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 18 th day of August,
1993 (the “ Employment Agreement ”), (ii)
Agreement wherein the Company granted the Executive certain net
profits interests in Company properties dated the 27 th day of June,
1995 (the “ NPI Agreement ”), and (iii)
Restricted Stock Grant and Executive Deferred Compensation
Agreement dated as of the 31 st 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:
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,
