Document:

exv10w35

EXHIBIT 10.35

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) by and between THE MERIDIAN RESOURCE & EXPLORATION,
LLC., a Delaware limited liability company (the “Company”), and ALAN S. PENNINGTON (the
“Executive”) is made and entered into as of the Effective Date set forth in Section 1.3 below:

RECITALS

A. The Company desires to employ Executive in the capacity set forth on EXHIBIT “A”, pursuant to
the provisions of this Agreement;

B. The Executive desires employment as an employee of the Company pursuant to the provisions of
this Agreement; and

ARTICLE I.

TERMS OF EMPLOYMENT

The terms of employment are as follows:

1.1 EMPLOYMENT. The Company hereby employs the Executive for and during the term hereof in the
position set forth on EXHIBIT “A”. The Executive hereby accepts employment under the terms and
conditions set forth in this Agreement.

1.2 DUTIES OF EXECUTIVE. The Executive shall perform in the capacity described in Section 1.1
hereof and shall have such duties, responsibilities, and authorities as may be designated for such
office. The Executive agrees to devote the Executive’s best efforts, abilities, knowledge,
experience and full business time to the faithful performance of the duties, responsibilities, and
authorities which may be assigned to the Executive. Executive may not engage, directly or
indirectly, in any other business, investment, or activity that interferes with Executive’s
performance of Executive’s duties hereunder, or is contrary to the interests of the Company.
Executive shall at all times comply with and be subject to such policies and procedures as the
Company may establish from time to time, which will be customary within Company’s industry.
Executive acknowledges and agrees that Executive owes a fiduciary duty of loyalty, fidelity and
allegiance to act at all times in the best interests of the Company and to do no act which would
injure Company’s business, its interests, or its reputation. The foregoing shall not be construed
to prevent the Executive from making passive investments in other businesses or enterprises,
provided such investments do not require services on the part of the Executive.

1.3 TERM. This Agreement shall become effective as of the 17th day of December 2008,
(the “Effective Date”) and shall continue in force and effect for one (1) year unless sooner
terminated as provided in Section 2.1 hereof. Unless this Agreement is terminated before the end of
its initial term, the term hereof shall be automatically extended for successive one (1) year
terms, unless terminated prior to the expiration of any one (1) year term. Except as set out
herein, this Agreement may only be renewed or extended by written agreement executed by the Company
and the Executive pursuant to mutually acceptable terms and conditions.

1.4 COMPENSATION. The Company shall pay the Executive, as “Compensation” for services rendered by
the Executive under this Agreement the following Salary plus Bonus.

(a) SALARY: A base salary per month as set forth on EXHIBIT “A”, prorated for any partial
period of employment (“Salary”). Such Salary shall be paid in installments in accordance
with the Company’s regular payroll practices. Each calendar year the Company will determine
the cost of living increase to be added to the Salary.

 

 

(b) BONUS: A bonus as set forth in EXHIBIT “A” (“Bonus”).

(c) MANAGEMENT WELL BONUS PARTICIPATION: The Company and the Executive acknowledge the
existence of a separate agreement between themselves, titled “The Meridian Resource
Management Well Bonus Plan,” dated November 5, 1997 (“the Management Well Bonus Plan”);
which Management Well Bonus Plan is not affected by or superseded by the terms and
conditions of this Agreement; the Company and the Executive agree that all interpretation
and enforcement of the terms of the Management Well Bonus Plan shall be separate and stand
alone. Notwithstanding anything to the contrary contained in this Agreement or any other
agreement, the Company and the Executive acknowledge that the Executive’s participation
under the Management Well Bonus Plan is currently as set forth in EXHIBIT “A”.

1.5 EMPLOYMENT BENEFITS. In addition to the Salary payable to the Executive hereunder, the
Executive shall be entitled to the following benefits:

(a) EMPLOYMENT BENEFITS. As an employee of the Company, the Executive shall participate in
and receive coverage under all general employee benefit plans and programs, as may be in
effect from time to time, upon satisfaction by the Executive of the eligibility
requirements thereof. Nothing in this Agreement is to be construed or interpreted to
provide greater rights, participation, coverage, or benefits under such benefit plans or
programs than are provided to similarly situated employees pursuant to the terms and
conditions of such benefit plans and programs.

(b) WORKING FACILITIES. During the term of this Agreement, the Company shall provide, at
its expense, office space, furniture, equipment, supplies and personnel as shall be
adequate for the Executive’s use in performing Executive’s duties and responsibilities
under this Agreement.

(c) CLUB. Company shall reimburse Executive for all general club dues and business related
expenses incurred at the clubs set forth in EXHIBIT “A”.

(d) PROFESSIONAL DUES. The Company shall pay for all professional dues, seminars,
continuing education and related activities in the furtherance of the Executive’s duties
defined herein.

(e) VACATION. Executive shall be entitled to the vacation as set out in EXHIBIT “A”.

(f) GENERAL. The other benefits set out in EXHIBIT “A”.

(g) LIMITATIONS. Company shall not by reason of this Article 1.5 be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing, any incentive
compensation or employee benefit program or plan, so long as such actions are similarly
applicable to similarly situated covered employees.

ARTICLE II

TERMINATION

2.1 TERMINATION. Notwithstanding anything herein to the contrary, this Agreement and the
Executive’s employment hereunder may be terminated without any breach of this Agreement at any time
during the term hereof by reason of and in accordance with the following provisions:

(a) DEATH. If the Executive dies during the term of this Agreement and while in the employ
of the Company, this Agreement shall automatically terminate as of the date of the
Executive’s death, and the Company shall have no further liability hereunder to the
Executive or Executive’s estate, except to the extent set forth in Section 2.2(a) hereof.

(b) DISABILITY. If, during the term of this Agreement, the Executive shall be prevented
from performing the Executive’s duties hereunder, for a period of not less than sixty (60)
consecutive

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days or an aggregate of ninety (90) days during any period of twelve (12) consecutive
calendar months, by reason of becoming disabled as hereinafter defined, the Company may
terminate this Agreement immediately upon written notice to the Executive without any
further liability hereunder to the Executive, except as set forth in Section 2.2(b) hereof.
For purposes of this Agreement, the Executive shall be deemed “Disabled” when the Board of
Directors of the Company, upon the written report of a qualified physician designated by
the Board of Directors of the Company, shall have determined that the Executive has become
mentally, physically and/or emotionally incapable of performing Executive’s duties and
services under this Agreement.

(c) TERMINATION BY THE COMPANY FOR CAUSE. Prior to the expiration of the term of this
Agreement, the Company may discharge the Executive for cause and terminate this Agreement
immediately upon written notice to the Executive without any further liability hereunder to
the Executive, except to the extent set forth in Section 2.1(c) hereof. For purposes of
this Agreement, a “discharge for cause” shall mean termination of the Executive upon
written notice to the Executive limited, however, to one or more of the following reasons:

(1) Conviction of the Executive by a court of competent jurisdiction of a felony or
a crime involving moral turpitude;

(2) The Executive’s failure or refusal to comply with the Company’s policies,
standards, and regulations of the Company, which from time to time may be
established;

(3) The Executive’s engaging in conduct amounting to fraud, dishonesty, gross
negligence, willful misconduct or conduct that is unprofessional, unethical, or
detrimental to the reputation, character or standing of the Company; or

(4) The Executive’s failure to faithfully and diligently perform the duties
required hereunder or to comply with the provisions of this Agreement.

Prior to terminating this Agreement pursuant to clause (2) or (4) of this Section 2.1, the
Company shall furnish the Executive written notice of the Executive’s alleged failure to
abide by or alleged breach of this Agreement. Any such notice shall set forth in detail
the facts and circumstances alleged to provide a basis for such termination. The Executive
shall have thirty (30) days receipt of such notice to cure such failure to abide or breach
and the Company’s Board of Directors, in its sole discretion, shall determine if the
failure to abide or breach is cured.

(d) TERMINATION BY THE COMPANY WITH NOTICE. The Company may terminate this Agreement at any
time, for any reason, other than as set forth in Subparagraphs (a), (b) or (c) of this
Section 2.1, with or without cause, in the Company’s sole discretion, immediately upon
written notice to the Executive without any further liability hereunder to the Executive,
except to the extent set forth in Section 2.2(d) hereof.

(e) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The Executive may terminate this
Agreement at any time for Good Reason (as hereinafter defined) in which event the Company
shall have no further liability hereunder to the Executive, except to the extent set forth
in Section 2.2(e) hereof. For purposes of this Agreement, the term “Good Reason” shall
mean, without the Executive’s express written consent, the occurrence of any of the
following circumstances:

(1) The Company’s failure to pay the Executive the Compensation pursuant to the
terms of this Agreement that has not been cured within thirty (30) days after
notice of such noncompliance has been given by the Executive to the Company; or

(2) Any failure by the Company to comply with any material provision of this
Agreement that has not been cured within thirty (30) days after notice of such
noncompliance has been given by the Executive to the Company. Any such notice shall
set forth in detail the facts and circumstances of the alleged failure. The
Executive shall use Executive’s best

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efforts to make a good faith determination if the failure has been cured and shall
so notify the Company within five (5) days after the expiration of said thirty (30)
day period; or

(3) A failure to elect or reelect or to appoint or reappoint the Executive to
the office of Senior Vice President and Chief Accounting Officer of the Company or
other material change by the Company of the Executive’s functions, duties or
responsibilities which change would reduce the ranking or level, dignity,
responsibility, importance or scope of the Executive’s position with the Company
from the position and attributes thereof described in Section 1.1 above;

(4) The assignment or reassignment by the Company of the Executive to a location
not within thirty (30) miles of the Company’s current location;

(5) The failure for any reason of the Executive to continue to directly report to
the Chief Executive Officer and/or President of the Company as his supervisor,
without any intermediate supervisor;

(6) The failure of the Company to continue to provide the Executive with office
space, related facilities and secretarial assistance that are commensurate with the
Executive’s responsibilities to and position with the Company;

(7) The notification by the Company of the Company’s intention not to observe
or perform one or more of the obligations of the Company under this Agreement;

(8) The failure by the Company to fulfill its obligations to the Executive as
required by the Company’s Indemnification Agreement, attached as Exhibit “B”;

(9) The occurrence of any other material breach of this Agreement by the Company or
any of its subsidiaries.; or

(10) The refusal to assume this Agreement by any successor or assign of the
Company as provided in Section 4.4.

(f) TERMINATION BY THE EXECUTIVE WITH NOTICE. The Executive may terminate this Agreement
fifteen (15) days in advance for any reason, in the Executive’s sole discretion other than
Good Reason, by giving the Company fifteen (15) days prior written notice, in which event
the Company shall have no further liability hereunder to the Executive, except to the
extent set forth in Section 2.2(f) hereof.

2.2 COMPENSATION UPON TERMINATION

(a) DEATH. In the event the Executive’s employment hereunder is terminated pursuant to the
provisions of Section 2.1(a) hereof due to the death of the Executive, the Company shall
have no further obligation to the Executive or Executive’s estate, except to pay to the
Executive’s spouse, or if none, the estate of the Executive, the Accrued Obligation. For
purposes of this Agreement, “Accrued Obligation” means the sum of (i) the Executive’s
Salary through the date of termination of this Agreement for periods through but not
following the Executive’s Separation From Service (as defined in Section 2.2(b)), (2) any
accrued vacation pay earned by the Executive and (3) any sick leave benefits earned by the
Executive, in each case, to the extent not theretofore paid. Any amount due the Executive
under this Section 2.2(a) shall be paid in a lump sum in cash within thirty (30) days after
the death of the Executive.

(b) DISABILITY. In the event the Executive’s employment hereunder is terminated pursuant to
the provisions of Section 2.1(b) hereof due to Disability of the Executive, the Company
shall be

relieved of all of its obligations under this Agreement, except to pay the Executive
(i) the Accrued Obligation and (ii) the Executive’s Salary through the date of termination
of the Executive’s

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employment for periods following the Executive’s Separation From Service, to the extent not
theretofore paid. The provisions of the preceding sentence shall not affect the
Executive’s rights to receive payments under the Company’s disability insurance plan, if
any. The Company shall pay the Executive the Accrued Obligation in a lump sum in cash
within thirty (30) days after the termination of the Executive’s employment hereunder. The
Company shall pay the Executive the amount specified in clause (ii) of the first sentence
of this Section 2.2(b) within thirty (30) days following the Executive’s Separation From
Service if the Executive is not a Specified Employee or on the date that in six (6) months
following the date of the Executive’s Separation From Service if the Executive is a
Specified Employee. For purposes of this Agreement, the terms “Separation From Service”
and “Specified Employee” shall have the meanings ascribed to such terms in Section 409A.

(c) TERMINATION BY THE COMPANY FOR CAUSE. In the event the Executive’s employment hereunder
is terminated by the Company for Cause pursuant to the provisions of Section 2.1(c) hereof,
the Company shall have no further obligation to the Executive under this Agreement except
to pay the Executive (i) the Accrued Obligation and (ii) the Executive’s Salary through the
date of termination of the Executive’s employment for periods following the Executive’s
Separation From Service, to the extent not theretofore paid. The Company shall pay the
Executive the Accrued Obligation in a lump sum in cash within sixty (60) days after the
termination of the Executive’s employment hereunder. The Company shall pay the Executive
the amount specified in clause (ii) of the first sentence of this Section 2.2(c) within
thirty (30) days following the Executive’s Separation From Service if the Executive is not
a Specified Employee or on the date that is six (6) months following the date of the
Executive’s Separation From Service if the Executive is a Specified Employee.

(d) TERMINATION BY THE COMPANY WITH NOTICE. In the event the Executive’s employment
hereunder is terminated by the Company pursuant to the provisions of Section 2.1(d) hereof,
the Executive shall be entitled to receive (i) the Accrued Obligation; (ii) the Executive’s
Salary through the date of termination of the Executive’s employment for periods following
the Executive’s Separation From Service, to the extent not theretofore paid; and (iii) an
amount equal to the Executive’s full monthly Salary payable for eighteen (18) months. The
Company shall pay the Executive the Accrued Obligation in a lump sum in cash within thirty
(30) days after the termination of the Executive’s employment hereunder. The Company shall
pay the Executive the amounts specified in clauses (ii), and (iii) of the first sentence of
this Section 2.2(b) within thirty (30) days following the Executive’s Separation From
Service if the Executive is not a Specified Employee or on the date that is six (6) months
following the date of the Executive’s Separation From Service if the Executive is a
Specified Employee.

(e) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. In the event this Agreement is
terminated by the Executive pursuant to the provisions of Section 2.1(e) hereof, the
Executive shall be entitled to receive the benefits and payments as specified for
termination by the Company with notice, as described in paragraph 2.2(d) above. Any
amounts due the Executive under this paragraph 2.2(e) shall be paid in the forms and at the
times specified in Section 2.2(d).

(f) TERMINATION BY THE EXECUTIVE WITH NOTICE. In the event the Executive’s employment
hereunder is terminated by the Executive pursuant to the provisions of Section 2.1(f)
hereof, all future compensation to which Executive is entitled hereunder and all future
benefits for which Executive is eligible hereunder shall cease and terminate as of the date
of termination. Executive shall be entitled to the Accrued Obligation. Any amount due the
Executive hereunder shall be paid in a lump sum in cash within thirty (30) days after the
termination of Executive’s Employment hereunder.

(g) TERMINATION OF OBLIGATIONS OF THE COMPANY UPON PAYMENT OF COMPENSATION. Upon full payment of
the amounts, if any, due the Executive pursuant to the preceding provisions of this Section 2.2,
the Company shall have no further obligation to the Executive under this

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Agreement. In no event shall the termination of obligations under this Section 2.2 relieve the
Company of its obligations to the Executive under the Management Well Bonus Plan.

ARTICLE III

PROTECTION OF INFORMATION AND NON-COMPETITION

PROTECTIVE COVENANTS. The Executive recognizes that his employment by the Company is one of the
highest trust and confidence because (i) the Executive will become fully familiar with all aspects
of the Company’s business during the term of this Agreement, (ii) certain information of which the
Executive will gain knowledge during his employment is proprietary and confidential information
which is special and peculiar value to the Company, and (iii) if any such proprietary and
confidential information were imparted to or became known by any person, including the Executive,
engaging in a business in competition with that of the Company, hardship, loss or irreparable
injury and damage could result to the Company, the measurement of which would be difficult if not
impossible to ascertain. The Executive acknowledges that the Company has developed unique skills,
concepts, designs, marketing programs, marketing strategy, business practices, methods of
operation, trademarks, licenses, hiring and training methods, financial and other confidential and
proprietary information concerning its operations and expansion plans (“Trade Secrets”). Trade
Secrets shall not include the geologic or geophysical information, rather such information shall be
subject to the terms and provisions of Subparagraph (c) below. Therefore, the Executive agrees that
it is necessary for the Company to protect its business from such damage, and the Executive further
agrees that the following covenants constitute a reasonable and appropriate means, consistent with
the best interest of both the Executive and the Company, to protect the Company against such damage
and shall apply to and be binding upon the Executive as provided herein:

(a) TRADE SECRETS. The Executive recognizes that his position with the Company is one of
the highest trust and confidence by reason by of the Executive’s access to and contact with
certain Trade Secrets of the Company. The Executive agrees and covenants to use his best
efforts and exercise utmost diligence to protect and safeguard the Trade Secrets of the
Company. The Executive further agrees and covenants that, except as may be required by the
Company in connection with this Agreement, or with the prior written consent of the
Company, the Executive shall not, either during the term of this Agreement or thereafter,
directly or indirectly, use for the Executive’s own benefit or for the benefit of another,
or disclose, disseminate, or distribute to another, any Trade Secret (whether or not
acquired, learned, obtained, or developed by the Executive alone or in conjunction with
others) of the Company or of others with whom the Company has a business relationship. All
memoranda, notes, records, drawings, documents, or other writings whatsoever made,
compiled, acquired, or received by the Executive during the term of this Agreement, arising
out of, in connection with, or related to any activity or business of the Company,
including, but not limited to, Trade Secrets, are, and shall continue to be, the sole and
exclusive property of the Company, and shall, together with all copies thereof and all
advertising literature, be returned and delivered to the Company by the Executive
immediately, without demand, upon the termination of this Agreement, or at any time upon
the Company’s demand.

(b) RESTRICTION ON SOLICITING EMPLOYEES OF THE COMPANY. The Executive covenants that during
the term of this Agreement and for the period set forth on EXHIBIT “A” (“Non-Solicitation
Period”) following the termination of this Agreement, he will not, either directly or
indirectly, call on, solicit, or take away, or attempt to call on, solicit, induce or take
away any employee of the Company, either for himself or for any other person, firm,
corporation or other entity. Further, Executive shall not induce any employee of the
Company to terminate his or her employment with the Company.

(c) COVENANT NOT TO COMPETE. The Executive hereby covenants and agrees that during the term
of this Agreement and for the earlier of one (1) year after the date of his termination or
until the Company no longer has a well operating in such designated prospects (“the
Non-Compete Period”), he will not without the prior written consent of the Company,
directly or indirectly, either as an employee, employer, consultant, agent, principal,
partner, shareholder (other than through ownership of publicly-traded capital stock of a
corporation which represents less than five

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percent (5%) of the outstanding capital stock of such corporation), corporate officer,
director, investor, financier or in any other individual or representative capacity, engage
or participate in any business competitive with the business conducted by the Company
within the prospect areas on which Executive has worked up to the date of the termination
of this Agreement (“Designated Prospect(s)”). The Company shall provide to the Executive a
list and an outline of each such Designated Prospect within fifteen (15) business days
after the date of termination. Further, Executive agrees and covenants not to use for his
benefit or for the benefit of another or disclose, disseminate or distribute to another,
any geologic or geophysical information regarding the Designated Prospects during the
Non-Compete Period. Failure of the Company to provide Executive the list of Designated
Prospects within fifteen days of termination shall be deemed a waiver by the Company of
this provision “c” against Executive.

(d) SURVIVAL OF COVENANTS. Each covenant of the Executive set forth in this Article III
shall survive the termination of this Agreement and shall be construed as an agreement
independent of any other provision of this Agreement, and the existence of any claim or
cause of action of the Executive against the Company whether predicated on this Agreement
or otherwise shall not constitute a defense to the enforcement by the Company of said
covenant.

(e) REMEDIES. In the event of breach or threatened breach by the Executive of any provision
of this Article III, the Company shall be entitled to relief by temporary restraining
order, temporary injunction, or permanent injunction or otherwise, in addition to other
legal and equitable relief to which it may be entitled, including any and all monetary
damages which the Company may incur as a result of said breach, violation or threatened
breach or violation. The Company may pursue any remedy available to it concurrently or
consecutively in any order as to any breach, violation, or threatened breach or violation,
and the pursuit of one of such remedies at any time will not be deemed an election of
remedies or waiver of the right to pursue any other of such remedies as to such breach,
violation, or threatened breach or violation, or as to any other breach, violation, or
threatened breach or violation.

(f) LIMITATIONS. The obligations of confidentiality regarding Trade Secrets and geologic or
geophysical information regarding the Designated Prospects set forth in this Section 3.1
shall not apply if (i) it can be demonstrated by the Executive to have been within his
legitimate possession prior to the time of disclosure by the disclosing party, (ii) it was
in the public domain prior to disclosure, or (iii) if such disclosure comes into the public
domain through no fault of the Executive.

The Executive hereby acknowledges that the Executive’s agreement to be bound by the protective
covenants set forth in this Article III was a material inducement for the Company entering into
this Agreement and agreeing to pay the Executive the compensation and benefits set forth herein.
Further, Executive understands the foregoing restrictions may limit his or her ability to engage in
certain businesses during the period of time provided for, but acknowledges that Executive will
receive sufficiently high remuneration and other benefits under this Agreement to justify such
restriction.

ARTICLE IV

GENERAL PROVISIONS

4.1 NOTICES. all notices, requests, consents, and other communications under this Agreement shall
be in writing and shall be deemed to have been delivered on the date personally delivered or on the
date deposited in a receptacle maintained by the United States Postal Service for such purpose,
postage prepaid, by certified mail, return receipt requested, addressed to the respective parties
as follows:

IF TO THE EXECUTIVE: As set forth in EXHIBIT “A”.

IF TO THE COMPANY: The Meridian Resource & Exploration, LLC. 1401 Enclave Parkway, Suite 300
Houston, Texas 77077 ATTN: Chief Executive Officer.

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Either party hereto may designate a different address by providing written notice of such new
address to the other party hereto.

4.2 SEVERABILITY. If any provision contained in this Agreement is determined by a court of
competent jurisdiction or an arbitrator pursuant to Section 5 below to be void, illegal or
unenforceable, in whole or in part, then the other provisions contained herein shall remain in full
force and effect as if the provision which was determined to be void, illegal, or unenforceable had
not been contained herein. If the restrictions contained in Article III are found by a court to be
unreasonable or overly broad as to geographic area or time, or otherwise unenforceable, the parties
intend for said restrictions to be modified by said court so as to be reasonable and enforceable
and, as so modified, to be fully enforced.

4.3 WAIVER, MODIFICATION AND INTEGRATION. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach
by any party. This instrument contains the entire agreement of the parties concerning employment
and supersedes all prior and contemporaneous representations, understandings and agreements
(including but not limited to any initial employment or independent contractor agreement) either
oral or in writing, between the parties hereto with respect to the employment of the Executive by
the Company and all such prior or contemporaneous representations, understandings and agreements,
both oral and written, are hereby terminated, unless otherwise specifically designated on EXHIBIT
“A”. This Agreement may not be modified, altered or amended except by written agreement of all the
parties hereto.

4.4 BINDING EFFECT. This Agreement shall be binding and effective upon the parties and their
respective heirs, executors and successors and shall supercede any other agreement, contract of
employment or understanding previously entered into by and between the Company and Executive, if
any exists. If the Company shall at any time be merged or consolidated into or with any other
entity, the provisions of this Agreement shall survive any such transaction and shall be binding on
and inure to the benefit and responsibility of the entity resulting from such merger or
consolidation (and this provision shall apply in the event of any subsequent merger or
consolidation), and the Company, upon the occasion of the above-described transaction, shall
include in the appropriate agreements the obligation that the payments herein agreed to be paid to
or for the benefit of Executive, his beneficiaries or estate, shall be paid.

4.5 GOVERNING LAW. The parties intend that the laws of the State of Texas should govern the
validity of this Agreement, the construction of its terms, and the interpretation of the rights and
duties of the parties hereto.

4.6 REPRESENTATION OF EXECUTIVE. The Executive hereby represents and warrants to the Company that
the Executive has not previously assumed any obligations inconsistent with those contained in this
Agreement, unless specifically set out in EXHIBIT “A”. The Executive further represents and
warrants to the Company that the Executive has entered into this Agreement pursuant to Executive’s
own initiative and that this Agreement is not in contravention of any existing commitments. The
Executive acknowledges that the Company has entered into this Agreement in reliance upon the
foregoing representations of the Executive.

4.7 COUNTERPART EXECUTION. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute but one and the same
instrument.

4.8 COMPANY. For the purposes of this Agreement, Company shall include any parent, subsidiary
division of the Company, or any entity, which directly or indirectly, controls, is controlled by,
or is under common control with the Company.

4.9 EXECUTIVE. Executive represents to the Company and agrees that he: (i) was specifically advised
to and fully understands his rights to discuss all aspects of this Agreement with an attorney, (ii)
has, to the extent he desires, availed himself of these rights, and (iii) has carefully read and
fully understands the provisions of this Agreement.

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ARTICLE V

CONFIDENTIALITY

5.1 CONFIDENTIALITY. This Agreement is confidential, and the substance may be disclosed only as
mutually agreed by the parties or as may be required by law.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above
written effective as of the Effective Date.

	 	 	 	 	 
	 	THE COMPANY:

THE MERIDIAN RESOURCE & EXPLORATION, LLC.

 	 
	 	BY:  	/s/ JOSEPH A. REEVES, JR.
 	 
	 	 	Joseph A. Reeves, Jr., CEO 	 
	 	 	 	 
	 
	 	EXECUTIVE:

 	 
	 	/s/ ALAN S. PENNINGTON
 	 
	 	 	 
	 	 	 
	 
	 	Printed Name:

 	 
	 	ALAN S. PENNINGTON
 	 
	 	 	 
	 	 	 

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EXHIBIT “A” TO EMPLOYMENT AGREEMENT

	 	 	 	 	 	 	 
	Executive Name:	 	Alan S. Pennington
	 
	 	 	 	 	 	 
	Position:	 	Senior Vice President, Exploration
	 
	 	 	 	 	 	 
	Monthly Base Salary:	 	$20,425.42
	 
	 	 	 	 	 	 
	Bonus:	 	An annual bonus at the discretion of the Company’s Board of Directors.
	 
	 	 	 	 	 	 
	Participation:	 	The Executive’s participation interest shall be 0.25% pursuant
to the Company’s Management Well Bonus Plan.
	 
	 	 	 	 	 	 
	Vacation:	 	Executive shall be deemed to have 5 years service with the Company as
of the date hereof for the purpose of calculating the vacation to which
Executive is entitled to pursuant Company policy. The vacation shall be earned
each year based upon each full month of employment during that year. Vacation
days will be coordinated in advance, subject to the reasonable discretion of
the Chief Executive Officer.
	 
	 	 	 	 	 	 
	Clubs:	 	Westlake Club
	 
	 	 	 	 	 	 
	Non-Solicitation Period:	 	Six (6) months
	 
	 	 	 	 	 	 
	Home Address:	 	 
	 
	 	 	 	 	 	 
	Section 4.3 Agreement(s):     

	 	 	1.	 	 	The Meridian Resource Management Well Bonus Plan,
dated November 5, 1997.
	 
	 	 	 	 	 	 
	 

	 	 	2.	 	 	Net profits interests in
prospects granted in writing
pursuant to that certain agreement
dated December 30, 1993 and that
certain agreement dated June 27,
1995.
	 
	 	 	 	 	 	 
	Section 4.6 Restrictions:	 	None

-10-exv10w4w1

Exhibit 10.4.1

AMENDMENT TO AGREEMENT

     This Amendment to Agreement entered into as of the 31st day of December, 2008 by
and between THE FAUQUIER BANK, a Virginia banking corporation (the “Bank”), and Eric P. Graap, (the
“Executive”).

RECITALS

     1. The Bank and Executive entered into an Agreement dated as of the 27th of November, 2000,
the (“Agreement”) which provides for compensation and other benefits to the Executive in certain
events, a copy of which is attached hereto as Exhibit A; and

     2. The Agreement was amended by the parties, pursuant to a written amendment attached hereto
as Exhibit B.

     3. The parties desire to further amend the Agreement, as of December 31, 2008, in order to
comply with the applicable provisions of Section 409A of the Internal Revenue Code of 1986, as
amended;

     NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

     1. Paragraph 2(v) of the Agreement is hereby amended to include the following as the last
sentence:

     Notwithstanding the foregoing, no payments shall become payable under this Agreement on the
Date of Termination unless the Executive is considered to have separated from service, within the
meaning of Treasury Regulation § 1.409A-1(h), as of the Date of Termination.

     2. A new Paragraph 2(vi) is added to the Agreement to state the following:

     Key Employee. “Key Employee” shall have the meaning assigned to that term under Section 409A
of the Internal Revenue Code of 1986, as amended, which generally defines a Key Employee as an
employee who, with respect to a publicly traded company, is (a) one of the top fifty most highly
compensated officers with an annual compensation in excess of $130,000 (as adjusted from time to
time by Treasury Regulations), (b) a five percent owner of the Bank, or (c) a one percent owner of
the Bank with annual compensation in excess of $150,000 (as adjusted from time to time by Treasury
Regulations).

     3. Paragraph 3(ii)(a) of the Agreement is hereby amended to state as follows:

     On or before the Executive’s last day of employment with the Bank, the Bank shall pay to the
Executive as compensation for services rendered to the Bank a cash amount (subject to any
applicable payroll or other taxes required to be withheld) equal to 2.99 times the highest annual

 

compensation paid to the Executive by the Bank for any six months ending with the Executive’s
termination, provided that, if the Executive is a Key Employee on the Date of Termination, the cash
amount shall not be paid until the first day of the seventh month following the Date of
Termination. For purposes of this paragraph 3(ii), highest annual compensation shall include only
base salary and cash bonuses paid to Executive.

     4. The first paragraph of Section 4 of the Agreement is hereby amended to state as follows:

     STOCK OPTIONS: Upon a Change of Control, all stock options granted to the Executive under any
of the Bank’s Stock Option Plans, or any successor thereto, shall become immediately exercisable
with respect to all or any portion of the shares covered thereby regardless of whether such options
are otherwise exercisable. The Bank shall reimburse the Executive for any federal income tax
liability incurred by the Executive in connection with the exercise of such options which would not
have otherwise been incurred by the Executive in the absence of such options becoming immediately
available upon a Change of Control, such reimbursement to be submitted to the Executive within ten
(10) days of written notification to the Bank by the Executive of the exact amount of such
additional tax liability, provided that no reimbursements shall be made after the end of the year
next following the year in which the Executive remits the taxes to the appropriate government
entity.

     5. Section 5 is hereby amended by adding the following sentence to the end of subsection (i).

     Notwithstanding the foregoing, for the duration of any such litigation and until the Executive
receives any monetary awarded owed to him pursuant to such litigation, the Bank shall reimburse the
foregoing costs on a current basis after the Executive submits a claim for reimbursement with the
proper documentation of the expenses, provided that no expense will be reimbursed after the end of
the year following the year in which the expense is incurred.

THE FAUQUIER BANK

By:                                                             

EXECUTIVE

By:                                                             

2

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