Document:

exv10w1

Exhibit 10.1

Execution Version

AMENDMENT NO. 1

     This Amendment No. 1 dated as of April 28, 2009 (this “Agreement”) is among Stone
Energy Corporation, a Delaware corporation (“Borrower”), Stone Energy Offshore, L.L.C., a
Delaware limited liability company (“Guarantor”), the financial institutions party to the
Credit Agreement described below as Banks (“Banks”), and Bank of America, N.A., as Agent
for the Banks (“Agent”) and as Issuing Bank (“Issuing Bank”).

INTRODUCTION

     A. The Borrower, the Banks, the Issuing Bank, and the Agent have entered into the Second
Amended and Restated Credit Agreement dated as of August 28, 2008 (the “Credit Agreement”).

     B. The Guarantor entered into that certain Guaranty dated as of August 28, 2008.

     C. The parties hereto desire to (i) amend the Credit Agreement to modify the definition of
Applicable Margin and to clarify the application of provisions relating to Borrowing Base Assets to
Swap Contracts that are given value in the Borrowing Base and (ii) amend the Guaranty to update a
certain statutory reference.

     D. The Guarantor wishes to reaffirm its guarantee of the Obligations as amended by this
Agreement.

     THEREFORE, in fulfillment of the foregoing, the Borrower, the Guarantor, the Agent, the
Issuing Bank, and the Banks hereby agree as follows:

     Section 1. Definitions; References. Unless otherwise defined in this Agreement, each
term used in this Agreement which is defined in the Credit Agreement has the meaning assigned to
such term in the Credit Agreement.

     Section 2. Amendment. Upon the satisfaction of the conditions specified in
Section 6 of this Agreement, and, unless otherwise specified, effective as of the date set
forth above, the Credit Agreement and the Guaranty are amended as follows:

          (a) The definition of “Adjusted Base Rate” in Section 1.1 of the Credit Agreement shall be
amended to read in its entirety as follows:

     “Adjusted Base Rate” means, for any day, the fluctuating rate per annum of
interest equal to the greater of (a) the Base Rate in effect on such day, (b) the Federal
Funds Rate in effect on such day plus 0.50% and (c) the Eurodollar Rate in effect on such
day for an Interest Period of one month plus 1.00%; provided that for any Advance maintained
as a Base Rate Advance due to the application of Section 2.14(b), the “Adjusted Base Rate”
shall be the greater of clauses (a) or (b) above.

 

 

          (b) The definition of “Applicable Margin” in Section 1.1 of the Credit Agreement shall be
amended to read in its entirety as follows:

     “Applicable Margin” means, for any day, the following percentages based upon
the ratio of (a) the aggregate outstanding amount of Advances plus the Letter of
Credit Exposure to (b) the Borrowing Base as of such day:

	 	 	 	 	 	 	 	 	 	 	 	 	 
		 	 	 	 	 	 	 	 
		 	 	 	 	 	Applicable Margin	 	 
		 	Applicable Margin	 	for	 	 
	Ratio of (Advances + Letter of	 	for	 	Eurodollar Rate	 	Applicable Margin
	Credit Exposure) to (Borrowing Base)	 	Base Rate Advances	 	Advances	 	for Commitment Fees
	Less than .30
	 	 	1.250	%	 	 	2.250	%	 	 	0.500	%
	Greater than or equal to .30 but less than .60
	 	 	1.500	%	 	 	2.500	%	 	 	0.500	%
	Greater than or equal to .60 but less than .90
	 	 	1.750	%	 	 	2.750	%	 	 	0.500	%
	Greater than or equal to .90
	 	 	2.000	%	 	 	3.000	%	 	 	0.500	%

          (c) The definition of “Borrowing Base Assets” in Section 1.1 of the Credit Agreement shall be
amended to read in its entirety as follows:

     “Borrowing Base Assets” means, at any time, any assets (including any Swap
Contracts) that are given value in the most recently determined Borrowing Base.

          (d) The definition of “Defaulting Bank” in Section 1.1 of the Credit Agreement shall be
amended to read in its entirety as follows:

     “Defaulting Bank” means any Bank that (a) has failed to fund any portion of the
Advances or participations in Letter of Credit Obligations required to be funded by it
hereunder within one Business Day of the date required to be funded by it hereunder, (b) has
otherwise failed to pay over to the Agent or any other Bank any other amount required to be
paid by it hereunder within one Business Day of the date when due, unless the subject of a
good faith dispute, or (c) is, or any controlling (as defined in the definition of
“Affiliate”) entity of which is, insolvent or the subject of a bankruptcy, insolvency or
similar proceeding.

          (e) Section 2.2(e) of the Credit Agreement shall be amended to read in its entirety as
follows:

     Upon any sale, lease, transfer, unwinding, termination, novation or other disposition,
whether or not in the ordinary course of business, by the Borrower or any of its
Subsidiaries of Borrowing Base Assets that (individually or on a cumulative basis with

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all such dispositions consummated since the determination of the most recently
determined Borrowing Base) were given value in the most recently determined Borrowing Base
in excess of 5% of the amount of such Borrowing Base, the Borrowing Base shall automatically
be reduced by (1) with respect to Swap Contracts, the Net Cash Proceeds received by a Credit
Party as a result of unwinding, terminating, or novating such Swap Contracts and (2) with
respect to all Borrowing Base Assets other than Swap Contracts, the present value given to
such assets in the most recent engineering report delivered pursuant to Section
5.6(c), including the applicable stated discount utilized therein.

     (f) Section 2.4(b)(v) is hereby amended in its entirety to read as follows:

     Illegality. If any Bank shall notify the Agent and the Borrower that the
introduction of or any change in or in the interpretation of any law or regulation makes it
unlawful, or that any central bank or other governmental authority asserts that it is
unlawful for such Bank or its Eurodollar Lending Office to perform its obligations under
this Agreement to maintain or make any Eurodollar Rate Advances hereunder or any
Governmental Authority has imposed material restrictions on the authority of such Bank to
purchase or sell, or to take deposits of, Dollars in the London interbank market, (i) the
Borrower shall, no later than 10:00 a.m. (Dallas, Texas time) (A) if not prohibited by law,
on the last day of the Interest Period for each outstanding Eurodollar Rate Advance made by
such Bank or (B) if required by such notice, on the second Business Day following its
receipt of such notice prepay all of the Eurodollar Rate Advances made by such Bank then
outstanding, (ii) such Bank shall simultaneously make a Base Rate Advance to the Borrower on
such date in an amount equal to the aggregate principal amount of the Eurodollar Rate
Advances prepaid to such Bank, and (iii) the right of the Borrower to select Eurodollar Rate
Advances from such Bank for any subsequent Borrowing shall be suspended until such Bank
gives notice referred to above shall notify the Agent that the circumstances causing such
suspension no longer exist.

     (g) Section 2.12(a) is hereby amended in its entirety to read as follows:

     Eurodollar Rate Advances. If, due to either (i) the introduction of or any
change (other than any change by way of imposition or increase of reserve requirements
included in the Eurodollar Rate Reserve Percentage) in, or in the interpretation of, any law
or regulation after the date hereof or (ii) the compliance with any guideline or request
from any central bank or other Governmental Authority (whether or not having the force of
law) made after the date hereof, there shall be any increase in the cost to any Bank of
agreeing to make or making, funding, or maintaining Eurodollar Rate Advances (including due
to increased reserve or similar requirements), then the Borrower shall from time to time,
upon demand by such Bank (with a copy of such demand to the Agent), immediately pay to the
Agent for the account of such Bank additional amounts sufficient to compensate such Bank for
such increased cost. A certificate as to the amount of such increased cost and detailing
the calculation of such cost submitted to the Borrower and the Agent by such Bank shall be
conclusive and binding for all purposes, absent manifest error.

-3-

 

     (h) Section 2.12(c) is hereby amended in its entirety to read as follows:

     Letters of Credit. If any change in any law or regulation or in the
interpretation thereof after the date hereof by any court or administrative or Governmental
Authority charged with the administration thereof shall either (i) impose, modify, or deem
applicable any reserve, special deposit, or similar requirement against letters of credit
issued by, or assets held by, or deposits in or for the account of, the Issuing Bank or (ii)
impose on the Issuing Bank any other condition regarding the provisions of this Agreement
relating to the Letters of Credit or any Letter of Credit Obligations (including increased
reserve or similar requirements), and the result of any event referred to in the preceding
clause (i) or (ii) shall be to increase the cost to the Issuing Bank of issuing or
maintaining any Letter of Credit (which increase in cost shall be determined by the Issuing
Bank’s reasonable allocation of the aggregate of such cost increases resulting from such
event), then, upon demand by the Issuing Bank, the Borrower shall pay to the Issuing Bank,
from time to time as specified by the Issuing Bank, additional amounts which shall be
sufficient to compensate the Issuing Bank for such increased cost. A certificate as to such
increased cost incurred by the Issuing Bank, as a result of any event mentioned in clause
(i) or (ii) above, and detailing the calculation of such increased costs submitted by the
Issuing Bank to the Borrower, shall be conclusive and binding for all purposes, absent
manifest error.

     (i) A new Section 2.12(d) is added to read in its entirety as follows:

     Delay in Requests. Failure or delay on the part of any Bank or Issuing Bank to
demand compensation pursuant to the foregoing provisions of this Section shall not
constitute a waiver of such Bank’s or Issuing Bank’s right to demand such compensation,
provided that the Borrower shall not be required to compensate a Bank or Issuing
Bank pursuant to the foregoing provisions of this Section for any increased costs incurred
or reductions suffered more than 180 days prior to the date that such Bank or Issuing Bank,
as the case may be, notifies the Borrower of the change in law or regulation or the
interpretation or application thereof giving rise to such increased costs or reductions and
of such Bank’s or Issuing Bank’s intention to claim compensation therefore (except that, if
the change in law or regulation or the interpretation or application thereof giving rise to
such increased costs or reductions is retroactive, then the 180 day period referred to above
shall be extended to include the period of retroactive effect thereof).

     (j) A new Section 2.14 is added to read in its entirety as follows:

     Inability to Determine Rates. If the Majority Banks determine that for any
reason in connection with any request for Eurodollar Rate Advances or a conversion to or
continuation thereof that (a) Dollar deposits are not being offered to banks in the London
interbank Eurodollar market for the applicable amount and Interest Period of such Eurodollar
Rate Advances, (b) adequate and reasonable means do not exist for determining the Eurodollar
Rate for any requested Interest Period with respect to such proposed Eurodollar Rate
Advance, or (c) the Eurodollar Rate for any requested Interest Period with respect to such
proposed Eurodollar Rate Advance does not adequately and fairly reflect the cost to such
Banks of funding such Advance, the Agent will promptly so

-4-

 

notify the Borrower and each Bank. Thereafter, the obligation of the Banks to make
Eurodollar Rate Advances, or effect any conversion thereto or continuation thereof, shall be
suspended until the Agent (upon the instruction of the Majority Banks) revokes such notice.
Upon receipt of such notice, the Borrower may revoke, without premium or penalty, any
pending request for an Advance of, conversion to or continuation of Eurodollar Rate Advances
or, failing that, will be deemed to have converted such request into a request for Advances
bearing interest based upon the Base Rate in the amount specified therein.

          (k) Effective as of April 1, 2009, each reference in the Guaranty and in Exhibit C of the
Credit Agreement to “Chapter 34 of the Texas Business and Commerce Code” shall be amended to refer
to “Chapter 43 of the Texas Civil Practice and Remedies Code”.

     Section 3. Reaffirmation of Liens.

          (a) The Borrower (i) is party to certain Security Documents securing and supporting the
Borrower’s obligations under the Credit Documents, (ii) represents and warrants that it has no
defenses to the enforcement of the Security Documents and that according to their terms the
Security Documents will continue in full force and effect to secure the Borrower’s obligations
under the Credit Documents, as the same may be amended, supplemented, or otherwise modified, and
(iii) acknowledges, represents, and warrants that the liens and security interests created by the
Security Documents are valid and subsisting and create an Acceptable Security Interest in the
Collateral to secure the Borrower’s obligations under the Credit Documents, as the same may be
amended, supplemented, or otherwise modified.

          (b) The delivery of this Agreement does not indicate or establish a requirement that any
Guaranty or Security Document requires the Borrower’s or any Guarantor’s approval of amendments to
the Credit Agreement.

     Section 4. Representations and Warranties. The Borrower represents and warrants to
the Agent and the Banks that:

          (a) the representations and warranties set forth in the Credit Agreement and in the other
Credit Documents are true and correct in all material respects as of the date of this Agreement;
provided that such materiality qualifier shall not apply if such representation or warranty is
already subject to a materiality qualifier in the Credit Agreement or such other Credit Document;

          (b) (i) the execution, delivery, and performance of this Agreement are within the corporate
power and authority of the Borrower and have been duly authorized by appropriate proceedings and
(ii) this Agreement constitutes a legal, valid, and binding obligation of the Borrower, enforceable
against the Borrower in accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the rights of creditors generally
and general principles of equity; and

          (c) as of the effectiveness of this Agreement and after giving effect thereto, no Default or
Event of Default has occurred and is continuing.

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     Section 5. Reaffirmation of GuarantyThe Guarantor hereby ratifies, confirms, and
acknowledges that its obligations under the Guaranty are in full force and effect and that the
Guarantor continues to unconditionally and irrevocably guarantee the full and punctual payment,
when due, whether at stated maturity or earlier by acceleration or otherwise, all of the
Obligations (subject to the terms of the Guaranty), as such Obligations may have been amended by
this Agreement. The Guarantor hereby acknowledges that its execution and delivery of this
Agreement does not indicate or establish an approval or consent requirement by the Guarantor under
the Guaranty in connection with the execution and delivery of amendments, modifications or waivers
to the Credit Agreement, the Notes or any of the other Credit Documents.

     Section 6. Effectiveness. This Agreement shall become effective as of the date
hereof, and the Credit Agreement and Guaranty shall be amended as provided herein, upon the
occurrence of all of the following: (a) the Majority Banks’, the Borrower’s, and the Guarantor’s
duly and validly executing originals of this Agreement and delivery thereof to the Agent, (b) the
representations and warranties in this Agreement being true and correct in all material respects
before and after giving effect to this Agreement, and (c) the Borrower’s having paid all costs,
expenses, and fees which have been invoiced and are payable pursuant to Section 9.4 of the
Credit Agreement or any other written agreement.

     Section 7. Effect on Credit Documents. Except as amended herein, the Credit Agreement
and the Credit Documents remain in full force and effect as originally executed, and nothing herein
shall act as a waiver of any of the Agent’s or Banks’ rights under the Credit Documents, as
amended. This Agreement is a Credit Document for the purposes of the provisions of the other
Credit Documents. Without limiting the foregoing, any breach of representations, warranties, and
covenants under this Agreement may be a Default or Event of Default under other Credit Documents.

     Section 8. Choice of Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Texas.

     Section 9. Counterparts. This Agreement may be signed in any number of counterparts,
each of which shall be an original.

[The remainder of this page has been left blank intentionally.]

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     THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS DEFINED IN THE CREDIT AGREEMENT, REPRESENT
THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

     EXECUTED as of the date first set forth above.

	 	 	 	 	 
	 	BORROWER:

STONE ENERGY CORPORATION

 	 
	 	By:  	/s/ David H. Welch
 	 
	 	 	Name:  	David H. Welch 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 
	 	 	 
	 	By:  	                                              /s/ Kenneth H. Beer
 	 
	 	 	Name:  	Kenneth H. Beer 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 
	 	GUARANTOR:

STONE ENERGY OFFSHORE, L.L.C.

 	 
	 	By:  	/s/ David H. Welch
 	 
	 	 	Name:  	David H. Welch 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 
	 	 	 
	 	By:  	                                              /s/ Kenneth H. Beer
 	 
	 	 	Name:  	Kenneth H. Beer 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 

[SIGNATURE PAGE TO AMD NO. 1 TO 2nd A&R CREDIT AGREEMENT]

 

 

	 	 	 	 	 
	 	AGENT AND ISSUING BANK:

BANK OF AMERICA, N.A., as Agent and Issuing Bank

 	 
	 	By:  	/s/ Ronald E. McKaig
 	 
	 	 	Name:  	Ronald E. McKaig 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	BANKS:

BANK OF AMERICA, N.A.

 	 
	 	By:  	/s/ Ronald E. McKaig
 	 
	 	 	Name:  	Ronald E. McKaig 	 
	 	 	Title:  	Senior Vice President 	 
	 

[SIGNATURE PAGE TO AMD NO. 1 TO 2nd A&R CREDIT AGREEMENT]

 

 

	 	 	 	 	 
	 	BNP PARIBAS

 	 
	 	By:  	/s/ Douglas R. Liftman
 	 
	 	 	Name:  	Douglas R. Liftman 	 
	 	 	Title:  	Managing Director 	 
	 
	 	 	 
	 	By:  	     /s/ Polly Schott
 	 
	 	 	Name:  	Polly Schott 	 
	 	 	Title:  	Director 	 
	 

[SIGNATURE PAGE TO AMD NO. 1 TO 2nd A&R CREDIT AGREEMENT]

 

 

	 	 	 	 	 
	 	NATIXIS

 	 
	 	By:  	/s/ Liana Tchernysheva
 	 
	 	 	Name:  	Liana Tchernysheva 	 
	 	 	Title:  	Director 	 
	 
	 	 	 
	 	By:  	     /s/ Louis P. Laville, III
 	 
	 	 	Name:  	Louis P. Laville, III 	 
	 	 	Title:  	Managing Director 	 
	 

[SIGNATURE PAGE TO AMD NO. 1 TO 2nd A&R CREDIT AGREEMENT]

 

 

	 	 	 	 	 
	 	THE BANK OF NOVA SCOTIA

 	 
	 	By:  	/s/ Andy Ostrov
 	 
	 	 	Name:  	Andy Ostrov 	 
	 	 	Title:  	Director 	 
	 

[SIGNATURE PAGE TO AMD NO. 1 TO 2nd A&R CREDIT AGREEMENT]

 

 

	 	 	 	 	 
	 	CAPITAL ONE, N.A.

 	 
	 	By:  	/s/ Paul D. Hein
 	 
	 	 	Name:  	Paul D. Hein 	 
	 	 	Title:  	Vice President 	 
	 

[SIGNATURE PAGE TO AMD NO. 1 TO 2nd A&R CREDIT AGREEMENT]

 

 

	 	 	 	 	 
	 	TORONTO DOMINION (TEXAS) LLC

 	 
	 	By:  	/s/ Debbi L. Brito
 	 
	 	 	Name:  	Debbi L. Brito 	 
	 	 	Title:  	Authorized Signatory 	 
	 

[SIGNATURE PAGE TO AMD NO. 1 TO 2nd A&R CREDIT AGREEMENT]

 

 

	 	 	 	 	 
	 	ALLIED IRISH BANKS p.l.c.

 	 
	 	By:  	/s/ Mark Connelly
 	 
	 	 	Name:  	Mark Connelly 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	 	 
	 	By:  	     /s/ Edward Fenk
 	 
	 	 	Name:  	Edward Fenk 	 
	 	 	Title:  	Vice President 	 
	 

[SIGNATURE PAGE TO AMD NO. 1 TO 2nd A&R CREDIT AGREEMENT]

 

 

	 	 	 	 	 
	 	BARCLAYS BANK PLC

 	 
	 	By:  	/s/ Maria Lund
 	 
	 	 	Name:  	Maria Lund 	 
	 	 	Title:  	Vice President 	 
	 

[SIGNATURE PAGE TO AMD NO. 1 TO 2nd A&R CREDIT AGREEMENT]

 

 

	 	 	 	 	 
	 	REGIONS BANK

 	 
	 	By:  	/s/ William A. Philipp
 	 
	 	 	Name:  	William A. Philipp 	 
	 	 	Title:  	Vice President 	 
	 

[SIGNATURE PAGE TO AMD NO. 1 TO 2nd A&R CREDIT AGREEMENT]

 

 

	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ Mark E. Thompson
 	 
	 	 	Name:  	Mark E. Thompson 	 
	 	 	Title:  	Senior Vice President 	 
	 

[SIGNATURE PAGE TO AMD NO. 1 TO 2nd A&R CREDIT AGREEMENT]

 

 

	 	 	 	 	 
	 	WHITNEY NATIONAL BANK

 	 
	 	By:  	/s/ William Jochetz
 	 
	 	 	Name:  	William Jochetz 	 
	 	 	Title:  	Officer 	 
	 

[SIGNATURE PAGE TO AMD NO. 1 TO 2nd A&R CREDIT AGREEMENT]

 

 

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A.

 	 
	 	By:  	/s/ Jo Linda Papadakis
 	 
	 	 	Name:  	Jo Linda Papadakis 	 
	 	 	Title:  	Vice President 	 
	 

[SIGNATURE PAGE TO AMD NO. 1 TO 2nd A&R CREDIT AGREEMENT]

 

 

	 	 	 	 	 
	 	SUMITOMO MITSUI BANKING CORPORATION

 	 
	 	By:  	/s/ Masakazu Hasegawa
 	 
	 	 	Name:  	Masakazu Hasegawa 	 
	 	 	Title:  	General Manager 	 
	 

[SIGNATURE PAGE TO AMD NO. 1 TO 2nd A&R CREDIT AGREEMENT]exv10w1

EXHIBIT 10.1

THE MERIDIAN RESOURCE & EXPLORATION LLC

CHANGE IN CONTROL SEVERANCE PLAN

(As Adopted Effective December 15, 2008)

 

 

THE MERIDIAN RESOURCE & EXPLORATION LLC

CHANGE IN CONTROL SEVERANCE PLAN

(As Adopted Effective December 15, 2008)

     WHEREAS, The Meridian Resource & Exploration LLC, a limited liability company organized and
existing under the laws of the State of Delaware (“TMRX”), recognizes that one of its most valuable
assets is its employees and consultants;

     WHEREAS, TMRX would like to provide severance benefits in the event that the employment or
affiliation relationship of certain service providers is involuntarily terminated in conjunction
with a change in control; and

     WHEREAS, TMRX desires to establish The Meridian Resource Change in Control Severance Plan (the
“Plan”);

     NOW, THEREFORE, TMRX adopts this Agreement effective December 15, 2008.

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	ARTICLE I ESTABLISHMENT AND OBJECTIVE
	 	 	1	 
	 
	 	 	 	 
	1.1 Establishment
	 	 	1	 
	1.2 Objective
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	2.1 Capitalized Terms
	 	 	1	 
	2.2 Number and Gender
	 	 	8	 
	2.3 Headings
	 	 	8	 
	 
	 	 	 	 
	ARTICLE III ELIGIBILITY
	 	 	8	 
	 
	 	 	 	 
	ARTICLE IV BENEFITS
	 	 	9	 
	 
	 	 	 	 
	4.1 Equity Based Compensation
	 	 	9	 
	4.2 Benefits Following Termination of Employment or Affiliation Relationship
	 	 	9	 
	4.3 Legal Fees
	 	 	10	 
	 
	 	 	 	 
	ARTICLE V TIME OF BENEFITS PAYMENTS
	 	 	10	 
	 
	 	 	 	 
	ARTICLE VI TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE
	 	 	10	 
	 
	 	 	 	 
	6.1 Notice of Termination
	 	 	10	 
	6.2 Termination Date
	 	 	11	 
	6.3 Dispute Concerning Termination
	 	 	11	 
	 
	 	 	 	 
	ARTICLE VII WITHHOLDING
	 	 	11	 
	 
	 	 	 	 
	ARTICLE VIII DEATH OF PARTICIPANT
	 	 	12	 
	 
	 	 	 	 
	ARTICLE IX AMENDMENT AND TERMINATION
	 	 	12	 
	 
	 	 	 	 
	ARTICLE X ADOPTION OF PLAN BY AFFILIATES
	 	 	12	 
	 
	 	 	 	 
	ARTICLE XI MISCELLANEOUS
	 	 	12	 
	 
	 	 	 	 
	11.1 Plan Not an Employment Contract
	 	 	12	 
	11.2 Alienation Prohibited
	 	 	12	 
	11.3 Severability
	 	 	13	 
	11.4 Binding Effect
	 	 	13	 
	11.5 Other Amounts Due
	 	 	13	 
	11.6 Notices
	 	 	13	 
	11.7 Governing Law
	 	 	13	 

- i -

 

THE MERIDIAN RESOURCE & EXPLORATION LLC

CHANGE IN CONTROL SEVERANCE PLAN

ARTICLE I

ESTABLISHMENT AND OBJECTIVE

     1.1 Establishment. The Meridian Resource & Exploration LLC, a Delaware limited liability
company, hereby establishes a plan for certain employees and consultants to be known as the “The
Meridian Resource Change in Control Severance Plan” (the “Plan”).

     1.2 Objective. The Plan is designed to attract and retain certain designated employees and
consultants of the Company and the Affiliates (defined below) and to reward such employees and
consultants of the Company by providing replacement income and certain benefits in conjunction with
a Change in Control (defined below).

ARTICLE II

DEFINITIONS

     2.1 Capitalized Terms. Whenever used in the Plan, the following capitalized terms in this
Section 2.1 shall have the meanings set forth below:

     “Affiliate” means any entity which is a member of (i) the same controlled group of
corporations within the meaning of section 414(b) of the Code with TMRC or TMRX, (ii) a
trade or business (whether or not incorporated) which is under common control (within the
meaning of section 414(c) of the Code) with TMRC or TMRX or (iii) an affiliated service
group (within the meaning of section 414(m) of the Code) with TMRC or TMRX.

     “Annual Incentive Plan” means The Meridian Resource & Exploration LLC Annual Incentive
Compensation Plan, as amended from time to time.

     “Applicable Factor” means the applicable factor specified in the Participant’s Notice
of Participation not in excess of 1.5; 1.0; and .6 for a Level One Participant; a Level Two
Participant; and a Level Three Participant, respectively.

     “Applicable Period” the number of months specified in the Participant’s Notice of
Participation not in excess of 18; 12; and 6 for a Level One Participant; a Level Two
Participant; and a Level Three Participant, respectively.

     “Assets” means assets of any kind owned by TMRC or TMRX including but not limited to
securities of TMRX’s parent or direct and indirect subsidiaries and Affiliates.

     “Base Compensation” means a Participant’s base salary or wages from the Company (as
defined in section 3401(a) of the Code for purposes of federal income tax withholding) or
net earnings from self employment from the Company (as defined in section 1402(a) of the
Code) from the Company, modified by including any portion thereof that such Participant
could have received in cash in lieu of any elective deferrals made by the Participant
pursuant to a nonqualified deferred compensation arrangement or

1

 

pursuant to a qualified cash or deferred arrangement described in section 401(k) of the
Code and any elective contributions under a cafeteria plan described in section 125 of the
Code, and modified further by excluding any bonus, incentive compensation (including but not
limited to equity-based compensation), commissions, expense reimbursements or other expense
allowances, fringe benefits (cash and noncash), moving expenses, deferred compensation
(other than elective deferrals by the Participant under a qualified cash or deferred
arrangement described in section 401(k) of the Code or a nonqualified deferred compensation
arrangement that are expressly included in “Base Compensation” under the foregoing
provisions of this definition), welfare benefits as defined in ERISA, overtime pay, special
performance compensation amounts and severance compensation.

     “Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to those
terms in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

     “Board” means the Board of Directors of TMRX or other governing body of TMRX.

     “Cause” means (i) the willful and continued failure by the Participant to substantially
perform the Participant’s duties with the Company (other than any such failure resulting
from the Participant’s incapacity due to physical or mental illness) after a written demand
for substantial performance is delivered to the Participant by the Board (or by a delegate
appointed by the Board), which demand specifically identifies the manner in which the Board
believes that the Participant has not substantially performed the Participant’s duties, or
(ii) the willful engaging by the Participant in conduct which is demonstrably and materially
injurious to the Company or any of its Affiliates, monetarily or otherwise. For purposes of
Sections (i) and (ii) of this definition, (A) no act, or failure to act, on the
Participant’s part shall be deemed “willful” if done, or omitted to be done, by the
Participant in good faith and with reasonable belief that the act, or failure to act, was in
the best interest of the Company and (B) in the event of a dispute concerning the
application of this provision, no claim by the Company that Cause exists shall be given
effect unless the Company establishes to the Board by clear and convincing evidence that
Cause exists.

     “Change in Control” means the occurrence of any of the following events:

     (a) the consummation of a Merger of TMRC or an Affiliate of TMRC with another Entity,
unless the individuals and Entities who were the Beneficial Owners of the Voting Securities
of TMRC outstanding immediately prior to such Merger own, directly or indirectly, more than
70 percent of the combined voting power of the Voting Securities of any of TMRC, the
surviving Entity or the parent of the surviving Entity outstanding immediately after such
Merger;

     (b) any Person, other than a Specified Owner, becomes a Beneficial Owner, directly or
indirectly, of securities of TMRC representing 30 percent or more of the combined voting
power of TMRC’s then outstanding Voting Securities;

2

 

     (c) a sale, transfer, lease or other disposition of all or substantially all of TMRC or
TMRX’s Assets is consummated (an “Asset Sale”), unless:

     (1) the individuals and Entities who were the Beneficial Owners of the Voting
Securities of TMRC or TMRX immediately prior to such Asset Sale own, directly or
indirectly, more than 70 percent of the combined voting power of the Voting
Securities of the Entity that acquires such Assets in such Asset Sale or its parent
immediately after such Asset Sale in substantially the same proportions as their
ownership of TMRC or TMRX’s Voting Securities immediately prior to such Asset Sale;
or

     (2) the individuals who comprise the Board immediately prior to such Asset Sale
constitute a majority of the board of directors or other governing body of either
the Entity that acquired such Assets in such Asset Sale or its parent (or a majority
plus one member where such board or other governing body is comprised of an odd
number of directors); or

     (d) the individuals who are Incumbent Directors cease for any reason to constitute a
majority of the members of the Board of Directors of TMRC;

     (e) The stockholders of TMRC or TMRX approve a plan of complete liquidation or
dissolution of TMRC or TMRX.

     “Code” means the Internal Revenue Code of 1986, as amended, or any successor act.

     “Committee” means, prior to a Change in Control, Joseph Reeves and Michael Mayell.
After a Change in Control, “Committee” means such individuals as may be appointed by Joseph
Reeves and Michael Mayell; provided, however, that the maximum number of individuals
constituting the Committee after a Change in Control shall not exceed six (6).

     “Company” means TMRX or an Affiliate that adopts the Plan pursuant to the provisions of
Article X.

     “Disability” means the Participant’s incapacity due to physical or mental illness that
has caused the Participant to be absent from full-time performance of his duties with the
Company for a period of six (6) consecutive months.

     “Effective Date” means December 15, 2008, the date as of which the Plan is adopted.

     “Eligible Individual” means an employee of a Company who is not the Chief Executive
Officer or President and Chief Operating Officer of TMRC or TMRX or a director of TMRC.
“Eligible Individual” also means a consultant of the Company or an Affiliate who is not a
director of TMRC.

3

 

     “Entity” means any corporation, partnership, association, joint-stock company, limited
liability company, trust, unincorporated organization or other business entity.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, or any
successor act.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor
act.

     “Expiration Date” shall have the meaning specified in the definition of the “Term of
the Plan”.

     “Good Reason” for termination by the Participant of his employment or affiliation means
the occurrence (without the Participant’s express written consent) after any Change in
Control, of any one of the following acts by the Company, or failures by the Company to act,
unless, in the case of any act or failure to act described in paragraph (a) below, such act
or failure to act is corrected prior to the effective date of the Participant’s termination
for Good Reason:

     (a) the assignment to the Participant of any duties or responsibilities which are
substantially diminished as compared to the Participant’s duties and responsibilities
immediately prior to a Change in Control or a material change in the Participant’s reporting
responsibilities, titles or offices as an employee or consultant and as in effect
immediately prior to the Change in Control.

     (b) a reduction by the Company in the sum of the amount of the Participant’s annual
Base Compensation and the amount of the Participant’s target bonus opportunity under the
Annual Incentive Plan as in effect immediately prior to a Change in Control;

     (c) the relocation of the Participant’s principal place of employment or work location
to a location outside of a 30-mile radius from the Participant’s principal place of
employment immediately prior to the Change in Control or the Company’s requiring the
Participant to be based anywhere other than such principal place of employment or work
location (or permitted relocation thereof) except for required travel on the Company’s
business to an extent substantially consistent with the Participant’s business travel
obligations immediately prior to a Change in Control;

     (d) a material reduction in the employee benefits provided to the Participant
immediately prior to the Change in Control; or

     (e) any purported termination of the Participant’s employment or affiliation which is
not effected pursuant to a notice of termination satisfying the requirements of Section 6.1
hereof.

     The Participant’s right to terminate his employment or affiliation for Good Reason
shall not be affected by the Participant’s incapacity due to physical or mental illness.
The Participant’s continued employment or affiliation shall not constitute consent

4

 

to, or a waiver of any rights with respect to, any act or failure to act constituting
Good Reason hereunder.

     For purposes of any determination regarding the existence of Good Reason, any claim by
the Participant that Good Reason exists shall be presumed to be correct unless the Company
establishes to the Committee by clear and convincing evidence that Good Reason does not
exist. The Committee’s determination regarding the existence of Good Reason shall be
conclusive and binding upon all parties unless the Committee’s determination is arbitrary
and capricious.

     “Highest Base Compensation” means the Participant’s annualized Base Compensation in
effect immediately prior to (1) a Change in Control, (2) the first event or circumstance
constituting Good Reason, or (3) the Participant’s Termination of Employment or Affiliation
Relationship, whichever is greatest.

     “Incumbent Director” means —

     (a) a member of the Board of Directors of TMRC on the Effective Date; or

     (b) an individual-

     (1) who becomes a member of the Board of Directors of TMRC after the Effective
Date;

     (2) whose appointment or election by the Board of Directors of TMRC or
nomination for election by TMRC’s stockholders is approved or recommended by a vote
of at least two-thirds of the then serving Incumbent Directors (as defined herein);
and

     (3) whose initial assumption of service on the Board of Directors of TMRC is
not in connection with an actual or threatened election contest.

     “Level One Participant” means an Eligible Individual who is classified by the Committee
as a Level One Participant.

     “Level Two Participant” means an Eligible Individual who is classified by the Committee
as a Level Two Participant.

     “Level Three Participant” means an Eligible Individual who is classified by the
Committee as a Level Three Participant.

     “Merger” means a merger, consolidation or similar transaction.

     “Notice of Participation” has the meaning specified in Section 2.02.

     “Participant” means an individual who is eligible to participate in the Plan under the
provisions of Article III.

5

 

     “Person” shall have the meaning ascribed to the term in Section 3(a)(9) of the Exchange
Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section
13(d) thereof, except that the term shall not include (a) TMRC, TMRX, the Company or any of
their Affiliates, (b) a trustee or other fiduciary holding TMRC or TMRX securities under an
employee benefit plan of the Company or any of its Affiliates, (c) an underwriter
temporarily holding securities pursuant to an offering of those securities or (d) a
corporation owned, directly or indirectly, by the stockholders of TMRC or TMRX in
substantially the same proportions as their ownership of stock of the Company.

     “Plan” means The Meridian Resource & Exploration LLC Change in Control Severance Plan,
as it may be amended from time to time.

     “Renewal Date” shall have the meaning specified in the definition of the “Term of the
Plan.”

     “Section 409A” means section 409A of the Code and the Department of Treasury rules and
regulations issued thereunder.

     “Separation From Service” has the meaning ascribed to that term in Section 409A.

     “Specified Employee” means a person who is, as of the date of the person’s Separation
From Service, a “specified employee” within the meaning of Section 409A.

     “Specified Owner” means any of the following:

     (a) TMRC or an Affiliate of TMRC;

     (b) an employee benefit plan (or related trust) sponsored or maintained by TMRC or TMRX
or any Affiliate of TMRC or TMRX;

     (c) a Person that becomes a Beneficial Owner of TMRC’s or TMRX’s outstanding Voting
Securities representing 50 percent or more of the combined voting power of TMRC’s or TMRX’s
then outstanding Voting Securities as a result of the acquisition of securities directly
from TMRC and/or its Affiliates and/or Joseph Reeves and/or Michael Mayell;

     (d) Joseph Reeves or Michael Mayell; or

     (e) a Person that becomes a Beneficial Owner of TMRC’s or TMRX’s outstanding Voting
Securities representing 50 percent or more of the combined voting power of TMRC’s or TMRX’s
then outstanding Voting Securities as a result of a Merger if the individuals and Entities
who were the Beneficial Owners of the Voting Securities of TMRC or TMRX outstanding
immediately prior to such Merger own, directly or indirectly, more than 70 percent of the
combined voting power of the Voting Securities of any of TMRC or TMRX, the surviving Entity
or the parent of the surviving Entity outstanding immediately after such Merger in
substantially the same proportions as their

6

 

ownership of the Voting Securities of TMRC or TMRX outstanding immediately prior to
such Merger.

     “Term of the Plan” means the period commencing on the Effective Date and ending on:

     (a) the last day of the two-year period beginning on the Effective Date if no Change in
Control shall have occurred during that one-year period (such last day being the “Expiration
Date”); or

     (b) if a Change in Control shall have occurred during (i) the one-year period beginning
on the Effective Date or (ii) any period for which the Term of the Plan shall have been
automatically extended pursuant to the second sentence of this definition, the last day of
the two-year period beginning on the date on which the Change in Control occurred.

     After the expiration of the time period described in subsection (a) of this definition
and in the absence of a Change in Control (as described in subsection (b) of this
definition) the Term of the Plan shall be automatically extended for successive two-year
periods beginning on the day immediately following the Expiration Date (the beginning date
of each successive two-year period being a “Renewal Date”), unless, not later than nine
months prior to the Expiration Date or applicable Renewal Date, the Company shall give
notice to Participants that the Term of the Plan will not be extended.

     “Termination Date” means the date as of which a Participant incurs a Separation From
Service determined in accordance with the provisions of Section 6.2.

     “Termination of Employment or Affiliation Relationship” means the termination of an
individual’s employment or affiliation relationship with the Company (i) by the Company
without Cause after a Change in Control occurs, or (ii) by the individual for Good Reason
after a Change in Control occurs.

     For purposes of this definition, an individual’s employment or affiliation relationship
shall be deemed to have been terminated after a Change in Control, if (a) a Change in
Control occurs and (b) (i) the individual’s employment or affiliation relationship is
terminated by the Company without Cause prior to a Change in Control and such termination
was at the request or direction of a Person who has entered into an agreement with the
Company, the consummation of which would constitute a Change in Control; (ii) the individual
terminates his employment or affiliation relationship for Good Reason prior to a Change in
Control and the circumstance or event which constitutes Good Reason occurs at the request or
direction of a Person who has entered into an agreement with the Company, the consummation
of which would constitute a Change in Control; or (iii) the individual’s employment or
affiliation relationship is terminated by the Company without Cause or by the individual for
Good Reason and such termination or the circumstance or event which constitutes Good Reason
is otherwise in connection with or in anticipation of a Change in Control. For purposes of
any determination regarding the applicability of the immediately preceding sentence, any
position taken by

7

 

the Participant shall be presumed to be correct unless the Company establishes to the
Committee by clear and convincing evidence that such position is not correct.

     Termination of Employment or Affiliation Relationship does not include (i) a
termination of employment or affiliation due to the individual’s death or Disability, or
(ii) a termination of employment or affiliation by the individual without Good Reason.

     “TMRC” means The Meridian Resource Corporation, a Texas corporation, and any successor
by merger or otherwise.

     “TMRX” means The Meridian Resource & Exploration LLC, a Delaware limited liability
company , and any successor by merger or otherwise.

     “Voting Securities” means the outstanding securities entitled to vote generally in the
election of directors or other governing body.

     2.2 Number and Gender. As used in the Plan, unless the context otherwise expressly requires
to the contrary, references to the singular include the plural, and vice versa; references to the
masculine include the feminine and neuter; references to “including” mean “including (without
limitation)”; and references to Sections, Articles and clauses mean the sections and clauses of the
Plan.

     2.3 Headings. The headings of Sections and Articles herein are included solely for
convenience, and if there is any conflict between such headings and the text of the Plan, the text
shall control.

ARTICLE III

ELIGIBILITY

     The individuals who shall be eligible to participate in the Plan shall be those Eligible
Individuals who are selected by the Committee. The Committee shall notify an Eligible Individual
who has been selected for participation of his eligibility to participate in the Plan by furnishing
him a written notification of participation. Unless such notification (the “Notice of
Participation”) is delivered to an Eligible Individual by the Committee the Eligible Individual
shall not be a Participant. Unless a Participant signs and returns to the Committee a copy of the
Notice of Participation on or prior to the deadline specified in the Notice of Participation, he or
she shall not be eligible to receive payments or benefits under the Plan. The Notice of
Participation shall specify whether the Eligible Individual is classified by the Committee as a
Level One Participant, a Level Two Participant or a Level Three Participant. The Notice of
Participation shall also specify the Eligible Individual’s Applicable Factor and the Eligible
Individual’s Applicable Period.

     Notwithstanding any other provision of the Plan, the Committee may discontinue an individual’s
eligibility to participate in the Plan by providing him written advance notice (the “Notice”), no
later than 9 months prior to the Expiration Date or a Renewal Date (as defined in the definition of
“Term of the Plan” in Section 2.1), that he shall no longer participate in the Plan; provided,
however, that should a Change in Control occur during such 9-month advance

8

 

notification period, the Notice shall be void and of no effect, and the Participant shall be
eligible to participate in the Plan as if the Notice were never given.

ARTICLE IV

BENEFITS

     4.1 Equity Based Compensation. Upon the occurrence of a Change in Control, all options to
acquire TMRC stock, all shares of restricted TMRC stock, all other equity or phantom equity
incentives and any awards the value of which is determined by reference to or based upon the value
of TMRC stock, held by the Participant under any plan of the Company shall become immediately
vested, exercisable and nonforfeitable and all conditions thereof (including, but not limited to,
any required holding periods) shall be deemed to have been satisfied. However, in the case of such
an award that is subject to Section 409A, the payment of the award shall not be made earlier than
the earlier to occur of (1) the date on which occurs a Change in Control that constitutes a change
in the ownership or effective control of the corporation, or in the ownership of a substantial
portion of the assets of the corporation, within the meaning of Section 409A or (2) the payment
date specified in the applicable award agreement or the applicable terms and conditions relating to
the award.

     4.2 Benefits Following Termination of Employment or Affiliation Relationship. If a
Participant incurs a Termination of Employment or Affiliation Relationship during the Term of the
Plan, the Company shall provide the Participant the benefits described below.

     (a) Severance Payment. The Company will pay the Participant a cash
severance benefit in an amount equal to the Applicable Factor multiplied by the
Participant’s Highest Base Compensation.

     A Participant’s severance payment under this paragraph (a) will be paid in
accordance with the provisions of Article V.

     (b) Accident and Health Insurance Benefits. The Company shall arrange
to provide the Participant and his dependents continuation coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) for
accident and health insurance benefits substantially similar to those provided to
the Participant and his dependents by the Company immediately prior to the
Termination Date or, if more favorable to the Participant, those provided to the
Participant and his dependents immediately by the Company prior to the first
occurrence of an event or circumstance constituting Good Reason, at no cost to the
Participant, for the Applicable Period following the Participant’s Termination Date
(or such shorter period of time as is required under COBRA).

     Except for any reimbursements under the applicable group health plan that are
subject to a limitation on reimbursements during a specified period, the amount of
expenses eligible for reimbursement under this Section 4.2(b), or in-kind benefits
provided, during the Participant’s taxable year shall not affect the expenses
eligible for reimbursement, or in-kind benefits to be provided, in any other taxable
year of the Participant. Any reimbursement of an expense described

9

 

in this Section 4.2(b) shall be made on or before the last day of the
Participant’s taxable year following the Participants’ taxable year in which the
expense was incurred. The Participant’s right to reimbursement or in-kind benefits
pursuant to this Section 4.2(b) shall not be subject to liquidation or exchange for
another benefit.

     (c) Life Insurance. A Participant shall be entitled to a single sum
cash payment in an amount equivalent to the product of (i) the total monthly basic
life insurance premium (both the portion paid by the Company and the portion paid by
the Participant) applicable to the Participant’s basic life insurance coverage on
his Termination Date and (ii) the Applicable Period. The single sum cash payment
will be made in accordance with the provisions of Article V. If a conversion option
is applicable under the Company’s group life insurance program, a Participant may,
at his option, convert his basic life insurance coverage to an individual policy
after his Termination Date by completing the forms required by the Company.

     4.3 Legal Fees. The Company shall pay all legal fees and expenses incurred by the Participant
(i) in disputing in good faith any issue relating to the Participant’s termination of employment or
affiliation, or (ii) in seeking in good faith to obtain or enforce any benefit or right provided
under the Plan. Such payments shall be made within ten (10) business days after the delivery of
the Participant’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 Participant
such legal fees and expenses by the last day of the Participant’s taxable year following the
taxable year in which the Participant incurred such legal fees and expenses. The legal fees or
expenses that are subject to reimbursement pursuant to this Section 4.3 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 4.3 during a given taxable year of the
Participant shall not affect the amount of expenses eligible for reimbursement in any other taxable
year of the Participant. The right to reimbursement pursuant to this Section 4.3 is not subject to
liquidation or exchange for another benefit.

ARTICLE V

TIME OF BENEFITS PAYMENTS

     The Company shall pay the Participant any cash benefits described in paragraphs (a), (b), (c)
and (e) of Section 4.2 in a single sum cash payment within thirty (30) days after the Participant’s
Separation From Service if the Participant is not a Specified Employee or on the date that is six
months following the Participant’s Separation From Service if the Participant is a Specified
Employee.

ARTICLE VI

TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE

     6.1 Notice of Termination. After a Change in Control and during the Term of the Plan, any
purported termination of the Participant’s employment or affiliation relationship by the Company
shall be communicated by the Company by a written Notice of Termination to the

10

 

Participant in accordance with Section 11.7 hereof. For purposes of this Agreement, a “Notice
of Termination” shall mean a notice which shall indicate the specific termination provision in the
Plan relied upon and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Participant’s employment under the provision so indicated.
Further, a Notice of Termination for Cause is required to include a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of
the Board at a meeting of the Board which was called and held for the purpose of considering such
termination (after reasonable notice to the Participant and an opportunity for the Participant,
together with the Participant’s counsel, to be heard before the Board) finding that, in the good
faith opinion of the Board, the Participant was guilty of conduct set forth in clause (i) or (ii)
of the definition of Cause herein, and specifying the particulars thereof in detail. No purported
termination of the Participant’s employment by the Company after a Change in Control and during the
Term of the Plan shall be effective unless the Company complies with the procedures set forth in
this Section 6.1.

     6.2 Termination Date. “Termination Date,” with respect to any purported Separation From
Service after a Change in Control and during the Term of the Plan, shall mean (i) if the
Participant’s employment or affiliation relationship is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that the Participant shall not have returned to the
full-time performance of the Participant’s duties during such thirty (30) day period), and (ii) if
the Participant’s employment or affiliation relationship is terminated for any other reason, the
date specified in the Notice of Termination (which, in the case of a termination by the Company,
shall not be less than thirty (30) days (except in the case of a termination for Cause) and, in the
case of a termination by the Participant, shall not be less than fifteen (15) days nor more than
sixty (60) days, respectively, from the date such Notice of Termination is given).

     6.3 Dispute Concerning Termination. If within fifteen (15) days after any Notice of
Termination is given, or, if later, prior to the Termination Date (as determined without regard to
this Section 6.3), the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Termination Date shall be extended until the earlier
of (i) the date on which the Term of the Plan ends or (ii) the date on which the dispute is finally
resolved, either by mutual written agreement of the parties or by a final judgment, order or decree
of an arbitrator or a court of competent jurisdiction (which is not appealable or with respect to
which the time for appeal therefrom has expired and no appeal has been perfected); provided,
however, that the Termination Date shall be extended by a notice of dispute given by the
Participant only if such notice is given in good faith and the Participant pursues the resolution
of such dispute with reasonable diligence.

ARTICLE VII

WITHHOLDING

     The Company may withhold from any benefits paid under the Plan all income, employment, and
other taxes required to be withheld under applicable law.

11

 

ARTICLE VIII

DEATH OF PARTICIPANT

     If a Participant dies after his Termination Date but before the Participant receives full
payment of the benefits to which he is entitled, any unpaid benefits will be paid to the
Participant’s surviving spouse, or if the Participant does not have a surviving spouse, to the
Participant’s estate.

ARTICLE IX

AMENDMENT AND TERMINATION

     During the Term of the Plan, the Plan may not be terminated or amended in any manner that
would negatively affect a Participant’s rights under the Plan. Further, no amendment or
termination of the Plan after a Participant’s Termination Date shall affect the benefits payable to
such Participant. Subject to the foregoing restrictions, TMRX may amend or terminate the Plan by a
written instrument that is authorized by the Committee.

ARTICLE X

ADOPTION OF PLAN BY AFFILIATES

     (a) With the written approval of the Committee, any entity that is an Affiliate may
adopt the Plan by appropriate action of its board of directors or noncorporate counterpart,
as evidenced by a written instrument executed by an authorized officer of such entity or an
executed adoption agreement (approved by the board of directors or noncorporate counterpart
of the Affiliate), agreeing to be bound by all the terms, conditions and limitations of the
Plan and providing all information required by the Committee.

     (b) The provisions of the Plan shall apply separately and equally to each adopting
Affiliate in the same manner as is expressly provided for the Company, except that the power
to appoint the Committee and the power to amend or terminate the Plan shall be exercised by
TMRX.

     (c) For purposes of the Code and ERISA, the Plan as adopted by the Affiliates shall
constitute a single plan rather than a separate plan of each Affiliate.

ARTICLE XI

MISCELLANEOUS

     11.1 Plan Not an Employment Contract. The adoption and maintenance of the Plan is not a
contract between the Company and its employees and consultants that gives any employee or
consultant the right to be retained in its employment or service. Likewise, it is not intended to
interfere with the rights of the Company to terminate an employee’s or consultant’s employment or
affiliation at any time with or without notice and with or without cause or to interfere with an
employee’s or consultant’s right to terminate his employment at any time.

     11.2 Alienation Prohibited. No benefits hereunder shall be subject to anticipation or
assignment by a Participant, to attachment by, interference with, or control of any creditor of a

12

 

Participant, or to being taken or reached by any legal or equitable process in satisfaction of
any debt or liability of a Participant prior to its actual receipt by the Participant. Any
attempted conveyance, transfer, assignment, mortgage, pledge, or encumbrance of the benefits
hereunder prior to payment thereof shall be void.

     11.3 Severability. Each provision of the Plan may be severed. If any provision is determined
to be invalid or unenforceable, that determination shall not affect the validity or enforceability
of any other provision.

     11.4 Binding Effect. The Plan shall be binding upon any successor of the Company. Further,
the Board shall not authorize a Change in Control that is a merger or a sale transaction unless the
purchaser or the Company’s successor agrees to take such actions as are necessary to cause all
Participants to be paid or provided all benefits due under the terms of the Plan as in effect
immediately prior to the Change in Control.

     11.5 Other Amounts Due. Except as expressly provided otherwise herein, the payments and
benefits provided for in the Plan are in addition to and not in lieu of amounts and benefits that
are earned by a Participant prior to his Termination Date. The Company shall pay a Participant any
compensation earned through the Termination Date but not previously paid the Participant. Further
the Participant shall be entitled to any other amounts or benefits due the Participant in
accordance with any contract, plan, program or policy of the Company or any of its Affiliates.
Amounts that the Participant is entitled to receive under any plan, program, contract or policy of
the Company or any of its Affiliates at or subsequent to the Participant’s Termination Date shall
be payable or otherwise provided in accordance with such plan, program, contract or policy, except
as expressly modified herein.

     11.6 Notices. For the purpose of the Plan, notices and all other communications provided for
in the Plan shall be in writing and shall be deemed to have been duly given when delivered or
mailed by United States registered mail, return receipt requested, postage prepaid, addressed, if
to the Participant, to the residential address listed on the Participant’s notification of
participation and, if to the Company, to 1401 Enclave Parkway, Suite 300; Houston, Texas 77077;
Attention: General Counsel, or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of change of address shall be effective
only upon actual receipt.

     11.7 Governing Law. All provisions of the Plan shall be construed in accordance with the laws
of the State of Texas, except to the extent preempted by federal law and except to the extent that
the conflicts of laws provisions of the State of Texas would require the application of the
relevant law of another jurisdiction, in which event the relevant law of the State of Texas will
nonetheless apply, with venue for litigation being in Houston, Texas.

13

 

     IN WITNESS WHEREOF, TMRX has caused this instrument to be executed by its duly authorized
officer this 23rd day of December, 2008, effective as of December 15, 2008.

THE MERIDIAN RESOURCE & EXPLORATION LLC

By:
/s/ JOSEPH A. REEVES, JR.                                        

Title: CHIEF EXECUTIVE OFFICER

14

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