This Employment
Agreement (the “Agreement”) by and between The Meridian
Resource Corporation, a Texas corporation (the
“Company”), and Paul D. Ching (the
“Executive”) is made and entered into as of the
Effective Date set forth in Section 1.3 below.
A. The
Company desires to employ Executive in the capacity as President
and Chief Executive Officer; and
B. The
Executive desires employment as an employee of the Company pursuant
to the provisions of this Agreement.
The terms of
employment are as follows:
1.1 EMPLOYMENT.
The Company hereby employs the Executive for and during the term of
this Agreement in the position of President and Chief Executive
Officer. The Executive hereby accepts employment under the terms
and conditions set forth in this Agreement.
1.2 DUTIES OF
EXECUTIVE. The Executive shall perform in the capacity of President
and Chief Executive Officer and shall have such duties,
responsibilities, and authorities as may be designated for such
office. The Executive agrees to devote the Executive’s best
efforts, abilities, knowledge, experience and full business time to
the faithful performance of the duties, responsibilities and
authorities that may be assigned to the Executive by the Board of
Directors of the Company. The Executive may not engage, directly or
indirectly, in any other business, investment or activity that
interferes with the Executive’s performance of the
Executive’s duties hereunder or is contrary to the interests
of the Company. The Executive shall at all times comply with and be
subject to such policies and procedures as the Company may
establish from time to time and are customary within the
Company’s industry. The Executive acknowledges and agrees
that the Executive owes a fiduciary duty of loyalty, fidelity and
allegiance to act at all times in the best interests of the Company
and to do no act that would injure the Company’s business,
its interests or its reputation. The foregoing shall not be
construed to prevent the Executive from making passive investments
in other businesses or enterprises, provided such investments do
not require services on the part of the Executive.
1.3 TERM. This
Agreement shall become effective as of December 30, 2008 (the
“Effective Date”) and shall continue in force and
effect until June 30, 2009 unless sooner terminated as
provided in Section 2.1 hereof. This Agreement may only be
renewed or extended by written agreement executed by the Company
and the Executive pursuant to mutually acceptable terms and
conditions.
1.4 COMPENSATION.
The Company shall pay the Executive, as “Compensation”
for services rendered by the Executive under this Agreement the
following:
(a) SALARY:
A base salary of $41,667 per month, prorated for any partial period
of employment (“Salary”). Such Salary shall be paid in
installments in accordance with the Company’s regular payroll
practices.
(b) BONUS:
A bonus at the sole discretion of the Board of Directors of the
Company in an amount up to the equivalent of the Salary earned
during the Executive’s tenure as President and Chief
Executive Officer of the Company.
(c) STOCK
OPTIONS: Options to purchase an aggregate of 250,000 shares of the
Company’s common stock at an exercise price equal to the
closing market price of the Company’s common stock on the New
York Stock Exchange on January 2, 2009. Such options shall be
subject to the terms and conditions of the Company’s 2007
Long Term Incentive Plan (the “Plan”) and a Stock
Option Agreement in the form attached hereto as
Exhibit A , which the Company and the Executive are
entering into concurrently with the execution of this
Agreement.
1.5 NO EMPLOYMENT
BENEFITS. Except as set forth in this Agreement, the Executive
shall not be entitled to participate in any of the Company’s
employee benefit plans.
1.6 WORKING
FACILITIES. During the term of this Agreement, the Company shall
provide, at its expense, office space, furniture, equipment,
supplies and personnel as shall be adequate for the
Executive’s use in performing the Executive’s duties
and responsibilities under this Agreement.
1.7 EXPENSES. The
Company shall promptly reimburse the Executive for all reasonable
business expenses incurred during the term of this Agreement by the
Executive in performing services hereunder, including all
reasonable expenses of travel and living expenses while away from
home on business or at the request of and in the service of the
Company; provided, in each case, that such expenses are incurred
and accounted for in accordance with the policies and procedures
established by the Company applicable to its professional and other
employees.
2.1 TERMINATION.
Notwithstanding anything herein to the contrary, this Agreement and
the Executive’s employment hereunder may be terminated
without any breach of this Agreement at any time during the term
hereof by reason of and in accordance with the following
provisions:
(a) DEATH.
If the Executive dies during the term of this Agreement and while
in the employ of the Company, this Agreement shall automatically
terminate as of the date of the Executive’s death, and the
Company shall have no further liability hereunder to the Executive
or the Executive’s estate, except to the extent set forth in
Section 2.2(a) hereof.
(b) DISABILITY.
If, during the term of this Agreement, the Executive shall be
prevented from performing the Executive’s duties hereunder,
for a period of not less than 20 consecutive days or an aggregate
of 40 days during the term of this Agreement by reason of
becoming disabled as hereinafter defined, the Company may terminate
this Agreement immediately upon written notice to the Executive
without any further liability hereunder to the
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Executive,
except as set forth in Section 2.2(b) hereof. For purposes of
this Agreement, the Executive shall be deemed to have a
“Disability” when the Board of Directors of the
Company, upon the written report of a qualified physician
reasonably acceptable to the Board of Directors of the Company,
shall have determined that the Executive has become mentally,
physically and/or emotionally incapable of performing the
Executive’s duties and services under this
Agreement.
(c) TERMINATION
BY THE COMPANY FOR CAUSE. Prior to the expiration of the term of
this Agreement, the Company may discharge the Executive for cause
and terminate this Agreement immediately upon written notice to the
Executive without any further liability hereunder to the Executive,
except to the extent set forth in Section 2.2(c) hereof. For
purposes of this Agreement, a “discharge for cause”
shall mean termination of the Executive upon written notice to the
Executive limited, however, to one or more of the following
reasons:
(i) Conviction
of the Executive by a court of competent jurisdiction of a felony
or a crime involving moral turpitude;
(ii) The
Executive’s engaging in conduct amounting to fraud,
dishonesty, gross negligence, willful misconduct or conduct that is
unprofessional, unethical or detrimental to the reputation,
character or standing of the Company; or
(iii) The
Executive’s failure to faithfully and diligently perform the
duties required hereunder or to comply with the provisions of this
Agreement.
Prior to
terminating this Agreement pursuant to Section 2.1(c)(iii),
the Company shall furnish the Executive written notice of the
Executive’s alleged failure to abide by or alleged breach of
this Agreement. The Executive shall have thirty (30) days
after the Executive’s receipt of such notice to cure such
failure to abide or breach and the Company’s Board of
Directors, in its sole discretion, shall determine if the failure
to abide or breach is cured.
(d) TERMINATION
BY THE COMPANY WITH NOTICE. The Company may terminate this
Agreement at any time, for any reason, other than as set forth in
subparagraphs (a), (b) or (c) of this Section 2.1,
with or without cause, in the Company’s sole discretion,
immediately upon written notice to the Executive without any
further liability hereunder to the Executive, except to the extent
set forth in Section 2.2(d) hereof.
(e) TERMINATION
BY THE EXECUTIVE FOR GOOD REASON. The Executive may terminate this
Agreement at any time for Good Reason (as hereinafter defined) in
which event the Company shall have no further liability hereunder
to the Executive, except to the extent set forth in
Section 2.2(e) hereof. For purposes of this Agreement, the
term “Good Reason” shall mean, without the
Executive’s express written consent, the occurrence of any of
the following circumstances:
(i) The
Company’s failure to pay the Executive the Compensation
pursuant to the terms of this Agreement, which failure has not been
cured within 30 days after notice of such noncompliance has
been given by the Executive to the Company; or
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(ii) Any
failure by the Company to comply with any material provision of
this Agreement, which failure has not been cured within
30 days after notice of such noncompliance has been given by
the Executive to the Board of Directors of the Company. The
Executive shall make a good faith determination whether the failure
has been cured and shall so notify the Board of Directors of the
Company within five days after the expiration of such 30 day
period.
(f) TERMINATION
BY THE EXECUTIVE WITH NOTICE. The Executive may terminate this
Agreement 15 days in advance for any reason, in the
Executive’s sole discretion other than Good Reason, by giving
the Company 15 days prior written notice, in which event the
Company shall have no further liability hereunder to the Executive,
except to the extent set forth in Section 2.2(f)
hereof.
2.2 COMPENSATION
UPON TERMINATION.
(a) DEATH.
In the event the Executive’s employment hereunder is
terminated pursuant to the provisions of Section 2.1(a) hereof
due to the death of the Executive, the Company shall have no
further obligation to the Executive or the Executive’s
estate, except to pay to the Executive’s spouse, or if none,
to the estate of the Executive any Salary that has accrued as of
the date of death, but was then unpaid. Any amount due the
Executive under this Section 2.2(a) shall be paid in a lump
sum in cash within 30 days after the death of the
Executive.
(b) DISABILITY.
In the event the Executive’s employment hereunder is
terminated pursuant to the provisions of Section 2.1(b) hereof
due to Disability of the Executive, the Company shall be relieved
of all of its obligations under this Agreement, except to pay the
Executive any Salary that has accrued as of the date on which such
Disability is determined, but was then unpaid. Any amount due the
Executive under this Section 2.2(b) shall be paid in a lump
sum in cash within 30 days after the termination of the
Executive’s employment under Section 2.1(b).
(c) TERMINATION
BY THE COMPANY FOR CAUSE. In the event the Executive’s
employment hereunder is terminated by the Company for cause
pursuant to the provisions of Section 2.1(c) hereof, the
Company shall have no further obligation to the Executive under
this Agreement except to pay the Executive any Salary that has
accrued as of the date of such termination, but was then unpaid.
Any amount due the Executive under this Section 2.2(c) shall
be paid in a lump sum in cash within 60 days after the termination
of the Executive’s employment under
Section 2.1(c).
(d) TERMINATION
BY THE COMPANY WITH NOTICE. In the event the Executive’s
employment hereunder is terminated by the Company pursuant to the
provisions of Section 2.1(d) hereof
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