Exhibit 10.36


 


FIRST AMENDMENT


TO


SECOND
AMENDED AND RESTATED CREDIT AGREEMENT


 


THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED
CREDIT AGREEMENT (this “First Amendment”)
is entered into as of the First Amendment Closing Date (as defined below) by
and among CYMRI, L.L.C., a Nevada limited
liability company (F/K/A THE CYMRI CORPORATION, a Texas
corporation) (“CYMRI”)
and TRIUMPH ENERGY, INC., a
Louisiana 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 that
certain Second Amended and Restated Credit Agreement dated as of August 5,
2008 (as amended, modified or supplemented, the “Credit
Agreement”).


 


B.                                     Borrowers and Lender have agreed to amend
the Credit Agreement, subject to the terms and conditions of this First
Amendment.


 


C.                                     Capitalized terms used but not defined in
this 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 hereby
agree as follows:


 


I.                                         Amendments to Credit Agreement.


 


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


 


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


 


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


 


ARTICLE
I, DEFINITIONS,
of the Credit Agreement is hereby amended by revising the following definitions
in their entirety to read as follows:


 


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


 

















 


“Current
Liabilities” means all liabilities which would, in accordance
with GAAP, be included as current liabilities, on a consolidated basis, on the
balance sheet of Guarantor as of the date of calculation.


 


“Interest
Expense” means, for any period, the total interest expense
(including, without limitation, interest expense attributable to capitalized
leases) of Guarantor, on a consolidated basis, for such period, determined in
accordance with GAAP.


 


“Net
Income” means, for any period, the net income (or loss) of
Guarantor, on a consolidated basis, for such period, determined in accordance
with GAAP.


 


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


 


Section 2.7, Borrowing Base, of the Credit Agreement is
hereby amended by replacing the text of subsection (a) thereof with the
following text:


 


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


 


Section 6.16, Tangible Net Worth, is hereby
amended by replacing the text of that section in its entirety with the
following text:


 


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


 


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


 


“Section 6.17  Hedging Limitation.  Permit more than 80% of the anticipated
monthly notional volumes of crude oil or natural gas attributable to the proved
developed producing reserves that are projected to be produced from Borrowers’
Borrowing Base Oil and Gas Properties, as reflected in the most recently
delivered Reserve Report delivered pursuant to Section 2.7 or as otherwise
determined by the Lender, to be covered by Permitted Commodity Hedge
Agreements.”


 


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


 


III.                                 Calculation and Testing of Financial
Covenants.  Borrowers and Lender hereby acknowledge and
agree 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 of
the close of each fiscal quarter after commencing June 30, 2009, be
calculated based on Guarantor’s Financial Statements.


 


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


 


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


 


(b)         Borrowers have provided to Lender evidence
acceptable to Lender, in its sole discretion, that no less than 50% of Borrowers’ anticipated
monthly notional volumes of crude oil attributable to the proved developed
producing reserves that are projected to be produced from the Borrowing Base
Oil and Gas Properties are covered by Permitted Commodity Hedge Agreements for
the twelve (12) month period commencing on the First Amendment Closing Date;


 


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


 


(d)         Borrowers deliver to Lender such other
documents as Lender reasonably requests.


 


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


 


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transactions contemplated by this First Amendment or any other matters occurring
prior to the First Amendment Closing Date.  In particular, but without limiting the
generality of the foregoing, Exhibit V attached to the Credit Agreement as
amended by this First Amendment or any prior amendment describes all of
Borrowers’ Borrowing Base Oil and Gas Properties.  The representations and warranties made in this First
Amendment shall survive the execution and delivery of this First
Amendment.  No investigation by Lender is
required for Lender to rely on the representations and warranties in this First
Amendment.


 


VI.                                 Scope of Amendment; Reaffirmation;
Release.  All references to the Credit Agreement shall
refer 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 inconsistency
between the terms of the Credit Agreement (as amended by this First Amendment)
and any other Loan Document, the terms of the Credit Agreement shall control
and such other document shall be deemed to be amended to conform to the terms
of the Credit Agreement.  Borrowers
hereby reaffirm their obligations under the Loan Documents to which they are a
party to and agree that all Loan Documents to which they are a party remain in
full force and effect and continue to be legal, valid, and binding obligations
enforceable in accordance with their terms (as the same are affected by this
First Amendment).  Borrowers hereby
release Lender from any liability for actions or omissions in connection with
the Credit Agreement and the other Loan Documents prior to the date of this
First Amendment.


 


VII.                             Miscellaneous.


 


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


 


(b)                                 Form.  Each
agreement, document, instrument or other writing to be furnished to Lender
under any provision of this First Amendment must be in form and substance
satisfactory to Lender and its counsel.


 


(c)                                  Headings.  The headings
and captions used in this First Amendment are for convenience only and will not
be deemed to limit, amplify or modify the terms of this First Amendment, the
Credit Agreement, or the other Loan Documents.


 


(d)                                 Costs, Expenses and Attorneys’ Fees. 
Borrowers agree to pay or reimburse Lender on demand for all its
reasonable out-of-pocket costs and expenses incurred in connection with the
preparation, 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 of
each 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 with
the same effect as if all signatories had signed the same document.  All counterparts must be construed together
to constitute one and the same instrument. 
This First Amendment may be transmitted and signed by facsimile.  The effectiveness of any such documents and
signatures shall, subject to applicable law, have the same force and effect as
manually-signed originals and shall be binding on Borrowers and Lender.  Lender may also require that any such
documents and signatures be confirmed by a manually-signed original; provided that  the failure to request or deliver the
same 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, and
their performance enforced, under Texas law.


 


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


 


(Signature page follows)


 


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IN WITNESS WHEREOF, this First Amendment is executed
effective 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 First
Amendment


 

















 


GUARANTOR’S
CONSENT AND AGREEMENT


TO


FIRST
AMENDMENT TO


SECOND
AMENDED AND RESTATED CREDIT AGREEMENT


 


As an inducement to Lender
to execute, and in consideration of Lender’s execution of, this First
Amendment, the undersigned hereby consents to this First Amendment and agrees
that this First Amendment shall in no way release, diminish, impair, reduce or
otherwise adversely affect the obligations and liabilities of the undersigned
under its Guaranty executed by the undersigned in connection with the Credit
Agreement, or under any Loan Documents, agreements, documents or instruments
executed by the undersigned to create liens, security interests or charges to
secure any of the Obligations (as defined in the Credit Agreement), all of
which are in full force and effect.  The
undersigned further represents and warrants to Lender that (a) the
representations and warranties in each Loan Document to which it is a party are
true and correct in all material respects on and as of the date of this First
Amendment as though made on the date of this First Amendment, (b) it is in
full compliance with all covenants and agreements contained in each Loan
Document to which it is a party, and (c) no Default or Event of Default
has occurred and is continuing. 
Guarantor hereby releases Lender from any liability for actions or
omissions in connection with the Loan Documents prior to the date of this First
Amendment.  This Consent and Agreement
shall be binding upon the undersigned, and its permitted assigns, if any, and
shall 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 to
Guarantor’s Consent and Agreement to First Amendment