**Exhibit 10.36**

** **

**FIRST**AMENDMENT

**TO**

**SECONDAMENDED AND RESTATED CREDIT AGREEMENT**

** **

THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATEDCREDIT AGREEMENT (this “***First Amendment***”)is entered into as of the First Amendment Closing Date (as defined below) byand among **CYMRI, L.L.C.**, a Nevada limitedliability company **(F/K/A THE CYMRI CORPORATION**, a Texascorporation) (“***CYMRI***”)and **TRIUMPH ENERGY, INC.**, aLouisiana corporation (“***Triumph***”)(each individually, a “***Borrower***”and, collectively, the “***Borrowers***”),and **TEXAS CAPITAL BANK**, **N.A.** (the “***Lender***”).

 

**RECITALS**

 

A.                                   Borrowers and Lender entered into thatcertain Second Amended and Restated Credit Agreement dated as of August 5,2008 (as amended, modified or supplemented, the “***CreditAgreement***”).

 

B.                                     Borrowers and Lender have agreed to amendthe Credit Agreement, subject to the terms and conditions of this FirstAmendment.

 

C.                                     Capitalized terms used but not defined inthis First Amendment have the meaning given them in the Credit Agreement.

 

**AGREEMENT**

 

NOW THEREFORE, for good and valuable consideration,the receipt and sufficiency of which are acknowledged, the undersigned herebyagree as follows:

 

# I.                                         Amendments to Credit Agreement.

#  

ARTICLE I, DEFINITIONS, of the Credit Agreement is hereby amended by addingthe following definitions in their proper alphabetical order:

 

“***First Amendment***” means theFirst Amendment to Second Amended and Restated Credit Agreement dated as of theFirst Amendment Closing Date by and among Borrowers and Lender.

 

“***First Amendment Closing Date***”means May 28, 2009.

 

ARTICLEI, DEFINITIONS,of the Credit Agreement is hereby amended by revising the following definitionsin their entirety to read as follows:

 

“***CurrentAssets***” means all assets which would, in accordance with GAAP,be included as current assets, on a consolidated basis, on the balance sheet ofGuarantor as of the date of calculation.

 

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“***CurrentLiabilities***” means all liabilities which would, in accordancewith GAAP, be included as current liabilities, on a consolidated basis, on thebalance sheet of Guarantor as of the date of calculation.

 

“***InterestExpense***” means, for any period, the total interest expense(including, without limitation, interest expense attributable to capitalizedleases) of Guarantor, on a consolidated basis, for such period, determined inaccordance with GAAP.

 

“***NetIncome***” means, for any period, the net income (or loss) ofGuarantor, on a consolidated basis, for such period, determined in accordancewith GAAP.

 

“***Permitted Commodity HedgeAgreements***” means crude oil, natural gas, or other hydrocarbonCommodity Hedge Agreements; *provided that* (i) suchagreements are in form and substance and with a Person acceptable to theLender, in its discretion, (ii) each transaction under such agreement mustalso be approved by the Lender, (iii) that the floor prices in suchagreements are not less than the prices used by the Lender in its most recentBorrowing Base determination, and (iv) such agreements comply with therequirements set forth ***Section 6.17***.

 

## Section 2.7, Borrowing Base, of the Credit Agreement ishereby amended by replacing the text of subsection (a) thereof with thefollowing text:

##  

## “(a)  The BorrowingBase as of the First Amendment Closing Date is acknowledged by the Borrowersand the Lender to be $3,250,000.  Theamount of the Borrowing Base (as adjusted from time to time under the terms ofthis Agreement) shall be reduced by $0.00 on June 1, 2009 and by $58,000on July 1, 2009 and on the first day of each month thereafter (the “***Monthly Borrowing Base Reduction***”).”

##  

Section 6.16, Tangible Net Worth, is herebyamended by replacing the text of that section in its entirety with thefollowing text:

 

## “Section 6.16  Tangible Net Worth. Permit, as of theclose of any fiscal quarter, Guarantor’s tangible net worth, on a consolidatedbasis, to be less than seventy-five percent (75%) of its tangible net worth, ona consolidated basis, as of March 31, 2009, plus the aggregate total ofseventy-five percent (75%) of Guarantor’s positive Net Income determined on afiscal quarterly basis from and after April 1, 2009.”

##  

ARTICLE 6, Negative Covenants, is herebyamended by adding to the end thereof the following new Section 6.17:

 

“Section 6.17  Hedging Limitation.  Permit more than 80% of the anticipatedmonthly notional volumes of crude oil or natural gas attributable to the proveddeveloped producing reserves that are projected to be produced from Borrowers’Borrowing Base Oil and Gas Properties, as reflected in the most recentlydelivered Reserve Report delivered pursuant to Section 2.7 or as otherwisedetermined by the Lender, to be covered by Permitted Commodity HedgeAgreements.”

 

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# II.                                     Limited Waiver. Subject to the other terms and conditions set forth herein, Lenderhereby waives Borrowers’ compliance with the obligations set forth in Section 6.14(EBITDA to Fixed Charges) and Section 6.15 (Tangible Net Worth) ofthe Credit Agreement solely in relation to the fiscal quarter ending March 31,2009.  The waiver granted hereunderdoes not indicate an intent to establish any course of dealing between Lenderand Borrowers with regard to future waivers, consents, agreements to forbear orany other modifications that may be requested. Lender’s agreeing to the waiver herein should not be construed as anindication that Lender would be willing to agree to any further or futureconsents, waivers, agreements to forbear or any modifications to any of theterms of the Credit Agreement or other Loan Documents, or any Events of Defaultor Defaults that may exist or occur thereunder.

#  

# III.                                 Calculation and Testing of FinancialCovenants.  Borrowers and Lender hereby acknowledge andagree that the financial covenants set forth in Section 6.14(Current Ratio), Section 6.15 (EBITDA to Fixed Charges), and Section 6.16(Tangible Net Worth) of the Credit Agreement (as amended hereby) shall, as ofthe close of each fiscal quarter after commencing June 30, 2009, becalculated based on Guarantor’s Financial Statements.

#  

# IV.                                 Conditions Precedent. This First Amendment shall be effective once the following conditionsprecedent have been satisfied:

#  

## (a)          this First Amendment has been executedand delivered by Borrowers and Lender;

##  

## (b)         Borrowers have provided to Lender evidenceacceptable to Lender, in its sole discretion, that no less than 50% of Borrowers’ anticipatedmonthly notional volumes of crude oil attributable to the proved developedproducing reserves that are projected to be produced from the Borrowing BaseOil and Gas Properties are covered by Permitted Commodity Hedge Agreements forthe twelve (12) month period commencing on the First Amendment Closing Date;

##  

## (c)          Borrowers have paid to Lender, in immediatelyavailable funds, a waiver fee in the amount of $3,250.00; and

##  

## (d)         Borrowers deliver to Lender such otherdocuments as Lender reasonably requests.

##  

# V.                                     Representations, Warranties and Covenants. Borrowers represent and warrant to Lender that (a) they possess allrequisite power and authority to execute, deliver and comply with the terms ofthis First Amendment, (b) this First Amendment has been duly authorizedand approved by all requisite company and corporate action on the part of theBorrowers, (c) no other consent of any Person (other than Lender) isrequired for this First Amendment to be effective, (d) the execution anddelivery of this First Amendment does not violate their Governing Documents, (e) therepresentations and warranties in each Loan Document to which they are a partyare true and correct in all material respects on and as of the date of thisFirst Amendment as though made on the date of this First Amendment (f) theyare in full compliance with all covenants and agreements contained in each LoanDocument to which they are a party, (g) no Event of Default or Default hasoccurred and is continuing, and (h) no exhibit or schedule to the Credit Agreement isrequired to be supplemented, amended or modified in connection with the 

 

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# transactions contemplated by this First Amendment or any other matters occurringprior to the First Amendment Closing Date.  In particular, but without limiting thegenerality of the foregoing, Exhibit V attached to the Credit Agreement asamended by this First Amendment or any prior amendment describes all ofBorrowers’ Borrowing Base Oil and Gas Properties.  The representations and warranties made in this FirstAmendment shall survive the execution and delivery of this FirstAmendment.  No investigation by Lender isrequired for Lender to rely on the representations and warranties in this FirstAmendment.

#  

# VI.                                 Scope of Amendment; Reaffirmation;Release.  All references to the Credit Agreement shallrefer to the Credit Agreement as amended by this First Amendment.  Except as affected by this First Amendment,the Loan Documents are unchanged and continue in full force and effect.  However, in the event of any inconsistencybetween the terms of the Credit Agreement (as amended by this First Amendment)and any other Loan Document, the terms of the Credit Agreement shall controland such other document shall be deemed to be amended to conform to the termsof the Credit Agreement.  Borrowershereby reaffirm their obligations under the Loan Documents to which they are aparty to and agree that all Loan Documents to which they are a party remain infull force and effect and continue to be legal, valid, and binding obligationsenforceable in accordance with their terms (as the same are affected by thisFirst Amendment).  Borrowers herebyrelease Lender from any liability for actions or omissions in connection withthe Credit Agreement and the other Loan Documents prior to the date of thisFirst Amendment.

#  

# VII.                             Miscellaneous.

#  

## (a)                                  No Waiver of Defaults. Except as specifically provided in Part II above, this FirstAmendment does not constitute (i) a waiver of, or a consent to, (A) anyprovision of the Credit Agreement or any other Loan Document, or (B) anypresent or future violation of, or default under, any provision of the LoanDocuments, or (ii) a waiver of Lender’s right to insist upon futurecompliance with each term, covenant, condition and provision of the LoanDocuments.

##  

## (b)                                 Form.  Eachagreement, document, instrument or other writing to be furnished to Lenderunder any provision of this First Amendment must be in form and substancesatisfactory to Lender and its counsel.

##  

## (c)                                  Headings.  The headingsand captions used in this First Amendment are for convenience only and will notbe deemed to limit, amplify or modify the terms of this First Amendment, theCredit Agreement, or the other Loan Documents.

##  

## (d)                                 Costs, Expenses and Attorneys’ Fees. Borrowers agree to pay or reimburse Lender on demand for all itsreasonable out-of-pocket costs and expenses incurred in connection with thepreparation, negotiation, and execution of this First Amendment, including,without limitation, the reasonable fees and disbursements of Lender’s counsel.

##  

## (e)                                  Successors and Assigns. This First Amendment shall be binding upon and inure to the benefit ofeach of the undersigned and their respective successors and permitted assigns.

 

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## (f)                                    Multiple Counterparts. This First Amendment may be executed in any number of counterparts withthe same effect as if all signatories had signed the same document.  All counterparts must be construed togetherto constitute one and the same instrument. This First Amendment may be transmitted and signed by facsimile.  The effectiveness of any such documents andsignatures shall, subject to applicable law, have the same force and effect asmanually-signed originals and shall be binding on Borrowers and Lender.  Lender may also require that any suchdocuments and signatures be confirmed by a manually-signed original; provided that**the failure to request or deliver thesame shall not limit the effectiveness of any facsimile document or signature.

##  

## (g)                                 Governing Law. This First Amendment and the other Loan Documents must be construed, andtheir performance enforced, under Texas law.

##  

## (h)                                 Entirety.  **THE LOAN DOCUMENTS (AS AMENDED HEREBY) REPRESENT THE FINAL AGREEMENT BYAND AMONG BORROWERS, GUARANTOR AND LENDER AND MAY NOT BE CONTRADICTED BYEVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THEPARTIES.  THERE ARE NO UNWRITTEN ORALAGREEMENTS BETWEEN THE PARTIES.**

##  

***(Signature page follows)***

 

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IN WITNESS WHEREOF, this First Amendment is executedeffective as of the First Amendment Closing Date.

 

 
| ** ** | **BORROWERS****:**                               |
|------------|--------------------------------------------------|
|       |                                             |
| ** ** | **CYMRI,  L.L.C. (F/K/A THE CYMRI CORPORATION)** |
|       |                                             |   |
|       |                                             |   |
|       | By:                                              | /s/ D. Hughes  Watler, Jr. |
|       |                                             | D. Hughes  Watler, Jr. |
|       |                                             | Secretary |
|       |                                             |   |
|       |                                             |   |
| ** ** | **TRIUMPH  ENERGY, INC.**                        |
|       |                                             |   |
|       |                                             |   |
|       | By:                                              | /s/ D. Hughes  Watler, Jr. |
|       |                                             | D. Hughes  Watler, Jr. |
|       |                                             | Secretary |
|       |                                             |   |
|       |                                             |   |
| ** ** | **LENDER****:**                                  |
|       |                                             |   |
|       |                                             |   |
| ** ** | **TEXAS  CAPITAL BANK, N.A.**                    |
|       |                                             |   |
|       |                                             |   |
|       | By:                                              | /s/ Jonathan Gregory |
|       |                                             | Jonathan Gregory |
|       |                                             | Executive Vice  President |

 

Signature Page to FirstAmendment

 

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**GUARANTOR’SCONSENT AND AGREEMENT**

**TO**

**FIRSTAMENDMENT TO**

**SECONDAMENDED AND RESTATED CREDIT AGREEMENT**

 

As an inducement to Lenderto execute, and in consideration of Lender’s execution of, this FirstAmendment, the undersigned hereby consents to this First Amendment and agreesthat this First Amendment shall in no way release, diminish, impair, reduce orotherwise adversely affect the obligations and liabilities of the undersignedunder its Guaranty executed by the undersigned in connection with the CreditAgreement, or under any Loan Documents, agreements, documents or instrumentsexecuted by the undersigned to create liens, security interests or charges tosecure any of the Obligations (as defined in the Credit Agreement), all ofwhich are in full force and effect.  Theundersigned further represents and warrants to Lender that (a) therepresentations and warranties in each Loan Document to which it is a party aretrue and correct in all material respects on and as of the date of this FirstAmendment as though made on the date of this First Amendment, (b) it is infull compliance with all covenants and agreements contained in each LoanDocument to which it is a party, and (c) no Default or Event of Defaulthas occurred and is continuing. Guarantor hereby releases Lender from any liability for actions oromissions in connection with the Loan Documents prior to the date of this FirstAmendment.  This Consent and Agreementshall be binding upon the undersigned, and its permitted assigns, if any, andshall inure to the benefit of Lender and its respective successors and assigns.

 

 
| ** ** | **GUARANTOR:**              |
|------------|-----------------------------|
|       |                        |
| ** ** | **STRATUM HOLDINGS, INC.,** |
|       | a  Nevada corporation       |
|       |                        |   |
|       |                        |   |
|       | By:                         | /s/  D. Hughes Watler, Jr. |
|       |                        | D.  Hughes Watler, Jr. |
|       |                        | Chief Financial Officer & Secretary |

 

Signature Page toGuarantor’s Consent and Agreement to First Amendment 

 

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