Document:

exv10w2

 

Exhibit 10.2

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”) by and between The Meridian Resource
Corporation, a Texas corporation (referred to herein as the “Company”) and Michael J.
Mayell (the “Employee”), dated effective as of the beginning of the day on 29th
day of April, 2008.

W I T N E S S E T H:

     WHEREAS, the Employee and the Company desire to have the Employee continue employment with the
Company during the Term (as hereafter defined);

     WHEREAS, the Employee and the Company desire to set forth the terms and conditions of the
Employee’s employment with the Company; and

     WHEREAS, pursuant to that certain Termination Agreement between the Company and the Employee
dated April 29, 2008 (the “Termination Agreement”) the Employee and the Company have agreed to
terminate, effective as the beginning of the day on April, 29, 2008, the existing Employment
Agreement dated August 18, 1993;

     NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

AGREEMENTS

     1. Employment Period. Subject to the terms and conditions herein, the Company hereby
agrees to continue the Employee in his employment as Chief Executive Officer, and the Employee
hereby agrees to remain in the employment of the Company for the period commencing on the Effective
Date and ending on December 29, 2008 (the “Term”).

     2. Terms of Employment.

          (a) Positions and Duties. During the Term, the Employee’s position (including status,
offices, and reporting requirements), authority, duties and responsibilities shall remain
commensurate in all material respects with those held, exercised and assigned as of the Effective
Date and the Employee’s services shall be performed at Employer’s current location or only at any
other main office or location of Company within thirty (30) miles from such location.

     During the Term, and excluding any periods of vacation and sick leave to which the Employee is
entitled, the Employee agrees to devote reasonable attention and time to the business and affairs
of the Company, to discharge the responsibilities assigned to the Employee hereunder and to perform
faithfully and efficiently such responsibilities. Further, the Employee shall serve, when elected,
as a director of the Company, as a director or officer of any subsidiary of the Company, as a
member of any committee of any such Board of Directors to which he may be appointed, and the
Employee shall perform such other duties commensurate with his office, as the Board of Directors
may from time to time assign. During the Term it shall not be a violation of this Agreement for the
Employee to (i) serve on corporate, civic or charitable boards or

 

 

committees, (ii) deliver lectures and fulfill speaking engagements or (iii) manage personal
investments for so long as such activities do not materially interfere with the performance of the
Employee’s responsibilities in accordance with this Agreement; provided that such civic services,
volunteer work or lectures shall not interfere with Employee’s duties to the Company, as set forth
in this Agreement, and that Employee shall maintain his or her obligations of confidentiality as
set forth in this Agreement at all times during any such civic services, volunteer work or speaking
engagements. It is expressly understood and agreed that to the extent that any such activities have
been conducted by the Employee prior to the Effective Date, the continued conduct of such
activities (or the conduct of activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the performance of the Employee’s
responsibilities to the Company.

          (b) Compensation.

               (i) Base Salary. During the Term, the Employee shall receive an annual base salary
(“Base Salary”) of SIX HUNDRED THOUSAND AND NO/100 UNITED STATES DOLLARS ($600,000.00),
which shall be payable in equal semi-monthly installments.

               (ii) Incentive, Saving and Retirement Plans. In addition to Base Salary, the Employee
shall be entitled to participate during the Term in all incentive, savings and retirement plans,
practices, policies and programs applicable to other similar key employees of the Company that are
in effect from time to time.

               (iii) Welfare Benefit Plans. During the Term, the Employee and/or the Employee’s
family, as the case may be, shall be eligible for participation in and shall receive all benefits
under any welfare benefit plans, practices, policies and programs provided by the Company (if any)
to other similarly situated key employees, including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs.

               (iv) Expenses. During the Term, the Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Employee in accordance with the policies,
practices and procedures of the Company in effect, from time to time, for Employee.

               (v) Fringe Benefits. During the Term, the Employee shall be entitled to fringe
benefits, including payment of automobile expenses and payment of any professional dues and dues
for social club memberships, in accordance with plans, practices, programs and policies of the
Company in effect, from time to time, for the Employee.

               (vi) Office and Support Staff. During the Term, the Employee shall be entitled to an
office or offices of a size and with furnishings and other appointments, and to secretarial and
other assistance, at least equal to that provided to the Employee by the Company as of the
Effective Date.

               (vii) Vacation. During the 2008 calendar year, the Employee shall be entitled to paid
vacation of six (6) weeks.

 

 

     3. Termination.

          (a) Provision for. This Agreement may only be terminated prior to the end of the Term
by the Company or the Employee only in accordance with the terms of Sections 3, 4, 5 and 6 hereof.

          (b) Notice of Termination. Any termination by the Company or by the Employee for any
reason other than death shall be communicated by Notice of Termination to the other party hereto
given in accordance with the notice provisions contained in this Agreement. For purposes of this
Agreement, a “Notice of_Termination” means a written notice which specifies the termination
date.

          (c) Date of Termination. “Date of Termination” means the date of receipt of
the Notice of Termination or any later date specified therein, as the case may be; provided
however, that (i) if the Employee’s employment is terminated by the Company, the Date of
Termination shall be the date on which the Company notifies the Employee of such termination except
for termination for “Good Cause” (as hereinafter defined) (ii) if the Employee’s employment is
terminated by reason of Good Cause the Date shall be the earliest of (i) date of the conviction,
adjudication or judgment by the court of competent jurisdiction, or (ii) last day of the term of
this Agreement and (iii) if the Employee’s employment is terminated by reason of death, the Date of
Termination shall be the date of death of the Employee.

     4. Obligation of the Company upon Termination (Except Due to Death, Disability or Good
Cause). If after the date of the Agreement, the Company shall breach any agreement providing
for or respecting the employment of the Employee or if during the Term, the Company shall terminate
the Employee’s employment for any reason other than for death or Good Cause, or if during the Term,
the Employee shall terminate his Employment for “Good Reason” (as defined below), then the Company
shall pay or cause to be paid to the Employee the aggregate of the following amounts:

     A. Within 30 days following the Date of Termination the Company shall pay or cause to
be paid to the Employee, in cash, (i) the Employee’s earned but unpaid Base Salary through
the Date of Termination for periods through but not following the Employee’s Separation From
Service (the “Accrued Salary”) and (ii) the Employees accrued vacation pay, to the
extent not theretofore paid (the sum of the amounts described in clauses (i) and (ii) shall
be hereinafter referred to as the “Accrued Obligations”).

     B. The Company shall pay or cause to be paid to the Employee, in cash, the Employee’s
current Base Salary for the remainder of the Term for periods following the Employee’s
Separation From Service on the date of his Separation From Service if he is not a Specified
Employee on the date of his Separation From Service or on the date that is six months
following the date of his Separation From Service if he is a Specified Employee on the date
of his Separation From Service. For purposes of this Agreement, the terms “Separation
From Service” and “Specified Employee” shall have the meanings ascribed to those
terms in Section 409A. For purposes of this Agreement “Section 409A” means section
409A of the Internal Revenue Code of 1986, as amended (the “Code”) and

 

 

the rules and regulations promulgated thereunder by the Department of Treasury and the
Internal Revenue Service.

     C. For the remainder of the Term and until October 31, 2010 or such longer period as
any plan, program, practice or policy may provide, the Company shall continue benefits to
the Employee and/or the Employee’s family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and policies described in
Section 2(b)(iii) and (v) of this Agreement if the Employee’s employment had not been
terminated , including health insurance and life insurance, in accordance with the plans,
practices, programs or policies of the Company in effect prior to the Termination Date, and
for purposes of eligibility for retiree benefits pursuant to such plans, practices, programs
and policies, the Employee shall be considered to have remained employed until the end of
the Term and to have retired on the last day of such period. If the dental, accident,
health insurance or other benefits specified in this Section 4.C are taxable to the
Employee, the following provisions shall apply to the reimbursement or provision of such
benefits. The Employee shall be eligible for reimbursement for covered welfare expenses, or
for the provision of such benefits on an in-kind basis, during the period commencing on the
expiration of the Term and ending on October 31, 2010. The amount of such welfare benefits
eligible for reimbursement or the in-kind benefits to be provided under this Section 4.C
during the Employee’s taxable year shall not affect the expenses eligible for reimbursement,
or the in-kind benefits to be provided, in any other taxable year (with the exception of
applicable lifetime maximums applicable to medical expenses or medical benefits described in
section 105(b) of the Code). The Company shall reimburse an eligible welfare benefit
expense that is not a nontaxable insured benefit on or before the last day of the Employee’s
taxable year following the taxable year in which the expense was incurred. The Employee’s
right to reimbursement or direct provision of benefits under this Section 4.C is not subject
to liquidation or exchange for another benefit.

For purposes of this Agreement, “Good Reason” means:

               (i) if there is a change in the nature of the scope of functions, powers, authorities, duties
or responsibilities as set forth in Section 2(a) of this Agreement, which change is not remedied by
the Company within thirty (30) days after receipt of notice thereof given by the Employee;

               (ii) any failure by the Company to comply with any of the provisions of Section 2(b) of this
Agreement, which is not remedied by the Company within thirty (30) days after receipt of notice
thereof given by the Employee;

               (iii) the Company’s requiring the Employee to be based at any office or location other than
that described in Section 2(a) hereof, except for travel reasonably required in the performance of
the Employee’s responsibilities;

               (iv) any purported termination by the Company of the Employee’s employment except for “Good
Cause” (hereinafter defined) or Death; or

 

 

               (v) any failures by the Company to comply with and satisfy Section 12 of this Agreement.

     5. Obligation of the Company upon Termination Due to Death, or Disability. If the
Employee shall die or become Disabled (as defined below) during the Term, then the Company shall
pay or cause to be paid to the Employee’s estate the aggregate of the following amounts:

     A. Within 30 days following the date of the death of the Employee, the Company shall
pay or cause to be paid to the Employee’s estate, in cash, the Accrued Obligations.

     B. Within 30 days following the date of the death of the employee or the Employee
becoming Disabled, the Company shall pay or cause to be paid to the Employee and/or the
Employee’s estate, in cash, the Employee’s current Base Salary for the remainder of the Term
for periods following the date of the Employee’s death.

     C. For the remainder of the Term and until October 31, 2010 or such longer period as
any plan, program, practice or policy may provide, the Company shall continue benefits to
the Employee’s family at least equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies described in Section 2(b)(iii)
and (v) of this Agreement if the Employee’s employment had not been terminated, including
health insurance and life insurance, in accordance with the plans, practices, programs or
policies of the Company in effect prior to the Termination Date, and for purposes of
eligibility for retiree benefits pursuant to such plans, practices, programs and policies,
the Employee shall be considered to have remained employed until the end of the Term and to
have retired on the last day of such period. If the dental, accident, health insurance or
other benefits specified in this Section 5.C are taxable to the Employee’s family, the
following provisions shall apply to the reimbursement or provision of such benefits. The
Employee’s family shall be eligible for reimbursement for covered welfare expenses, or for
the provision of such benefits on an in-kind basis, during the period commencing on the
expiration of the Term and ending on October 31, 2010. The amount of such welfare benefits
eligible for reimbursement or the in-kind benefits to be provided under this Section 5.C
during the taxable of the Employee’s family shall not affect the expenses eligible for
reimbursement, or the in-kind benefits to be provided, in any other taxable year (with the
exception of applicable lifetime maximums applicable to medical expenses or medical benefits
described in section 105(b) of the Code). The Company shall reimburse an eligible welfare
benefit expense that is not a nontaxable insured benefit on or before the last day of the
taxable year of the Employee’s family following the taxable year in which the expense was
incurred. The right of the Employee’s family to reimbursement or direct provision of
benefits under this Section 5.C is not subject to liquidation or exchange for another
benefit.

     D. For purpose of this Agreement, the term Disabled shall have the meaning ascribed to
that term in Section 409A.

 

 

     6. Obligation of the Company Upon Termination For Good Cause.

     If the Employee’s employment is terminated by the Company for Good Cause, this Agreement shall
terminate without further obligations to the Employee, except as set out in this Section
and under this Agreement as it does not conflict with this Section, other than for the payment of
the Accrued Obligations. The Company shall pay the Accrued Obligations to the Employee, as
applicable, in a cash lump sum within thirty (30) days of the Date of Termination. For purposes
of this Agreement, “Good Cause” means:

               (i) The Employee has been convicted of a felony by a court of competent jurisdiction and such
conviction is no longer subject to direct appeal.

               (ii) The Employee has been adjudicated by a court of competent jurisdiction to be mentally
incompetent which mental incompetency directly affects his ability to serve, Employer, and such
adjudication is no longer subject to direct appeal.

               (iii) A court of competent jurisdiction has rendered a judgment that the Employee has
committed acts of fraud or willful malfeasance that has materially damaged the Company and such
determinations is no longer subject to direct appeal.

     7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the
Employee’s continuing or future participation in any benefit, bonus, incentive or other plans,
programs, policies or practices, provided by the Company and for which the Employee may qualify,
nor shall anything herein limit or otherwise affect such rights as the Employee may have under any
stock option or warrant or other agreements with the Company. Amounts which are vested benefits or
which the Employee is otherwise entitled to receive under any plan, policy, practice or program of
the Company at or subsequent to the Date of Termination shall be payable in accordance with such
plan, policy, practice or program.

     8. Full Settlement. The Company’s obligation to make or cause to be made the payments
provided for in this Agreement and otherwise to perform its obligation hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Employee or others. In no event shall the Employee be obligated to
seek other employment or take other action by way of mitigation of the amounts payable to the
Employee under any of the provisions of this Agreement.

     9. Legal Fees. The Company agrees to pay, or cause to be paid, to the full extent
permitted by law, all legal fees and expenses which the Employee may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the Company or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any guarantee of
performance thereof. Such payments under this Section 9 shall be made within ten (10) business
days after the delivery of the Employee’s written request for the payment accompanied by such
evidence of fees and expenses incurred as the Company may reasonably require. In any event the
Company shall pay the Employee such legal fees and expenses by the last day of the Employee’s
taxable year following the taxable year in which the Employee incurred such legal fees and
expenses. The legal fees or expenses that are subject to reimbursement pursuant to this Section 9
shall not be limited as a result of when the fees or expenses are incurred. The amount

 

 

of legal fees or expenses that is eligible for reimbursement pursuant to this Section 9 during
a given taxable year of the Employee shall not affect the amount of expenses eligible for
reimbursement in any other taxable year of the Employee. The right to reimbursement pursuant to
this Section 9 is not subject to liquidation or exchange for another benefit.

     10. Disputed Payments and Refusals to Pay. If the Company fails to make a payment
under this Agreement in whole or in part as of the payment date specified in this Agreement, either
intentionally or unintentionally, other than with the express or implied consent of the Employee,
the Company shall owe the Employee interest on the delayed payment at the applicable Federal rate
provided for in section 7872(f)(2)(A) of the Code if the Employee (i) accepts the portion (if any)
of the payment that the Company is willing to make (unless such acceptance will result in a
relinquishment of the claim to all or part of the remaining amount) and (ii) makes prompt and
reasonable good faith efforts to collect the remaining portion of the payment. Any such interest
payments shall become due and payable effective as of the applicable payment date(s) specified in
Section 4, Section 5 or Section 6 with respect to the delinquent payment(s) due under Section 4,
Section 5 or Section 6.

     11. Confidential Information. The Employee shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data relating to the
Company which shall have been obtained by the Employee during the Employee’s employment with the
Company and which shall not be or become public knowledge (other than by acts by the Employee or
his representatives in violation of this Agreement). After termination of the Employee’s
employment with the Company, the Employee shall not, without written consent of the Company,
communicate or divulge any such information, knowledge or data to anyone other than the Company and
those designated by it. In no event shall an asserted violation of the provisions of this Section
constitute a basis for deferring or withholding any amounts otherwise payable to the Employee under
this Agreement.

     12. Assignment and Binding Effect. This Agreement is personal to the Employee and
without the prior written consent of the Company shall not be assignable by the Employee otherwise
than by will or the laws of descent and distribution. This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by each party hereto and each party’s respective
successors, heirs, assigns and legal representatives.

     13. Successor. The Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation, or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, “Company” shall mean the Company as
hereinbefore defined and any successor to its business and/or assets.

     14. During the term of any NPI assignment, Employee agrees that he shall not directly or
indirectly, by, through, or on behalf of himself or others, acquire any mineral interest within the
geographical boundaries of such NPI assignment.

     15. Law Governing. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas. This Agreement was executed in Houston,

 

 

Harris County, Texas and performance of this Agreement will be made in such place. The state
and federal courts within Harris County, Texas shall have exclusive jurisdiction over any dispute
arising in connection with this Agreement. The parties hereby submit to the jurisdiction of the
courts within Harris County, Texas solely for this purpose.

     16. Notices. All notices and other communications hereunder shall be in writing and
shall be personally given by hand delivery to the other party or sent by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:

	 	 	 	 	 
	If to the Employee:
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	If to the Company:	 	The Meridian Resource Corporation
	 	 	1401 Enclave Parkway, Suite 300
	 	 	Houston, Texas 77077
	 

	 	Attention:
	 	 
	 

	 	 	 	 

or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee, or
if mailed, on the seventh (7th) day following the day on which it was deposited in the
Unites States mail.

     17. Severability. If any provision of this Agreement is held to be illegal, invalid,
or unenforceable under present or future laws effective during the term hereof, such provision
shall be fully servable and this Agreement and each separate provision hereof shall be construed
and enforced as if such illegal, invalid, or unenforceable provisions had never comprised a part of
this Agreement, and the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid, unenforceable provision or by its
severance from this Agreement.

     18. Headings. The headings of the paragraphs of this Agreement have been inserted for
convenience of reference only and shall not be construed or interpreted to restrict or modify any
of the terms or provisions hereof.

     19. Remedies. With respect to each and every breach, violation, or threatened breach
or violation by the Employee or the Company of any of the covenants set forth herein, the Company
and the Employee, in addition to all other remedies available at law or in equity, including
specific performance of the provisions hereof, shall be entitled to enjoin the commencement or
continuance thereof and may apply for entry of an injunction.

     20. No Waiver. The failure to enforce at any time any of the provisions of this
Agreement or to require at any time performance by the other party of any of the provisions hereof
shall in no way be construed to be a waiver of such provisions or to affect the validity of this
Agreement, or any part hereof, or the right of either party thereafter to enforce each and every
such provision of this Agreement in accordance with the terms of this Agreement.

 

 

     21. Counterparts. This Agreement may be executed un two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument.

     22. Consulting Agreement. Following the expiration of the Term, from December 30, 2008
until April 30, 2009, the Employee shall be make himself available to consult with the Company from
time to time as reasonably requested by the Company. The parties intend that the Employee’s level
of services rendered to the Company following the Term shall permanently decrease to a level that
is no more than 20 percent of the average level of services performed by the Employee over the
36-month period immediately preceding December 30, 2008. The parties shall enter into a consulting
agreement (the “Consulting Agreement”) which shall contains terms substantially identical
to the terms specified in clauses (i), (iv) and (vi) of Section 2(b). The Consulting Agreement is
attached hereto as Exhibit A.

     23. Entire Agreement.

          (a) This Agreement, the Termination Agreement, and the Consulting Agreement embody the entire
agreement and understanding between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings, whether written or oral, relating to the
subject matter hereof, unless expressly provided otherwise herein and except for (1) the Employee’s
rights in and under all stock options and warrants currently held by the Employee, (2) the
Employee’s right, granted pursuant to the NPI Agreement (as defined in the Termination Agreement),
in various oil and gas properties in which Company or its affiliates also holds an interest, (3)
the Employee’s right to participate in future prospects as previously authorized by the Board of
Directors of Employer, which right is set forth in that certain Participation Agreement dated
effective January 1, 1992 between Company and the Employee, (4) all rights of the Employee under
any other existing employee benefit plans established and adopted for employees of Company in
general, (5) all rights of the Employee to indemnity under all indemnification provided by Company
or any third parties and (6) other similar arrangements of Company and all agreements with respect
to the foregoing.

          (b) No amendment or modification of this Agreement, unless expressly provided otherwise
herein, shall be valid unless made in writing and signed by each of the parties whose rights,
duties, or obligations hereunder would in any way be affected by any amendment or modification.

          (c) No representations, inducements, or agreements have been made to induce either the
Employee or Company to enter into this Agreement which are not expressly set forth herein. This
Agreement is the sole source of rights and duties as between Company and the Employee relating to
the subject matter of this Agreement, except as expressly provided herein.

     IN WITNESS WHEREOF, the Employee has hereunto set his hand and, pursuant to the authorization
from its Board of Directors, the Company has caused these presents to be executed in its name on
its behalf, all as of the day and year first above written.

 

 

	 	 	 	 	 
	 	 	EMPLOYEE
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	/s/ Michael J. Mayell
	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	THE MERIDIAN RESOURCE CORPORATION, a Texas corporation
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Lloyd V. DeLano
	 

	 	 	 	 
	 

	 	 	 	Lloyd V. DeLano
	 

	 	 	 	Senior Vice President

 

 

Exhibit A

CONSULTING AGREEMENT

     THIS CONSULTING AGREEMENT (this “Agreement”) by and between The Meridian Resource
Corporation, a Texas corporation (referred to herein as the “Company”) and Michael J.
Mayell (the “Consultant”), dated effective as of the beginning of the day on
30th day of December, 2008.

W I T N E S S E T H:

     WHEREAS, the Company desires to retain the consulting services of the Consultant; and

     WHEREAS, the Consultant and the Company desire to set forth the terms and conditions of the
Consultant’s consulting arrangement with the Company;

     NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

AGREEMENTS

     1. Consulting Period. The Company and the Consultant hereby agree that the
Consultant shall provide consulting services to the Company for the period commencing on December
30, 2008 and ending on April 30, 2009 (the “Consulting Period”).

     2. Terms of Consulting Arrangement.

          (a) Duties. During the Consulting Period, the Consultant shall be make himself
available to consult with the Company from time to time as reasonably requested by the Company. The
parties intend that following December 29, 2008, the Consultant’s level of services rendered to the
Company shall permanently decrease to a level that is no more than 20 percent of the average level
of services performed by the Consultant over the 36-month period immediately preceding December
30, 2008. The Company agrees that the amount and the scheduling of the services provided by the
Consultant under this Agreement shall be such that the services do not interfere with the
Consultant’s schedule or his obligations to any subsequent employer.

          (b) Services. The Consultant’s services may include, but are not limited to: (a) advising the
Company regarding the Company’s operations; (b) advising and assisting the board of Directors with
respect to the Company’s planning processes, including preparing the annual budgets; (c) acting as
liaison when requested between the Company and those persons, entities and agencies having a direct
working relationship with the Company; (d) advising the Company with respect to national, state and
community issues which impact, affect or influence, or which may impact, affect or influence the
Company and its various programs; (e) coordinating and designing programs to enhance the image and
operations of the Company; (f) the coordination and implementation of internal controls and
advising the Company regarding the establishment and design of such controls; (g) the preparation
and submission to the Board of Directors of such

 

 

reports and data on Company operations as the Consultant deems appropriate; (h) advising the
Board of Directors regarding the performance of various administrative functions on behalf of the
Board of Directors; (i) advising the Board of Directors regarding the hiring, managing, training,
promoting and evaluating of Company personnel and consultants; (j) training and orientation of new
Directors; and (k) such other functions as are normally performed by independent Consultants that
provide services to similar companies. The Consultant shall provide the services contemplated by
this Agreement to the Company to the best of his ability in a prompt, diligent and competent manner
at such times as are mutually convenient for the Company and the Consultant and shall devote such
time to the performance of such services as shall be mutually agreed to by the Company and the
Consultant from time to time.

          (c) Location. The parties agree that the Consultant’s services shall be performed at
Consultant’s current location or only at any other main office or location of Company within thirty
(30) miles from such location.

          (d) Compensation.

               (i) Consulting Fees. During the Consulting Period, the Consultant shall receive
monthly remuneration of FIFTY THOUSAND AND NO/100 DOLLARS ($50,000.00), which shall be payable in
equal semi-monthly installments.

               (ii) Expenses. During the Consulting Period, the Consultant shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by the Consultant in accordance
with the policies, practices and procedures of the Company.

               (iii) Office and Support Staff. During the Consulting Period, the Consultant shall be
entitled to an office or offices of a size and with furnishings and other appointments, and to
secretarial and other assistance, at least equal to that provided to the Consultant as of the
December 29, 2008. In addition, Consultant shall continue to receive, during the Consulting
Period, the benefits set forth in Section (ii) (iii) & (v) of Section 2(b) of the New Employment
Agreement dated as of April 29, 2008.

     3. Status of Consultant. The parties agree that during the Consulting Period the
Consultant shall serve as an independent contractor rather than as an employee of the Company. The
Consultant shall pay when due all local, state and federal taxes applicable to the Consultant’s
performance of work hereunder.

     4. Full Settlement. The Company’s obligation to make or cause to be made the
payments provided for in this Agreement and otherwise to perform its obligation hereunder shall not
be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Consultant or others.

     5. Confidential Information. The Consultant shall hold in a fiduciary capacity for
the benefit of the Company all secret or confidential information, knowledge or data relating to
the Company which shall have been obtained by the Consultant during the Consulting Period and which
shall not be or become public knowledge (other than by acts by the Consultant or his
representatives in violation of this Agreement). After expiration of the Consulting Period, the
Consultant shall not, without written consent of the Company, communicate or divulge any such

 

 

information, knowledge or data to anyone other than the Company and those designated by it. In
no event shall an asserted violation of the provisions of this Section constitute a basis for
deferring or withholding any amounts otherwise payable to the Consultant under this Agreement.
“Confidential Information” as used in this Agreement is means all disclosures and information, data
and knowledge contained in any documents (whether geological, geophysical, economic, financial or
management, and whether in the form of maps, charts, logs, seismographs, interpretations,
calculations, summaries, opinions or other written or charted means) which are related, directly or
indirectly, to the prospect or to the exploration potential of the geographical area, and which
have previously hereto or during the Term hereof delivered or disclosed to or known by the
Consultant.

     6. Assignment and Binding Effect. This Agreement is personal to the Consultant and
without the prior written consent of the Company shall not be assignable by the Consultant. This
Agreement shall be binding upon and shall inure to the benefit of and be enforceable by each party
hereto and each party’s respective successors, heirs, assigns and legal representatives.

     7. Successor. The Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation, or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, “Company” shall mean the Company as
hereinbefore defined and any successor to its business and/or assets.

     8. Law Governing. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas without. This Agreement was executed in Houston, Harris
County, Texas and at least partial performance of this Agreement will be made in such place.

     9. Notices. All notices and other communications pertaining to this Agreement shall
be in writing and shall be personally given by hand delivery to the other party or sent by
registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

	 	 	 	 	 
	If to the Consultant:
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	If to the Company:	 	The Meridian Resource Corporation
	 	 	1401 Enclave Parkway, Suite 300
	 	 	Houston, Texas 77077
	 

	 	Attention:
	 	 
	 

	 	 	 	 

or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee, or
if mailed, postage prepaid, on the seventh (7th) day following the day on which it was
deposited in the Unites States mail.

     10. Severability. If any provision of this Agreement is held to be illegal, invalid,
or unenforceable under present or future laws effective during the term hereof, such provision
shall

 

 

be fully servable and this Agreement and each separate provision hereof shall be construed and
enforced as if such illegal, invalid, or unenforceable provisions had never comprised a part of
this Agreement, and the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid, unenforceable provision or by its
severance from this Agreement.

     11. Headings. The headings of the paragraphs of this Agreement have been inserted for
convenience of reference only and shall not be construed or interpreted to restrict or modify any
of the terms or provisions hereof.

     12. Remedies. With respect to each and every breach, violation, or threatened breach
or violation by the Consultant or the Company of any of the covenants set forth herein, the Company
and the Consultant, in addition to all other remedies available at law or in equity, including
specific performance of the provisions hereof, shall be entitled to enjoin the commencement or
continuance thereof and may apply for entry of an injunction.

     13. No Waiver. The failure to enforce at any time any of the provisions of this
Agreement or to require at any time performance by the other party of any of the provisions hereof
shall in no way be construed to be a waiver of such provisions or to affect the validity of this
Agreement, or any part hereof, or the right of either party thereafter to enforce each and every
such provision of this Agreement in accordance with the terms of this Agreement.

     14. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but all of which together shall constitute but one and
the same instrument.

     IN WITNESS WHEREOF, the Consultant has hereunto set his hand and, pursuant to the
authorization from its Board of Directors, the Company has caused these presents to be executed in
its name on its behalf, all as of the day and year first above written.

	 	 	 	 	 
	 	 	CONSULTANT
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	THE MERIDIAN RESOURCE CORPORATION, a Texas corporation
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:exv10w3

 

Exhibit 10.3

TERMINATION AGREEMENT

     THIS TERMINATION AGREEMENT (this “Termination Agreement”) is entered into as of the
29th day of April, 2008, by and among The Meridian Resource Corporation, a Texas corporation (said
corporation, 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 Agreement
dated as of the 18th day of August, 1993 (the “Employment Agreement”), (ii)
Agreement wherein the Company granted the Executive certain net profits interests in Company
properties dated the 27th day of June, 1995 (the “NPI Agreement”), and (iii)
Restricted Stock Grant and Executive Deferred Compensation Agreement dated as of the
31st day of July 1996 (the “DC Agreement”) (the Employment Agreement, NPI
Agreement 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 the
Agreements and enter into a new short-term employment agreement;

     WHEREAS, the Executive is willing to terminate the Agreements provided that certain terms in
the Agreements relating to such termination are fully taken into account in conjunction with this
Termination Agreement;

     WHEREAS, the Company and the Executive have agreed to terminate the Agreements on the terms
set forth herein;

     WHEREAS, the parties hereto desire to enter into this Termination Agreement to evidence the
foregoing 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, the
receipt and sufficiency of which are hereby acknowledged and confessed, the parties hereto hereby
agree as follows:

	I.	 	Termination.

     A. The Company and the Executive hereby agree to terminate the Employment Agreement and
the NPI Agreement (except to the extent that it is modified in Para. I.B. below) rights
thereunder effective as of the 29th day of April, 2008.

     B. In conjunction with such termination, the Company and the Executive acknowledge and
agree that the Executive is vested in his Net Profits Interests under the NPI Agreement
which have been assigned to the Executive or to which the Executive is entitled to an
assignment as a result of events occurring before April 28, 2008. Such Net Profits
Interests will remain unaffected by this Termination Agreement. More

 

 

particularly, and by way of illustration only, the Executive’s Net Profits Interest
rights with respect to any well spudded prior to April 28, 2008 are vested and are not
affected 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 any
other provision of the NPI Agreement to the contrary, with respect to any well spudded after
April 28, 2008, within the geographical boundaries of any Property (or on lands pooled
therewith) subject to the NPI Agreement prior to April 28, 2008, the Net Profits
Interest 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 in
clause (ii) of said Paragraph C of Article IV of the NPI Agreement. The Company and the
Executive further agree that after April 28, 2008 no new Net Profits Interests will be
assigned to the Executive under or pursuant to the NPI Agreement outside of the geographical
boundaries of any Property (or on lands pooled therewith) which was subject to a Net Profits
Interest grant prior to April 28, 2008.

     C. The Company and the Executive hereby agree to freeze the DC Agreement effective as
of the date hereof so that the Executive shall accrue no additional benefits under the DC
Plan with respect to periods after the date hereof, provided, however, that the Executive’s
deferral election for the 2008 calendar year shall remain in effect. The Company and the
Executive agree to enter into a termination agreement pursuant to which the the DC Agreement
shall be terminated effective as of the 29th day of April, 2008, and to each execute and
deliver any other document or certificate necessary to evidence such termination.. The
portion of the Executive’s account under the DC Agreement that is not subject to section
409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the rules and
regulations promulgated thereunder by the Department of Treasury and the Internal Revenue
Service (“Section 409A”) shall be distributed to the Executive immediately in
accordance with the existing termination provisions of Section 9.3 of the DC Agreement. The
remaining portion of the Executive’s account under the DC Agreement shall be distributed to
the Executive on the date of his Separation From Service if he is not a Specified Employee
on the date of his Separation From Service or on the date that is six months following the
date of his Separation From Service if he is a Specified Employee on the date of his
Separation From Service. For purposes of this Agreement, the terms “Separation From
Service” and “Specified Employee” shall have the meanings ascribed to those
terms in Section 409A. The Company and the Executive agree that the Executive shall have a
fully vested interest in his account under the DC Agreement and that the freezing and
termination of the DC Agreement shall not adversely impact the Executive’s rights with
respect to such benefits. The Company and the Executive agree that the Company may satisfy
its federal income tax withholding obligation and its Federal Insurance Contributions Act
withholding obligation with respect to the Executive’s benefit under the DC Agreement by
withholding therefrom shares of the Company’s Common Stock in an amount sufficient to
satisfy such withholding obligations.

     D. The Company and the Executive hereby agree to continue the employment of the
Executive under a new employment agreement to be executed concurrently with this Termination
Agreement in the form attached hereto as Exhibit A (the “New Employment Agreement”).

 

 

     E. Both parties agree to mutually cooperate to ensure compliance with this Termination
Agreement and fulfillment of the terms, conditions and obligations contained herein.
Without limiting the generality of the foregoing, the parties agree to execute and deliver
all such further documents, agreements and instruments and take such other and further
action as may be necessary or appropriate to carry out the purposes and intent of this
Termination Agreement. For example, to the extent any additional documents are necessary to
confirm the conveyance of any Net Profits Interest previously conveyed or to be conveyed
under the NPI Agreement, the Company will expeditiously deliver, execute, record or assign
any such documents, agreements and interests at the expense of the Company. In addition, to
the extent any corporate or board of directors action is necessary or appropriate to confirm
any issuance of shares of Company stock under the DC Agreement, the Company agrees to take
all such action. The Company further agrees to take such action which is reasonably
appropriate 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 Company
to effect a separation of the roles of the Company’s Chairman of the Board and Chief
Executive Officer..

     G. The Executive agrees that his right to participate (either directly or through an
affiliated entity) with the Company in new oil and gas projects by acquiring a portion of
the Company’s working interest therein, including, without limitation, all rights under the
letter agreement dated July 1, 1994, by and between the Executive and the Company, shall
terminate on December 29, 2008. Such termination shall not affect in any way any such
working interests acquired before such date. This section does not apply to any NPI
interest, or benefit plan, or the DC Agreement to the extent that any such rights are
addressed herein.

     H. Executive represents and warrants to the Company that following the execution of
this Termination Agreement and the New Employment Agreement, except for the New Employment
Agreement, the Consulting Agreement referred to therein, and the
Employment Agreement, there are no other agreements
relating 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 to
or on the behalf of the Executive the following amounts:

     1. the Executive’s current annual Base Salary (as defined in the
Employment Agreement) for the remainder of the Employment Period (as defined
in 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 Base
Salary 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 (as
defined in the Employment Agreement) the Executive would receive if he
remained employed by the Company at the current annual Base Salary plus the
Recent Bonus for the remainder of the Employment Period and (ii) actuarial
equivalent of his benefit, if any, under any Retirement Plan.

     On the date of his Separation From Service if he is not a Specified
Employee on the date of his Separation From Service or on the date that is
six months following his Separation From Service if he is a Specified
Employee on the date of his Separation From Service the Company shall pay or
cause to be paid to the Executive, in a single sum in cash, the aggregate of
the 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 of
the 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 distribution
provided 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 tax
imposed by Section 4999 of the Code, together with any interest or penalties imposed with
respect to such excise tax (“Excise Tax”), then the Executive shall be entitled to
receive an additional payment (a “Gross-Up Payment”) in an amount such that, after
payment (whether through withholding at the source or otherwise) by the Executive of all
taxes (including any interest or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and penalties imposed with respect
thereto), employment taxes and Excise Tax imposed upon the Gross-Up Payment, the Executive
retains 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). Any
Gross-Up Payment that the Company is required to make to reimburse the Executive for
federal, state and local taxes imposed upon the Executive, including the amount of
additional taxes imposed upon the Executive due to the Company’s payment of the initial
taxes on such amounts, shall be made by the Company by the end of the Executive’s taxable
year next following the Executive’s taxable year in which the Executive remits the related
taxes to the taxing authority.

     C. The Company shall promptly reimburse the Executive for costs and expenses of legal
counsel 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 for
expenses incurred by both Joseph A. Reeves and Michael J. Mayell beyond the amount
previously approved by the Board of Directors for that

 

 

purpose. Such payments under this Section II.D shall be made within ten (10) business
days after the delivery of the Executive’s written request for the payment accompanied by
such evidence of fees and expenses incurred as the Company may reasonably require. In any
event the Company shall pay the Executive such legal fees, consultants’ fees and expenses by
the last day of the Executive’s taxable year following the taxable year in which the
Executive incurred such legal fees, consultants’ fees and expenses. The legal fees,
consultants’ fees or expenses that are subject to reimbursement pursuant to this Section
II.D shall not be limited as a result of when the fees or expenses are incurred. The amount
of legal fees, consultants’ fees or expenses that is eligible for reimbursement pursuant to
this Section II.D during a given taxable year of the Executive shall not affect the amount
of expenses eligible for reimbursement in any other taxable year of the Executive. The
right to reimbursement pursuant to this Section II.D is not subject to liquidation or
exchange for another benefit.

     D. On the date of his Separation From Service if he is not a Specified Employee on the
date of his Separation From Service or on the date that is six months following the date of
his Separation From Service if he is a Specified Employee on the date of his Separation From
Service, the Company shall transfer ownership to the Executive of all furnishings and
artwork in the Executive’s office.

     E. All shares accrued to the Executive under the DC Agreement shall be delivered to the
Executive pursuant to the terms of such agreement as adjusted to reflect any changes
described in paragraph I.H.

	III.	 	Miscellaneous.

     A. This Termination Agreement shall be governed by and construed in accordance with the
laws of the State of Texas. Further, the Executive agrees that any legal proceeding to
enforce the provisions of this Termination Agreement shall be brought in Houston, Harris
County, Texas, and hereby waives his right to any pleas regarding subject matter or personal
jurisdiction and venue. The captions of this Termination Agreement are not part of the
provisions hereof and shall have no force or effect. This Termination Agreement may not be
amended or modified otherwise than by a written agreement executed by the parties hereto or
their respective successors and legal representatives.

     B. Every notice, approval, request, demand, or statement required or permitted to be
given under this Termination Agreement shall be in writing and shall be deemed sufficiently
given when deposited in the mail, registered or certified, postage prepaid, and addressed to
the 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 in
accordance herewith. Written notice given by any other method shall be deemed effective
when actually received by the party.

     C. Every provision of this Termination Agreement is intended to be severable such that
the invalidity or unenforceability of any provision of this Termination Agreement shall not
affect the validity or enforceability of any other provision of this Termination Agreement.

     D. The Company may withhold from any amounts payable under this Termination Agreement
such Federal, state or local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.

     E. In the event that the Executive makes a demand upon the Company for any benefits or
amounts due hereunder and the Company rejects such demand, and the Executive ultimately
prevails in litigation resulting therefrom, the Company shall reimburse the Executive for
reasonable attorney fees incurred by the Executive in enforcing rights to which the
Executive shall have become entitled pursuant to this Termination Agreement. Such payments
to the Executive under this Section III.E shall be made within ten (10) business days after
the delivery of the Executive’s written request for the payment accompanied by such evidence
of fees incurred as the Company may reasonably require. In any event the Company shall pay
the Executive such legal fees by the last day of the Executive’s taxable year following the
taxable year in which the Executive incurred such legal fees. The legal fees that are
subject to reimbursement pursuant to this Section III.E shall not be limited as a result of
when the fees or expenses are incurred. The amount of legal fees that is eligible for
reimbursement pursuant to this Section III.E during a given taxable year of the Executive
shall not affect the amount of expenses eligible for reimbursement in any other taxable year
of the Executive. The right to reimbursement pursuant to this Section III.E is not subject
to liquidation or exchange for another benefit.

     F. As soon as reasonably practicable, the Company shall create an irrevocable grantor
trust (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 cash
sufficient (on an undiscounted basis) to pay the estimated amount of the portion of the
Executive’s benefit under the DC Agreement that is subject to Section 409A and the amounts
specified in clauses 1, 2, 3 and 4 of Section II.A. Such amount shall be paid from the
Rabbi Trust on the dates specified in Sections I.C and II.A herein, provided that the
Company shall remain liable to pay any such amounts which for any reason are not paid from
the Rabbi Trust. The trustee of the Rabbi Trust shall be a bank or trust company selected
by the Company. Pursuant to the terms of the Trust Agreement, the trustee shall pay over
all funds and shares under the Rabbi Trust to the

 

 

Executive on the date that is six months following the date of separation, as required
by Section 409A.

     G. Except as specifically contemplated by this Termination Agreement, this Termination
Agreement constitutes the entire agreement by the parties hereto relating to the subject
matter hereof and supersedes and replaces all prior and contemporaneous agreements,
arrangements or understandings, whether written or oral, between the Company and the
Executive.

     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 or
remedy provided for in this Termination Agreement upon breach of any provisions, and no
acceptance of payment or performance during the continuation of such breach, shall
constitute a waiver of any term, covenant or condition herein or a waiver of any subsequent
breach 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 which
shall be deemed an original for all purposes, but all of which shall constitute one and the
same instrument.

     J. Any capitalized term used but not otherwise defined herein shall have the meaning
given 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 day
of 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.

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