exv10w21



 





Exhibit 10.21




FIRST AMENDMENT TO CREDIT AGREEMENT




     THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is dated as of February
21, 2008, by and among THE MERIDIAN RESOURCE CORPORATION, a Texas corporation (the
“Borrower”), the several banks, financial institutions and other entities from time to time
parties to the Credit Agreement (as defined below) (collectively, the “Lenders”), and
FORTIS CAPITAL CORP. (“Fortis”), as administrative agent for the Lenders.



RECITALS




     WHEREAS, the Borrower, Fortis as Administrative Agent, and certain financial institutions have
entered into an Amended and Restated Credit Agreement dated as of December 23, 2004 (as amended,
the “Credit Agreement”);



     WHEREAS, certain of the Lenders, RZB Finance LLC (“RZB”), Standard Bank plc
(“Standard”), Union Bank of California, N.A. (“UBOC”), Allied Irish Banks, plc, and
Fortis have assigned all or part of their interests in the Credit Agreement to Fortis, The Bank of
Nova Scotia, U.S. Bank National Association (“US Bank”), and Comerica Bank by way of
Assignments and Acceptances executed immediately prior to the effectiveness of this Amendment;



     WHEREAS, as a consequence of such Assignments and Acceptances and this Amendment, US Bank will
become a Lender and a party to the Credit Agreement and RZB, Standard and UBOC shall no longer be
Lenders under or a party to the Credit Agreement;



     WHEREAS, the Borrower has requested that the Lenders extend the maturity date of the Credit
Agreement to February 21, 2012 and make certain other amendments to the Credit Agreement, and,
subject to the terms and conditions set forth herein, the Lenders have agreed to make such
extension;



     WHEREAS, on January 3, 2007 the Borrower organized TMR Drilling Corporation, a Texas
corporation (“TMR Drilling”) as a Subsidiary, and executed a Second Amendment of Pledge
Agreement dated as of May 31, 2007 whereby it pledged its stock in TMR Drilling to the
Administrative Agent for the benefit of the Creditors (as defined therein);



     WHEREAS, TMR Drilling has executed a Second Amendment of Security Agreement and Joinder to
Guarantee, both dated as of May 31, 2007, whereby TMR Drilling became a Debtor and Guarantor
respectively; and



     WHEREAS, the Borrower has requested that the Lenders (a) waive certain provisions of the
Credit Agreement to enable TMR Drilling to purchase a land based drilling rig and related equipment
(the “Drilling Rig”) from Orion Drilling Company, LP (“Orion”) and lease the
Drilling Rig back to Orion with financing for the transaction to be provided by The CIT
Group/Equipment Financing, Inc. (“CIT”) as more fully described in Appendix I
attached hereto (the “Drilling Rig Transaction”), and (b) release and discharge their
security interest in the Drilling Rig and related property as more fully described in Appendix
I attached hereto (the “CIT Collateral”), and, subject to the terms and conditions set
forth herein, the Lenders have



 









 







agreed to grant such waivers and release and discharge their security interest in the CIT
Collateral;



     NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, agree as follows:



     1. Defined Terms. All capitalized terms used but not otherwise defined in this
Amendment shall have the meaning ascribed to them in the Credit Agreement. Unless otherwise
specified, all section references herein refer to sections of the Credit Agreement.



     2. Amendments to Credit Agreement.



          2.1 Definitions (Section 1).





     (a) Applicable Margin. The definition of “Applicable Margin” is
amended to read as follows:




     “‘Applicable Margin’ — for any day with respect to
Eurodollar Loans and ABR Loans, the applicable per annum rate set
forth below opposite the Borrowing Base Usage in effect on any such
day:



	 	 	 	 	 	 	 	 	 
	Borrowing Base Usage	 	Eurodollar Margin	 	ABR Margin
	 
	Less than or equal to 50%
	 	 	1.50	%	 	 	0.75	%
	Greater than 50% and less than or equal
to 75%
	 	 	1.75	%	 	 	1.00	%
	Greater than 75% and less than or equal
to 90%
	 	 	2.00	%	 	 	1.25	%
	Greater than 90%
	 	 	2.50	%	 	 	1.75	%







As used herein, “Borrowing Base Usage” on any day means the
percentage equivalent to the ratio of (i) the sum of the aggregate
principal amount of the Loans then outstanding and Letter of Credit
Outstandings on such day to (ii) the Borrowing Base in effect on
such day.”




     (b) Consolidated Tangible Net Worth. The definition of “Consolidated
Tangible Net Worth” is amended to read as follows:




     ”‘Consolidated Tangible Net Worth’ means, at any date of
determination, all assets of the Borrower and its Subsidiaries as of
such date, minus intangible assets, minus the liabilities of the
Borrower and its Subsidiaries, and all determined in accordance



2









 







with GAAP on a consistent basis with the latest financial
statements. For purposes of this definition, “intangible assets”
shall include patents, copyrights, licenses, franchises, good will,
trade names, and trade secrets but shall exclude oil, gas, or other
mineral leases, and all leases required to be capitalized under
GAAP. The calculation of Consolidated Tangible Net Worth shall
exclude the impact of ceiling test write-downs and the non-cash
impact of Commodity Hedging Agreements and other comprehensive
income (determined in accordance with GAAP), in each such case
occurring as of June 30, 2007 or thereafter.”




     (c) Syndication Agent. The definition of “Syndication Agent” is
amended to read as follows:




     “‘Syndication Agent’ — The Bank of Nova Scotia.”




     (d) Termination Date. The definition of “Termination Date” is amended
to read as follows:




     “‘Termination Date‘ — February 21, 2012.”




     (e) Uniform Customs. The definition of “Uniform Customs” is amended to
read as follows:




     “‘Uniform Customs‘ — the Uniform Customs and Practice
for Documentary Credits (2007 Revision), International Chamber of
Commerce Publication No. 600, as the same may be amended from time
to time.”




     (f) Agents. The terms “Documentation Agent” and “Sole Lead Arranger”
are hereby deleted from the Credit Agreement. The term “Co-Lead Arrangers” is added
to the Credit Agreement as follows:




     “‘Co-Lead
Arrangers’ — Fortis and The Bank of Nova
Scotia.”




     2.2 Section 7.2(f) (Certificates; Other Information). Section 7.2(f)
is amended to read as follows:




     “(f) within 60 days of the commencement of each fiscal year, annual
cash flow projections for such fiscal year of the Borrower, including
quarterly production volumes, revenues, expenses, taxes and budgeted capital
expenditures; and”




     2.3 Section 8.1(d) (Tangible Net Worth). Section 8.1(d) is amended to
read as follows:



3









 






     “(d) Tangible Net Worth. Permit the Consolidated Tangible Net
Worth of the Borrower and its Subsidiaries to be less than $215,000,000.00,
plus (i) (A) 50% of Consolidated Net Income for the period beginning July 1,
2007 and ending December 31, 2007, and (B) 50% of the Consolidated Net
Income for any fiscal year commencing after December 31, 2007, and (ii) 50%
of the net cash proceeds of any equity offering received by the Borrower or
any of its Subsidiaries after June 30, 2007.”




     2.4 Section 8.4 (Limitation on Guarantee Obligations). Section 8.4(c)
is amended to read as follows:




     “8.4 Limitation on Guarantee Obligations. Create, incur,
assume or suffer to exist any Guarantee Obligation except (a) Guarantee
Obligations in existence on the date hereof and listed on Schedule 8.4, (b)
Guarantee Obligations arising under the Loan Documents, (c) Guarantee
Obligations with respect to Indebtedness permitted by subsection 8.2 (other
than subsections (g) and (h) thereof), (d) Guarantee Obligations incurred by
any Borrower or any Subsidiary thereof with respect to any obligations or
liabilities of a Borrower or any Subsidiary thereof, so long as the
incurring of such obligations or liabilities is not prohibited by Section
8.2 hereof, and (e) Guarantee Obligations issued by the Borrower or by any
of its Subsidiaries in the ordinary course of business of obligations of
other Persons (other than in respect of Indebtedness) in connection with
current oil and gas drilling, oil and gas production, oil and gas
transportation, crude oil purchasing, oil and gas exploration or other
similar programs or operations. Notwithstanding any provision in this
Section 8.4, the Borrower and one or more of its Subsidiaries shall be
permitted to incur Guarantee Obligations (i) in connection with the Drilling
Rig Transaction as described in the First Amendment to Credit Agreement
dated February 21, 2008 in an amount not to exceed $10,300,000.00, and (ii)
with respect to Indebtedness permitted by subsection 8.2(h) not to exceed
$2,500,000 in the aggregate.”




     2.5 Section 10.11 (Others). Section 10.11 is amended to read as
follows:




     “10.11. Others. None of the Co-Lead Arrangers or the
Bookrunner, in such respective capacities, shall have any duties or
responsibilities, or incur any liabilities, under this Agreement or the
other Loan Documents.”




     2.6 Section 11.5 (Payment of Expenses and Taxes). Section 11.5 is
amended to read as follows:




     “11.5. Payment of Expenses and Taxes. The Borrower agrees (a)
to pay or reimburse the Administrative Agent for all its reasonable and
documented out-of-pocket costs and expenses incurred in connection with the
development, syndication, preparation and execution of, and any



4









 







amendment, supplement or modification to, this Agreement and the other
Loan Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of (i) counsel to the Administrative Agent
and (ii) the Administrative Agent customarily charged by it in connection
with syndicated credits, (b) to pay or reimburse each Lender and the
Administrative Agent for all its reasonable and documented costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent and to the several
Lenders, (c) to pay, indemnify, and hold each Lender, the Administrative
Agent, the Co-Lead Arrangers, the Bookrunner and the Syndication Agent (and
their respective Affiliates and their respective directors, officers,
employees and agents) harmless from, any and all recording and filing fees
and any and all liabilities with respect to, or resulting from any delay in
paying, stamp, excise and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of,
or consummation or administration of any of the transactions contemplated
by, or any amendment, supplement or modification of, or any waiver or
consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents, and (d) to pay, indemnify, and hold each Lender,
the Administrative Agent, the Co-Lead Arrangers, the Bookrunner and the
Syndication Agent (and their respective directors, officers, employees,
agents and affiliates) harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
with respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the other Loan Documents or the use or the
proposed use of proceeds contemplated by this Agreement, including, without
limitation, any of the foregoing relating to the violation of, noncompliance
with or liability under, any Environmental Law applicable to any Loan Party
or any of the Properties (all the foregoing in this clause (d),
collectively, the “indemnified liabilities”), provided that the Borrower
shall have no obligation under this clause (d) to any Administrative Agent,
the Co-Lead Arrangers, the Bookrunner, the Syndication Agent, or any Lender
(or any of their respective directors, officers, employers, agents or
affiliates), with respect to indemnified liabilities to the extent such
liabilities are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Person. Without limiting the foregoing, and to the
extent permitted by applicable law, the Borrower agrees not to assert, and
hereby waives, and agrees to cause each of its Subsidiaries not to assert
and to so waive, all rights for contribution or any other rights of



5









 







recovery with respect to all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature, under or related to Environmental Laws, that any of them might have
by statute or otherwise against any Person entitled to indemnification under
this subsection 11.5. The agreements in this subsection shall survive
repayment of the Loans and all other amounts payable hereunder and the
termination of this Agreement.”




     2.7 Schedules. The Schedules to the Credit Agreement are hereby deleted and
replaced by the Schedules attached to this Amendment as Appendix II.



     3. Borrowing Base. The Borrowing Base as of the effectiveness of this Amendment is
$110,000,000.00.



     4. New Lenders. Each new Lender hereby represents and warrants: (a) from and after
the effectiveness of this Amendment, it shall be bound by the provisions of the Credit Agreement as
a Lender thereunder and, to the extent of its Commitment, shall have the obligations of a Lender
thereunder, and (b) it has received a copy of the Credit Agreement, together with copies of the
most recent financial statements delivered pursuant to Section 7.1 thereof, as applicable,
and such other documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Amendment on the basis of which it has made such analysis
and decision independently and without reliance on the Administrative Agent or any other Lender,
and agrees that it will perform in accordance with their terms all of the obligations which by the
terms of the Loan Documents are required to be performed by it as a Lender.



     5. Reallocation of Existing Commitments, Loans, and Letter of Credit Outstandings. In
connection herewith, contemporaneously with the effectiveness hereof, Fortis, The Bank of Nova
Scotia, U.S. Bank, and Comerica Bank hereby acknowledge and agree that they have purchased and
accepted from other Lenders, a portion of the outstanding aggregate Commitments, Loans and Letter
of Credit Outstandings immediately prior to the effectiveness hereof (and if any such sale,
assignment, transfer or conveyance includes the assignment of any Eurodollar Rate Loan on a day
other than the last day of the Interest Period therefore, Borrower agrees that it shall pay any
amounts requested by an affected Lender pursuant to Section 4.14 of the Credit Agreement),
such that (a) each Lender’s Commitment shall equal the Commitment amount set forth opposite such
Lender’s name on Schedule 1.1(a) attached to this Amendment in Appendix II, and (b)
the amount of each Lender’s outstanding Loans and Letter of Credit Outstandings shall equal such
Lender’s Commitment Percentage (as set forth in Schedule 1.1(a)) of the total outstanding
Loans and Letter of Credit Outstandings. The Borrower, the Administrative Agent and each Lender a
party hereto hereby consent to all reallocations and assignments of the Commitments, Loans and
Letter of Credit Outstandings effected pursuant to the foregoing.



     6. Effectiveness of Amendment. This Amendment shall become effective upon receipt by
the Administrative Agent, on behalf of the Lenders, of:




     (a) An executed copy of this Amendment;



6









 






     (b) An executed copy of each Assignment and Acceptance referred to in the
Recitals to this Amendment;




     (c) A duly executed Note payable to the order of each new Lender and any
existing Lender whose Commitment has changed as a result of this Amendment;




     (d) A copy of the resolution, in form and substance satisfactory to the
Administrative Agent, of the board of directors of the Borrower authorizing the
execution, delivery and performance of this Amendment and the Notes issued pursuant
to paragraph (b) above;




     (e) A copy of a Confirmation of Guarantee, in form and substance satisfactory
to the Administrative Agent, duly executed by each Guarantor; and




     (f) Payment of all fees due and owing to the Administrative Agent and the
Lenders.



     7. Consent and Waiver.




     (a) The Lenders hereby (i) consent to the Drilling Rig Transaction and waive
any related Event of Default caused thereby, (ii) waive any violations of
Sections 8.11 and 8.13 of the Credit Agreement to the extent such provisions
would be deemed violated solely due to the Drilling Rig Transaction, (iii) consent
to the pledge of the CIT Collateral to CIT pursuant to the Drilling Rig Transaction,
and (iv) agree that the CIT Collateral (A) shall not be considered “Collateral”
within the meaning of Section 2.1 of the Security Agreement dated as of
August 13, 2002, as amended, executed by the Borrower and the other Debtors party
thereto in favor of the Administrative Agent for the benefit of the Creditors as
defined therein, and, notwithstanding Sections 8.18 and 7.9(a) of the Credit
Agreement, do hereby release and discharge their security interest in the CIT
Collateral, and (B) shall not secure any Obligations or other liabilities owed by
the Borrower or any of its Subsidiaries to the Lenders or the Administrative Agent.




     (b) Except as expressly waived or agreed herein, all covenants, obligations and
agreements of Borrower contained in the Credit Agreement shall remain in full force
and effect in accordance with their terms. Without limitation of the foregoing, the
consents and agreements set forth herein are limited precisely to the extent set
forth herein and shall not be deemed to (i) be a consent or agreement to, or waiver
or modification of, any other term or condition of the Credit Agreement or any other
documents referred to therein, or a consent to or waiver of any future action or
inaction by the Borrower, or (ii) except as expressly set forth herein, prejudice
any right or rights which the Lenders may now have or may have in the future under
or in connection with the Credit Agreement or any of the documents referred to
therein. Except as expressly modified hereby, the terms and provisions of the
Credit Agreement and any other documents or



7









 







instruments executed in connection with any of the foregoing, are and shall
remain in full force and effect, and the same are hereby ratified and confirmed by
Borrower in all respects.



     8. Ratifications, Borrower Representations and Warranties.




     8.1 The terms and provisions set forth in this Amendment shall modify and supersede all
inconsistent terms and provisions set forth in the Credit Agreement and, except as expressly
modified and superseded by this Amendment, the terms and provisions of the Credit Agreement
are ratified and confirmed and shall continue in full force and effect. The Borrower and
the Lenders agree that the Credit Agreement and the Loan Documents, as amended hereby, shall
continue to be legal, valid, binding and enforceable in accordance with their respective
terms.




     8.2 To induce the Lenders to enter into this Amendment, the Borrower ratifies and
confirms that each representation and warranty set forth in the Credit Agreement is true and
correct in all material respects as if such representations and warranties were made on the
even date herewith (unless any such representations and warranties are stated to refer to a
specific earlier date, in which case such representations and warranties shall be true and
correct in all material respects as of such earlier date), and further represents and
warrants (a) that there has occurred since the date of the last financial statements
delivered to the Lender no event or circumstance that has resulted or could reasonably be
expected to result in a Material Adverse Effect, (b) that no Event of Default exists on the
date hereof, and (c) that the Borrower is fully authorized to enter into this Amendment.



     9. Benefits. This Amendment shall be binding upon and inure to the benefit of the
Lender and the Borrower and their respective successors and assigns; provided, however, that
Borrower may not, without the prior written consent of the Lenders, assign any rights, powers,
duties or obligations under this Amendment, the Credit Agreement or any of the other Loan
Documents.



     10. Construction. This Amendment shall be governed by and construed in accordance
with the laws of the State of Texas.



     11. Invalid Provisions. If any provision of this Amendment is held to be illegal,
invalid or unenforceable under present or future laws, such provision shall be fully severable and
the remaining provisions of this Amendment shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance.



     12. Entire Agreement. The Credit Agreement, as amended by this Amendment, contains
the entire agreement among the parties regarding the subject matter hereof and supersedes all prior
written and oral agreements and understandings among the parties hereto regarding same.



     13. Reference to Credit Agreement. The Credit Agreement and any and all other
agreements, documents or instruments now or hereafter executed and delivered pursuant to the terms
hereof or pursuant to the terms of the Credit Agreement, as amended hereby, are hereby



8









 







amended so that any reference in the Credit Agreement to the Credit Agreement shall mean a
reference to the Credit Agreement as amended hereby.



     14. Counterparts. This Amendment may be separately executed in any number of
counterparts (including by facsimile or other electronic transmission), each of which shall be an
original, but all of which, taken together, shall be deemed to constitute one and the same
agreement.



[The Remainder of this Page Intentionally Left Blank]




9









 








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



	 	 	 	 	 
	 	THE MERIDIAN RESOURCE CORPORATION

 	 
	 	By:  	/s/ Joseph A. Reeves, Jr.
 	 
	 	 	Name:  	Joseph A. Reeves, Jr. 	 
	 	 	Title:  	Chairman & Chief Executive Officer 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	FORTIS CAPITAL CORP., as Administrative Agent,

Co-Lead Arranger, Bookrunner, Issuing Lender and a

Lender

 	 
	 	By:  	/s/ David Montgomery
 	 
	 	 	Name:  	David Montgomery 	 
	 	 	Title:  	Director 	 
	 
	 	 	 
	 	By:  	                        /s/ Darrell Holley
 	 
	 	 	Name:  	Darrell Holley 	 
	 	 	Title:  	Managing Director 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	THE BANK OF NOVA SCOTIA, as Co-Lead Arranger,

Syndication Agent and a Lender

 	 
	 	By:  	/s/ David G. Mills
 	 
	 	 	Name:  	David G. Mills 	 
	 	 	Title:  	Director 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	COMERICA BANK, as a Lender

 	 
	 	By:  	/s/ Huma Manal
 	 
	 	 	Name:  	Huma V. Manal 	 
	 	 	Title:  	Vice President 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION, as a Lender

 	 
	 	By:  	/s/ Justin Alexander
 	 
	 	 	Name:  	Justin M. Alexander 	 
	 	 	Title:  	Vice President 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	ALLIED IRISH BANKS plc, as a Lender

 	 
	 	By:  	/s/
David O’Driscoll
 	 
	 	 	Name:  	David O’Driscoll 	 
	 	 	Title:  	Assistant Vice President 	 
	 
	 	 	 
	 	By:  	                    /s/ Vaughn Buck
 	 
	 	 	Name:  	Vaughn Buck 	 
	 	 	Title:  	Director