Exhibit 10.3**TERMINATION AGREEMENT**     THIS TERMINATION AGREEMENT (this “Termination Agreement”) is entered into as of the29th day of April, 2008, by and among The Meridian Resource Corporation, a Texas corporation (saidcorporation, together with its successors and assigns permitted under this Termination Agreement,hereinafter referred to as the “Company”), and Joseph A. Reeves ( the “Executive”).**W I T N E S S E T H:**     WHEREAS, the Company and the Executive entered into that certain (i) Employment Agreementdated as of the 18th day of August, 1993 (the “Employment Agreement”), (ii)Agreement wherein the Company granted the Executive certain net profits interests in Companyproperties dated the 27th day of June, 1995 (the “NPI Agreement”), and (iii)Restricted Stock Grant and Executive Deferred Compensation Agreement dated as of the31st day of July 1996 (the “DC Agreement”) (the Employment Agreement, NPIAgreement and DC Agreement may collectively be referred to herein as the “Agreements”);     WHEREAS, the Board of Directors of the Company has requested that the Executive terminate theAgreements and enter into a new short-term employment agreement;     WHEREAS, the Executive is willing to terminate the Agreements provided that certain terms inthe Agreements relating to such termination are fully taken into account in conjunction with thisTermination Agreement;     WHEREAS, the Company and the Executive have agreed to terminate the Agreements on the termsset forth herein;     WHEREAS, the parties hereto desire to enter into this Termination Agreement to evidence theforegoing in accordance with the terms and conditions set forth in this Termination Agreement;     NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, thereceipt and sufficiency of which are hereby acknowledged and confessed, the parties hereto herebyagree as follows:**I.** **Termination****.**     **A.**The Company and the Executive hereby agree to terminate the Employment Agreement andthe NPI Agreement (except to the extent that it is modified in Para. I.B. below) rightsthereunder effective as of the 29th day of April, 2008.     **B.**In conjunction with such termination, the Company and the Executive acknowledge andagree that the Executive is vested in his Net Profits Interests under the NPI Agreementwhich have been assigned to the Executive or to which the Executive is entitled to anassignment as a result of events occurring before April 28, 2008. Such Net ProfitsInterests will remain unaffected by this Termination Agreement. More
 

 
particularly, and by way of illustration only, the Executive’s Net Profits Interestrights with respect to any well spudded prior to April 28, 2008 are vested and are notaffected by this Agreement. The Company and the Executive further agree that,notwithstanding the provisions of Paragraph C of Article IV, of the NPI Agreement or anyother provision of the NPI Agreement to the contrary, with respect to any well spudded afterApril 28, 2008, within the geographical boundaries of any Property (or on lands pooledtherewith)subject to the NPI Agreement prior to April 28, 2008, the Net ProfitsInterest with respect to such well shall be calculated by including in the computation of“Chargeable Expenditures” with respect to such well the capital expenditures described inclause (ii) of said Paragraph C of Article IV of the NPI Agreement. The Company and theExecutive further agree that after April 28, 2008 no new Net Profits Interests will beassigned to the Executive under or pursuant to the NPI Agreement outside of the geographicalboundaries of any Property (or on lands pooled therewith) which was subject to a Net ProfitsInterest grant prior to April 28, 2008.     **C.**The Company and the Executive hereby agree to freeze the DC Agreement effective asof the date hereof so that the Executive shall accrue no additional benefits under the DCPlan with respect to periods after the date hereof, provided, however, that the Executive’sdeferral election for the 2008 calendar year shall remain in effect. The Company and theExecutive agree to enter into a termination agreement pursuant to which the the DC Agreementshall be terminated effective as of the 29th day of April, 2008, and to each execute anddeliver any other document or certificate necessary to evidence such termination.. Theportion of the Executive’s account under the DC Agreement that is not subject to section409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the rules andregulations promulgated thereunder by the Department of Treasury and the Internal RevenueService (“Section 409A”) shall be distributed to the Executive immediately inaccordance with the existing termination provisions of Section 9.3 of the DC Agreement. Theremaining portion of the Executive’s account under the DC Agreement shall be distributed tothe Executive on the date of his Separation From Service if he is not a Specified Employeeon the date of his Separation From Service or on the date that is six months following thedate of his Separation From Service if he is a Specified Employee on the date of hisSeparation From Service. For purposes of this Agreement, the terms “Separation FromService” and “Specified Employee” shall have the meanings ascribed to thoseterms in Section 409A. The Company and the Executive agree that the Executive shall have afully vested interest in his account under the DC Agreement and that the freezing andtermination of the DC Agreement shall not adversely impact the Executive’s rights withrespect to such benefits. The Company and the Executive agree that the Company may satisfyits federal income tax withholding obligation and its Federal Insurance Contributions Actwithholding obligation with respect to the Executive’s benefit under the DC Agreement bywithholding therefrom shares of the Company’s Common Stock in an amount sufficient tosatisfy such withholding obligations.     **D.**The Company and the Executive hereby agree to continue the employment of theExecutive under a new employment agreement to be executed concurrently with this TerminationAgreement in the form attached hereto as Exhibit A (the “New Employment Agreement”).
 

 
     **E.**Both parties agree to mutually cooperate to ensure compliance with this TerminationAgreement and fulfillment of the terms, conditions and obligations contained herein.Without limiting the generality of the foregoing, the parties agree to execute and deliverall such further documents, agreements and instruments and take such other and furtheraction as may be necessary or appropriate to carry out the purposes and intent of thisTermination Agreement. For example, to the extent any additional documents are necessary toconfirm the conveyance of any Net Profits Interest previously conveyed or to be conveyedunder the NPI Agreement, the Company will expeditiously deliver, execute, record or assignany such documents, agreements and interests at the expense of the Company. In addition, tothe extent any corporate or board of directors action is necessary or appropriate to confirmany issuance of shares of Company stock under the DC Agreement, the Company agrees to takeall such action. The Company further agrees to take such action which is reasonablyappropriate to bring the DC Agreement into documentary compliance with Section 409A.     **F.**The Executive agrees to vote in favor of an amendment to the Bylaws of the Companyto effect a separation of the roles of the Company’s Chairman of the Board and ChiefExecutive Officer..     **G.**The Executive agrees that his right to participate (either directly or through anaffiliated entity) with the Company in new oil and gas projects by acquiring a portion ofthe Company’s working interest therein, including, without limitation, all rights under theletter agreement dated July 1, 1994, by and between the Executive and the Company, shallterminate on December 29, 2008. Such termination shall not affect in any way any suchworking interests acquired before such date. This section does not apply to any NPIinterest, or benefit plan, or the DC Agreement to the extent that any such rights areaddressed herein.     **H.**Executive represents and warrants to the Company that following the execution ofthis Termination Agreement and the New Employment Agreement, except for the New EmploymentAgreement, the Consulting Agreement referred to therein, and theEmployment Agreement, there are no other agreementsrelating to the compensation of the Executive, either written or oral.**II.** **Payments and Benefits****.**     **A.**As part of this Termination Agreement, the Company shall pay or cause to be paid toor on the behalf of the Executive the following amounts:     1. the Executive’s current annual Base Salary (as defined in theEmployment Agreement) for the remainder of the Employment Period (as definedin the Employment Agreement); and     2. an amount equal to the last Annual Bonus paid to the Executive, (the“Recent Bonus”) as defined in the Employment Agreement); and
 

 
     3. the product of two (2) times the sum of the current annual BaseSalary plus the Recent Bonus; and     4. a lump sum retirement benefit equal to the difference between (i)the actuarial equivalent to the benefit under any Retirement Plan (asdefined in the Employment Agreement) the Executive would receive if heremained employed by the Company at the current annual Base Salary plus theRecent Bonus for the remainder of the Employment Period and (ii) actuarialequivalent of his benefit, if any, under any Retirement Plan.     On the date of his Separation From Service if he is not a SpecifiedEmployee on the date of his Separation From Service or on the date that issix months following his Separation From Service if he is a SpecifiedEmployee on the date of his Separation From Service the Company shall pay orcause to be paid to the Executive, in a single sum in cash, the aggregate ofthe amounts specified in clauses 1, 2, 3 and 4 of this Section IIA.     It is hereby agreed by the Company and the Executive that the sum ofthe amounts set forth in this section is UNITED STATES DOLLARS$4,953,374.00.     **B.**In the event it shall be determined that any payment, benefit or distributionprovided to the Executive hereunder or otherwise would constitute “parachute payments”within the meaning of Section 280G of the Code and would be subject to the excise taximposed by Section 4999 of the Code, together with any interest or penalties imposed withrespect to such excise tax (“Excise Tax”), then the Executive shall be entitled toreceive an additional payment (a “Gross-Up Payment”) in an amount such that, afterpayment (whether through withholding at the source or otherwise) by the Executive of alltaxes (including any interest or penalties imposed with respect to such taxes), including,without limitation, any income taxes (and any interest and penalties imposed with respectthereto), employment taxes and Excise Tax imposed upon the Gross-Up Payment, the Executiveretains an amount of the Gross-Up Payment equal to the Excise Tax imposed on such payment(or such amount is paid on the Executive’s behalf with respect to such Excise Tax). AnyGross-Up Payment that the Company is required to make to reimburse the Executive forfederal, state and local taxes imposed upon the Executive, including the amount ofadditional taxes imposed upon the Executive due to the Company’s payment of the initialtaxes on such amounts, shall be made by the Company by the end of the Executive’s taxableyear next following the Executive’s taxable year in which the Executive remits the relatedtaxes to the taxing authority.     **C.**The Company shall promptly reimburse the Executive for costs and expenses of legalcounsel and consultants related to the negotiation of the termination of the Agreements.However, such amount shall be limited to a collective amount of an additional $100,000 forexpenses incurred by both Joseph A. Reeves and Michael J. Mayell beyond the amountpreviously approved by the Board of Directors for that
 

 
purpose. Such payments under this Section II.D shall be made within ten (10) businessdays after the delivery of the Executive’s written request for the payment accompanied bysuch evidence of fees and expenses incurred as the Company may reasonably require. In anyevent the Company shall pay the Executive such legal fees, consultants’ fees and expenses bythe last day of the Executive’s taxable year following the taxable year in which theExecutive incurred such legal fees, consultants’ fees and expenses. The legal fees,consultants’ fees or expenses that are subject to reimbursement pursuant to this SectionII.D shall not be limited as a result of when the fees or expenses are incurred. The amountof legal fees, consultants’ fees or expenses that is eligible for reimbursement pursuant tothis Section II.D during a given taxable year of the Executive shall not affect the amountof expenses eligible for reimbursement in any other taxable year of the Executive. Theright to reimbursement pursuant to this Section II.D is not subject to liquidation orexchange for another benefit.     **D.**On the date of his Separation From Service if he is not a Specified Employee on thedate of his Separation From Service or on the date that is six months following the date ofhis Separation From Service if he is a Specified Employee on the date of his Separation FromService, the Company shall transfer ownership to the Executive of all furnishings andartwork in the Executive’s office.     **E.**All shares accrued to the Executive under the DC Agreement shall be delivered to theExecutive pursuant to the terms of such agreement as adjusted to reflect any changesdescribed in paragraph I.H.**III.** **Miscellaneous****.**     **A.**This Termination Agreement shall be governed by and construed in accordance with thelaws of the State of Texas. Further, the Executive agrees that any legal proceeding toenforce the provisions of this Termination Agreement shall be brought in Houston, HarrisCounty, Texas, and hereby waives his right to any pleas regarding subject matter or personaljurisdiction and venue. The captions of this Termination Agreement are not part of theprovisions hereof and shall have no force or effect. This Termination Agreement may not beamended or modified otherwise than by a written agreement executed by the parties hereto ortheir respective successors and legal representatives.     **B.**Every notice, approval, request, demand, or statement required or permitted to begiven under this Termination Agreement shall be in writing and shall be deemed sufficientlygiven when deposited in the mail, registered or certified, postage prepaid, and addressed tothe party hereto to which given as follows:           If to the Executive:                                                                 If to the Company: The Meridian Resource Corporation      1401 Enclave Parkway, Suite 300      Houston, Texas 77077      Attn:             
 

 
or to such other address as either party shall have furnished to the other in writing inaccordance herewith. Written notice given by any other method shall be deemed effectivewhen actually received by the party.     **C.**Every provision of this Termination Agreement is intended to be severable such thatthe invalidity or unenforceability of any provision of this Termination Agreement shall notaffect the validity or enforceability of any other provision of this Termination Agreement.     **D.**The Company may withhold from any amounts payable under this Termination Agreementsuch Federal, state or local taxes as shall be required to be withheld pursuant to anyapplicable law or regulation.     **E.**In the event that the Executive makes a demand upon the Company for any benefits oramounts due hereunder and the Company rejects such demand, and the Executive ultimatelyprevails in litigation resulting therefrom, the Company shall reimburse the Executive forreasonable attorney fees incurred by the Executive in enforcing rights to which theExecutive shall have become entitled pursuant to this Termination Agreement. Such paymentsto the Executive under this Section III.E shall be made within ten (10) business days afterthe delivery of the Executive’s written request for the payment accompanied by such evidenceof fees incurred as the Company may reasonably require. In any event the Company shall paythe Executive such legal fees by the last day of the Executive’s taxable year following thetaxable year in which the Executive incurred such legal fees. The legal fees that aresubject to reimbursement pursuant to this Section III.E shall not be limited as a result ofwhen the fees or expenses are incurred. The amount of legal fees that is eligible forreimbursement pursuant to this Section III.E during a given taxable year of the Executiveshall not affect the amount of expenses eligible for reimbursement in any other taxable yearof the Executive. The right to reimbursement pursuant to this Section III.E is not subjectto liquidation or exchange for another benefit.     **F.**As soon as reasonably practicable, the Company shall create an irrevocable grantortrust (the “*Rabbi Trust*”) which shall be subject to the claims of creditors of the Company.As soon as reasonably practicable, the Company shall transfer to the Rabbi Trust cashsufficient (on an undiscounted basis) to pay the estimated amount of the portion of theExecutive’s benefit under the DC Agreement that is subject to Section 409A and the amountsspecified in clauses 1, 2, 3 and 4 of Section II.A. Such amount shall be paid from theRabbi Trust on the dates specified in Sections I.C and II.A herein, provided that theCompany shall remain liable to pay any such amounts which for any reason are not paid fromthe Rabbi Trust. The trustee of the Rabbi Trust shall be a bank or trust company selectedby the Company. Pursuant to the terms of the Trust Agreement, the trustee shall pay overall funds and shares under the Rabbi Trust to the
 

 
Executive on the date that is six months following the date of separation, as requiredby Section 409A.     **G.**Except as specifically contemplated by this Termination Agreement, this TerminationAgreement constitutes the entire agreement by the parties hereto relating to the subjectmatter hereof and supersedes and replaces all prior and contemporaneous agreements,arrangements or understandings, whether written or oral, between the Company and theExecutive.     **H.**No failure by a party hereto to insist upon strict performance of any term,covenant, condition or agreements of this Termination Agreement, or to exercise any right orremedy provided for in this Termination Agreement upon breach of any provisions, and noacceptance of payment or performance during the continuation of such breach, shallconstitute a waiver of any term, covenant or condition herein or a waiver of any subsequentbreach or default in the performance of any term, covenant, condition or agreements herein.     **I.**This Termination Agreement may be executed in multiple counterparts, each of whichshall be deemed an original for all purposes, but all of which shall constitute one and thesame instrument.     **J.**Any capitalized term used but not otherwise defined herein shall have the meaninggiven to such term in the Employment Agreement, the NPI Agreement, or in the DC Agreement,as the case may be.
 

 
     IN WITNESS WHEREOF, the undersigned have executed this Termination Agreement on the 29th dayof April, 2008, to be effective on the date first written above.       **THE MERIDIAN RESOURCE CORPORATION**  a Texas corporation            By: /s/ Lloyd V. DeLano       Name: Lloyd V. DeLano       Title: Senior Vice President                 **EXECUTIVE**            /s/ Joseph A. Reeves, Jr.