prc_10k-exhibit1031.htm


    
      
        
        
Exhibit 10.31

      


      


      


      


      


      


      


      


      


      


      First
Amendment

      


      to

      


      Second
Lien Term Loan Agreement

      


      Dated
as of March 19, 2009

      


      Among

      


      PETRO
RESOURCES CORPORATION

      as
Borrower,

      


      CIT
Capital USA Inc.,

      as
Administrative Agent,

      


      and

      


      The
Lenders Party Thereto

      


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      FIRST
AMENDMENT TO SECOND LIEN TERM LOAN AGREEMENT

      


      


      THIS
FIRST AMENDMENT TO
SECOND LIEN TERM LOAN AGREEMENT (this “First Amendment”)
dated March 19, 2009, is among Petro
Resources Corporation, a limited liability company duly formed and
existing under the laws of the State of Delaware (the “Borrower”); each of
the Lenders from time to time party to the Loan Agreement (as hereinafter
defined); and CIT Capital USA Inc., as administrative agent for the Lenders (in
such capacity, together with its successors in such capacity, the “Administrative
Agent”).

      


      RECITALS

      


      A.           The
Borrower, the Administrative Agent and the Lenders are parties to that certain
Second Lien Term Loan Agreement dated as of September 9, 2008 (the “Loan Agreement”),
pursuant to which the Lenders made certain loans to and on behalf of the
Borrower.

      


      B.           The
Borrower has requested and the Administrative Agent and the Lenders have agreed
to amend certain provisions of the Loan Agreement.

      


      C.           NOW,
THEREFORE, to induce the Administrative Agent and the Lenders to enter into this
First Amendment and in consideration of the premises and the mutual covenants
herein contained, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

       

      Section
1. Defined
Terms.  Each capitalized term used herein but not otherwise
defined herein has the meaning given such term in the Loan Agreement, as amended
by this First Amendment.  Unless otherwise indicated, all section
references in this First Amendment refer to sections of the Loan
Agreement.

       

      Section
2. Amendments to Loan
Agreement.

       

      2.2 Amendments to Section
1.02.

       

      (a) The
definition of “Adjusted LIBO Rate”
is hereby amended to add the phrase  “; provided that the adjusted
LIBO Rate applicable for any Eurodollar Loans shall be no less than two and a
half percent (2.5%) per annum at any time” after “Statutory Reserve Rate” and
before the final period in the third line.

       

      (b) The
definition of “Agreement” is hereby
amended in its entirety to read as follows:

       

      “Agreement” means this
Loan Agreement, as amended by the First Amendment, and as the same may be
further amended or supplemented from time to time.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      (c) The
definition of “Alternate Base Rate”
is hereby amended in its entirety to read as follows:

       

      “Alternate Base Rate”
means, for any day, a rate per annum equal to the greatest of (a) the Prime
Rate in effect on such day plus one percent (1%), (b) the sum of the
Federal Funds Effective Rate in effect on such day plus one-half of one percent
(0.5%) and (c) the Adjusted LIBO Rate having an Interest Period of three
months in effect on such day (or if such day is not a Business Day, the
immediately preceding Business Day) plus 1%.  Any change in the
Alternate Base Rate due to a change in the Prime Rate, the Federal Funds
Effective Rate or the Adjusted LIBO Rate shall be effective from and including
the effective date of such change in the Prime Rate, the Federal Funds Effective
Rate or the Adjusted LIBO Rate, respectively.

       

      (d) The
definition of “EBITDAX” is hereby
amended in its entirety to read as follows:

       

      “EBITDAX” means, for
any period, the sum of Consolidated Net Income for such period plus the
following expenses or charges to the extent deducted from Consolidated Net
Income in such period: interest, income taxes, depreciation, depletion,
amortization, exploration expenses and other similar noncash charges, minus all
noncash income added to Consolidated Net Income; provided that EBITDAX for the
fiscal quarters ending March 31, 2009, June 30, 2009 and September 30, 2009
shall be calculated as follows:

       

      (a)           for
the fiscal quarter ending March 31, 2009, EBITDAX shall be EBITDAX for such
quarter multiplied by four;

       

      (b)           for
the fiscal quarter ending June 30, 2009, EBITDAX shall be EBITDAX for the
six-month period ending on such date multiplied by two.

       

      (c)           for
the fiscal quarter ending September 30, 2009, EBITDAX shall be EBITDAX for the
nine-month period ending on such date multiplied by four/thirds.

       

      Thereafter,
EBITDAX shall be calculated using EBITDAX for the period of four fiscal quarters
ending on the last day of the fiscal quarter immediately preceding the date of
determination for which financial statements are available.

       

      (e) The
definition of “LIBO
Rate” is hereby amended in its entirety to read as follows:

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      “LIBO Rate” means,
with respect to any Eurodollar Borrowing for any Interest Period, the rate
appearing on Bloomberg BBAM Screen (or on any successor or substitute thereto or
therefor providing rate quotations comparable to those currently provided on
Bloomberg BBAM Screen, as determined by the Administrative Agent from time to
time for purposes of providing quotations of interest rates applicable to dollar
deposits in the London interbank market) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period, as
the rate for dollar deposits with a maturity comparable to such Interest Period.
In the event that such rate is not available at such time for any reason, then
the “LIBO Rate” with respect to such Eurodollar Borrowing for such Interest
Period shall be determined by Administrative Agent by reference to such other
comparable publicly available service for displaying the offered rate for dollar
deposits in the London interbank market as may be selected by the Administrative
Agent and, in the absence of availability, the “LIBO Rate” with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of an amount comparable to such Eurodollar Borrowing and for a maturity
comparable to such Interest Period are offered by the principal London office of
a banking institution selected by the Administrative Agent in immediately
available funds in the London interbank market at approximately 11:00 a.m.,
London time, two (2) Business Days prior to the commencement of such Interest
Period.

       

      (f) The first
sentence of the definition of “Prime Rate” is hereby
amended in its entirety to read as follows:

       

      “Prime Rate” means in
respect of ABR Loans, the rate of interest per annum publicly announced from
time to time by JPMorgan Chase Bank, N.A. (or its successor) as its prime rate
in effect at its principal office in New York City (or if such rate is at any
time not available, the prime rate so quoted by any banking institution as
determined by the Administrative Agent in its sole discretion); each change in
the Prime Rate shall be effective on the date such change is publicly announced
as being effective.

       

      (g) The
following definition is hereby added where alphabetically appropriate to read as
follows:

       

      “First Amendment”
means that certain First Amendment to Loan Agreement, dated as of March 19,
2009, among the Borrower, the Administrative Agent and the Lenders party
thereto.

       

      2.3 Amendment to Section
3.03.  Section 3.03 is hereby amended in its entirety to read
as follows:

       

      Alternate Rate of
Interest.  If prior to the commencement of any Interest Period
for a Eurodollar Borrowing:

       

      (a) the
Administrative Agent determines (which determination shall be conclusive absent
manifest error) (i) that adequate and reasonable means do not exist for
ascertaining the Adjusted LIBO Rate or LIBO Rate for such Interest Period or
(ii) deposits (whether in dollars or an alternative currency) are not being
offered to banks in the applicable offshore interbank market for such currency
for the applicable amount and Interest Period of such Eurodollar Borrowing;
or

       

      
        
          
          

        

        
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      (b) the
Administrative Agent is advised by the Majority Lenders that the Adjusted LIBO
Rate or LIBO Rate, as applicable, for such Interest Period will not adequately
and fairly reflect the cost to such Lenders of making or maintaining their Loans
included in such Borrowing for such Interest Period;

       

      then the
Administrative Agent shall give notice thereof to the Borrower and the Lenders
by telephone or telecopy as promptly as practicable thereafter and, until the
Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.

      


      2.4 Amendment to Section
9.01.  Section 9.01(b) is hereby amended in its entirety to
read as follows:

       

      (b) Ratio of Net Debt to
EBITDAX.   The Borrower will not, at any time, permit its
ratio of Net Debt as of such time to EBITDAX as of the last day of the most
recent fiscal quarter for which financial statements are then available to be
greater than (i) 6.5 to 1.0 for any fiscal quarter ending on or before December
31, 2010 and (ii) 5.5 to 1.0 for all fiscal quarters ending
thereafter.

       

      Section
3. Waivers.

       

      3.2 The
Borrower has informed the Administrative Agent that it is unable to comply with
Section 9.01(b) for the fiscal quarter ended December 31, 2008, in violation of
Section 9.01(b) of the Loan Agreement (the “Designated Default”).
Therefore, the Borrower hereby requests, and the Administrative Agent and the
Lenders hereby agree to waive the Designated Default.  Except as
expressly waived herein, all covenants, obligations and agreements of the
Borrower contained in the Loan Agreement and the other Loan Documents shall
remain in full force and effect in accordance with their terms.

       

      3.3 Neither
the execution by the Administrative Agent or the Lenders of this First
Amendment, nor any other act or omission by the Administrative Agent or the
Lenders or their officers in connection herewith, shall be deemed a waiver by
the Administrative Agent or the Lenders of any other defaults which may exist,
which may have occurred prior to the Designated Default or which may occur in
the future under the Loan Agreement and/or the other Loan Documents, or any
future defaults of the same provision waived hereunder (collectively "Other
Violations").  Similarly, nothing contained in this First
Amendment shall directly or indirectly in any way whatsoever: (i) impair,
prejudice or otherwise adversely affect the Administrative Agent's or the
Lenders' right at any time to exercise any right, privilege or remedy in
connection with the Loan Documents with respect to any Other Violations, (ii)
amend or alter any provision of the Loan Agreement, the other Loan Documents, or
any other contract or instrument, or (iii) constitute any course of dealing or
other basis for altering any obligation of the Borrower or any right, privilege
or remedy of the Administrative Agent or the Lenders under the Loan Agreement,
the other Loan Documents, or any other contract or
instrument.  Nothing in this First Amendment shall be construed to be
a consent by the Administrative Agent or the Lenders to any Other
Violations.

       

      
        
          
          

        

        
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      Section
4. Conditions
Precedent.  This First Amendment shall not become effective
until the date on which each of the following conditions is satisfied (or waived
in accordance with Section 12.02 of the Loan Agreement):

       

      4.2 The
Administrative Agent shall have received from each party hereto, counterparts
(in such number as may be requested by the Administrative Agent) of this First
Amendment signed on behalf of such Person.

       

      4.3 The
Administrative Agent, the Arranger and the Lenders shall have received all
agency fees and all other fees and other amounts due and payable on or prior to
the effective date of this First Amendment, including, to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses required to be reimbursed
or paid by the Borrower (including, without limitation, the reasonable fees and
expenses of Vinson & Elkins L.L.P., counsel to the Administrative
Agent).

       

      4.4 At the
time of and immediately after giving effect to the terms of this First
Amendment, no Default shall have occurred and be continuing.

       

      The
Administrative Agent is hereby authorized and directed to declare this First
Amendment to be effective when it has received documents confirming or
certifying, to the satisfaction of the Administrative Agent, compliance with the
conditions set forth in this Section 4 or the waiver of such conditions as
permitted hereby. Such declaration shall be final, conclusive and binding upon
all parties to the Loan Agreement for all purposes.

       

      Section
5. Miscellaneous.

       

      5.2 Confirmation.  The
provisions of the Loan Agreement, as amended by this First Amendment, shall
remain in full force and effect following the effectiveness of this First
Amendment.

       

      5.3 Ratification and
Affirmation; Representations and Warranties.  The Borrower
hereby (a) acknowledges the terms of this First Amendment; (b) ratifies and
affirms its obligations under, and acknowledges, renews and extends its
continued liability under, each Loan Document to which it is a party and agrees
that each Loan Document to which it is a party remains in full force and effect,
except as expressly amended hereby, notwithstanding the amendments contained
herein and (c)
represents and warrants to the Lenders that as of the date hereof, after giving
effect to the terms of this First Amendment:  (i) all of the
representations and warranties contained in each Loan Document to which it is a
party are true and correct, except to the extent any such representations and
warranties are expressly limited to an earlier date, in which case, such
representations and warranties shall continue to be true and correct as of such
specified earlier date, (ii) no Default or Event of Default has occurred and is
continuing and (iii) no event or events have occurred which individually or in
the aggregate could reasonably be expected to have a Material Adverse
Effect.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      5.4 Counterparts.  This
First Amendment may be executed by one or more of the parties hereto in any
number of separate counterparts, and all of such counterparts taken together
shall be deemed to constitute one and the same instrument.  Delivery
of this First Amendment by facsimile transmission shall be effective as delivery
of a manually executed counterpart hereof.

       

      5.5 NO ORAL
AGREEMENT.  THIS FIRST AMENDMENT, THE LOAN AGREEMENT AND THE
OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND THEREWITH REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR UNWRITTEN ORAL AGREEMENTS OF THE
PARTIES.  THERE ARE NO SUBSEQUENT ORAL AGREEMENTS BETWEEN THE
PARTIES.

       

      5.6 GOVERNING
LAW.  THIS FIRST AMENDMENT (INCLUDING, BUT NOT LIMITED TO, THE
VALIDITY AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

       

      5.7 Payment of
Expenses.  The Borrower agrees to pay or reimburse the
Administrative Agent for all of its out-of-pocket costs and expenses incurred in
connection with this First Amendment, any other documents prepared in connection
herewith and the transactions contemplated hereby, including, without
limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent.

       

      5.8 Severability.  Any
provision of this First Amendment which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

       

      5.9 Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties hereto and its respective successors and
assigns.

       

      
        
          
          

        

        
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      5.10 Release of
Lenders.  IN CONSIDERATION OF THIS FIRST
AMENDMENT AND, SUBJECT TO THE CONDITIONS STATED HEREIN, THE BORROWER HEREBY
RELEASES, ACQUITS, FOREVER DISCHARGES, AND COVENANTS NOT TO SUE, THE
ADMINISTRATIVE AGENT AND EACH OF THE LENDERS, ALONG WITH ALL OF THEIR
BENEFICIARIES, OFFICERS, DIRECTORS, AGENTS, EMPLOYEES, SERVANTS, ATTORNEYS AND
REPRESENTATIVES, AS WELL AS THEIR RESPECTIVE HEIRS, EXECUTORS, LEGAL
REPRESENTATIVES, ADMINISTRATORS, PREDECESSORS IN INTEREST, SUCCESSORS AND
ASSIGNS (EACH INDIVIDUALLY, A “RELEASED
PARTY” AND COLLECTIVELY,
THE “RELEASED
PARTIES”) FROM ANY AND
ALL CLAIMS, DEMANDS, DEBTS, LIABILITIES, SUITS, OFFSETS AGAINST THE INDEBTEDNESS
EVIDENCED BY THE LOAN DOCUMENTS AND ACTIONS, CAUSES OF ACTION OR CLAIMS FOR
RELIEF OF WHATEVER KIND OR NATURE, WHETHER KNOWN OR UNKNOWN, SUSPECTED OR
UNSUSPECTED BY BORROWER OR ANY GUARANTOR, WHICH THE BORROWER, ANY GUARANTOR, OR
ANY SUBSIDIARY MAY HAVE RELATED TO ANY ACTIONS OR FACTS OCCURRING PRIOR TO THE
DATE OF THIS FIRST AMENDMENT AGAINST ANY RELEASED PARTY, FOR OR BY REASON OF ANY
MATTER, CAUSE OR THING WHATSOEVER OCCURRING ON OR PRIOR TO THE DATE OF THIS
FIRST AMENDMENT, WHICH RELATE TO, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY
THE LOAN AGREEMENT, ANY NOTE, ANY SECURITY INSTRUMENT, ANY OTHER LOAN DOCUMENT
OR THE TRANSACTIONS EVIDENCED THEREBY, INCLUDING, WITHOUT LIMITATION, ANY
DISBURSEMENTS UNDER THE LOAN AGREEMENT, ANY NOTES, THE NEGOTIATION OF ANY OF THE
LOAN AGREEMENT, THE NOTES, OR THE OTHER LOAN DOCUMENTS, THE TERMS THEREOF, OR
THE APPROVAL, ADMINISTRATION, ENFORCEMENT OR SERVICING
THEREOF.

       

      


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      IN
WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly
executed as of the date first written above.

       

      


      
        
          	BORROWER:	

                  PETRO RESOURCES
      CORPORATION

                	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Donald L. Kirkendall                    	 
	 	 	Name:  
      Donald L. Kirkendall 	 
	 	 	Title:     President	 
	 	 	 	 


        

      

    

     

     

    
      
        
          
            	

                    ADMINISTRATIVE
      AGENT AND LENDER:

                  	
                    CIT CAPITAL USA
      INC.,

                    as Administrative Agent and as a Lender

                  	 
	 	 	 	 
	
                     

                  	
                    By:
      

                  	/s/ David Bornstein                       	 
	 	 	David
      Bornstein	 
	 	 	

                    Vice
      President

                  	 
	 	 	 	 


          

        

      

                                                                                                                                                                                         

       

       

       

       

       

       

       

       

       

      
        Signature
Page to First Amendment to Loan Agreement

        (Petro
Resources Corporation)

        S-1