,
and will take such other action as is reasonably necessary to cause all of the
Shares and Warrant Shares to be listed or quoted on such other trading market
as promptly as possible.

 

4.8                                 Subsequent Equity Sales.

 

(a)                      From the date
hereof until 30 days after the Closing Date, neither the Company nor any
Subsidiary shall issue, enter into any agreement to issue or announce the
issuance or proposed issuance of any shares of Common Stock or Common Stock
Equivalents.

 

18

 

(b)                     Notwithstanding
the foregoing, this Section 4.8 shall not apply in respect of an Exempt
Issuance.

 

4.9                                 Equal Treatment of Purchasers.  Prior to the Closing Date, no consideration
(including any modification of any Transaction Document) shall be offered or
paid to any Person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents unless the same consideration is
also offered to all of the parties to the Transaction Documents.  For clarification purposes, this provision
constitutes a separate right granted to each Purchaser by the Company and
negotiated separately by each Purchaser, and is intended for the Company to
treat the Purchasers as a class and shall not in any way be construed as the
Purchasers acting in concert or as a group with respect to the purchase,
disposition or voting of Securities or otherwise.

 

4.10                           Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other
Purchasers, covenants that neither it nor any Affiliate acting on its behalf or
pursuant to any understanding with it will execute any purchases or sales,
including Short Sales of any of the Company’s securities during the period
commencing with the execution of this Agreement and ending at such time that
the transactions contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 4.2. 
Each Purchaser, severally and not jointly with the other Purchasers, covenants
that until such time as the transactions contemplated by this Agreement are
publicly disclosed by the Company pursuant to the initial press release as
described in Section 4.2, such Purchaser will maintain the confidentiality
of the existence and terms of this transaction.  Notwithstanding the
foregoing and notwithstanding anything contained in this Agreement to the
contrary, the Company expressly acknowledges and agrees that (i) no
Purchaser makes any representation, warranty or covenant hereby that it will
not engage in effecting transactions in any securities of the Company after the
time that the transactions contemplated by this Agreement are first publicly
announced pursuant to the initial press release as described in Section 4.2,
(ii) no Purchaser shall be restricted or prohibited from effecting any
transactions in any securities of the Company in accordance with applicable
securities laws from and after the time that the transactions contemplated by
this Agreement are first publicly announced pursuant to the initial press
release as described in Section 4.2 and (iii) no Purchaser shall have
any duty of confidentiality to the Company or its Subsidiaries after the
issuance of the initial press release as described in Section 4.2. 
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the covenant set forth
above shall only apply with respect to the portion of assets managed by the
portfolio manager that made the investment decision to purchase the Securities
covered by this Agreement.

 

4.11                           Delivery of Warrants After Closing.  The Company shall
deliver, or cause to be delivered, the respective Warrant certificates
purchased by each Purchaser to such Purchaser within three Trading Days of the
Closing Date.

 

4.12                           Cooperation.  The Company and each of the Purchasers shall
reasonably cooperate and use their respective commercially reasonable efforts
to provide any information reasonably requested by the other parties hereto
with respect to such filings and other disclosures as may be necessary in
connection with the transactions contemplated hereby.

 

19

 

ARTICLE V.

MISCELLANEOUS

 

5.1                                 Termination. 
This Agreement may be terminated by (i) any Purchaser, as to such
Purchaser’s obligations hereunder only and without any effect whatsoever on the
obligations between the Company and the other Purchasers, or (ii) by the
Company, in each case, by written notice to the other parties, if the Closing
has not been consummated on or before August 28, 2009; provided, however,
that no such termination will affect the right of any party to sue for any
breach by the other party (or parties), for which purpose the provisions of Section 4.5
shall remain in effect in accordance with the provisions and limitations
thereof.

 

5.2                                 Fees and Expenses.  Except as expressly set forth in the
Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement.  The Company shall pay all Transfer Agent
fees, stamp taxes and other taxes and duties levied in connection with the
delivery of any Securities to the Purchasers.

 

5.3                                 Entire Agreement.  The Transaction Documents, together with the
exhibits and schedules thereto, the Prospectus and the Prospectus Supplement,
contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge have been
merged into such documents, exhibits and schedules.

 

5.4                                 Notices.  Any and all notices or other communications
or deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of: (a) the
date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth on the signature pages attached
hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the
next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth on the signature pages attached
hereto on a day that is not a Trading Day or later than 5:30 p.m. (New
York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (d) upon actual receipt
by the party to whom such notice is required to be given.  The address for such notices and
communications shall be as set forth on the signature pages attached
hereto.

 

5.5                                 Amendments; Waivers.  No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the
case of an amendment, by the Company and, prior to the Closing, the Purchasers
holding at least a majority in interest of the Shares then outstanding (which
amendment shall be binding on all Purchasers) or, in the case of a waiver or an
amendment following the Closing, by the party against whom enforcement of any
such waived provision is sought or to be bound by such amendment.  No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right.

 

20

 

5.6           Headings.  The headings herein are for convenience only,
do not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.

 

5.7           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted
assigns.  No party may assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Company, in the case of a proposed assignment by a Purchaser, or
each Purchaser, in the case of a proposed assignment by the Company (other than
by merger, consolidation or sale of all or substantially all of the Company’s
assets).

 

5.8           No Third-Party Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.5.

 

5.9           Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents shall be
governed by and construed and enforced in accordance with the internal laws of
the State of New York, without regard to the principles of conflicts of law
thereof.  If any party shall commence an
action or proceeding to enforce any provisions of the Transaction Documents,
then, in addition to the obligations of the Company under Section 4.5, the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its reasonable attorneys’ fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.

 

5.10         Survival.  The representations and warranties contained
herein shall expire on the date that is the 6 month anniversary of the Closing
Date.

 

5.11         Execution.  This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. 
In the event that any signature is delivered by facsimile transmission or
by e-mail delivery of a “.pdf” format data file, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.

 

5.12         Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their commercially reasonable efforts to find and
employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.

 

21

 

5.13         Rescission and Withdrawal Right.  Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) any of the other
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time
upon written notice to the Company within two Business Days of the Company’s
failure to perform, any relevant notice, demand or election in whole or in part
without prejudice to its future actions and rights; provided, however,
that in the case of a rescission of an exercise of a Warrant, the applicable
Purchaser shall be required to return any shares of Common Stock subject to any
such rescinded exercise notice concurrently with the return to such Purchaser
of the aggregate exercise price paid to the Company for such shares and the
restoration of such Purchaser’s right to acquire such shares pursuant to such
Purchaser’s Warrant (including, issuance of a replacement warrant certificate
evidencing such restored right).

 

5.14         Replacement of Securities.  If any certificate or instrument evidencing
any Securities is mutilated, lost, stolen or destroyed, the Company shall issue
or cause to be issued in exchange and substitution for and upon cancellation
thereof (in the case of mutilation), or in lieu of and substitution therefor, a
new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary
and reasonable indemnity or security, if requested.  The applicant for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs (including customary indemnity) associated with the issuance of such replacement
Securities.

 

5.15         Remedies.  In addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of damages, each
of the Purchasers and the Company will be entitled to seek specific performance
under the Transaction Documents.  The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agree to waive and not to assert in any action
for specific performance of any such obligation the defense that a remedy at
law would be adequate.

 

5.16         Payment Set Aside.  To the extent that the Company makes a
payment or payments to any Purchaser pursuant to any Transaction Document or a
Purchaser enforces or exercises its rights thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside, recovered from, disgorged by or are required to be refunded, repaid or
otherwise restored to the Company, a trustee, receiver or any other person
under any law (including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the extent of
any such restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.

 

22

 

5.17         Independent Nature of Purchasers’
Obligations and Rights.  The
obligations of each Purchaser under any Transaction Document are several and
not joint with the obligations of any other Purchaser, and no Purchaser shall
be responsible in any way for the performance or non-performance of the
obligations of any other Purchaser under any Transaction Document.  Nothing contained herein or in any other
Transaction Document, and no action taken by any Purchaser pursuant thereto, shall
be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents.  Except as set forth in Section 5.5, each
Purchaser shall be entitled to independently protect and enforce its rights
including, without limitation, the rights arising out of this Agreement or out
of the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose.  Each Purchaser has been
represented by its own separate legal counsel in their review and negotiation
of the Transaction Documents.  For
reasons of administrative convenience only, each Purchaser and its respective
counsel have chosen to communicate with the Company through WS.  WS does not represent any of the Purchasers
and only represents Rodman & Renshaw, LLC, the placement agent. The
Company has elected to provide all Purchasers with the same terms and
Transaction Documents for the convenience of the Company and not because it was
required or requested to do so by any of the Purchasers.

 

5.18         Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not
be a Business Day, then such action may be taken or such right may be exercised
on the next succeeding Business Day.

 

5.19         Construction. The parties agree
that each of them and/or their respective counsel has reviewed and had an
opportunity to revise the Transaction Documents and, therefore, the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of the Transaction
Documents or any amendments hereto. In addition, each and every reference to
share prices and shares of Common Stock in any Transaction Document shall be
subject to adjustment for reverse and forward stock splits, stock dividends,
stock combinations and other similar transactions of the Common Stock that
occur after the date of this Agreement.

 

5.20         WAIVER
OF JURY TRIAL.  IN ANY
ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST
ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST
EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

23

 

IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

 

	
  PACWEST BANCORP

  	
   

  	
  Address
  for Notice:

  
	
   

  	
   

  	
  10250
  Constellation Blvd, Suite 1640

  
	
   

  	
   

  	
  Los
  Angeles, CA 90067 

  
	
   

  	
   

  	
  Attention:
  General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  Fax:
  (310) 201-0498

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  With
  a copy to (which shall not constitute notice):

  	
   

  	
  Sullivan &
  Cromwell LLP

  
	
   

  	
   

  	
  1888
  Century Park East

  Los Angeles, California 90067

  
	
   

  	
   

  	
  Attention:
  Patrick Brown

  

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

24

 

[PURCHASER SIGNATURE PAGES TO PACW SECURITIES PURCHASE AGREEMENT]

 

IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

 

 

	
  Name
  of Purchaser:

  	
   

  	
   

  
	
   

  	
   

  
	
  Signature of Authorized Signatory of Purchaser:

  	
   

  	
   

  
	
   

  	
   

  
	
  Name
  of Authorized Signatory:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title
  of Authorized Signatory:

  	
   

  	
   

  
	
   

  	
   

  
	
  Email
  Address of Authorized Signatory:

  	
   

  	
   

  
	
   

  	
   

  
	
  Facsimile
  Number of Authorized Signatory:

  	
   

  	
   

  
	
   

  	
   

  
	
  Address for Notice of Purchaser:

  	
   

  	
   

  
									

 

 

Address
for Delivery of certificated Securities for Purchaser (if not same as address
for notice):

 

 

Information
for Delivery of uncertificated Securities by DWAC:

 

Account
Number:

Account
Name:

DTC
Number:

 

Subscription
Amount: $

Shares:

Warrant
Shares:

Purchaser
elects the following beneficial ownership blocker in the Warrant:
      
4.99%/          9.99%

 

EIN
Number:  [PROVIDE THIS UNDER SEPARATE COVER]

 

[SIGNATURE PAGES CONTINUE]

 

25Exhibit
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 

 

2

 

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.

 

3

 

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 

 

4

 

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]

 

5

 

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

  

 

6

 

	
   

  	
   

  	
  ADMINISTRATIVE
  AGENT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE
  ROYAL BANK OF SCOTLAND plc,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Mark Lumpkin, Jr.

  
	
   

  	
   

  	
  Name:

  	
  Mark
  Lumpkin, Jr.

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  

 

7

 

	
   

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE
  ROYAL BANK OF SCOTLAND plc,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Mark Lumpkin, Jr.

  
	
   

  	
   

  	
  Name:

  	
  Mark
  Lumpkin, Jr.

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  

 

8

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