exv10w1






Exhibit 10.1




THE MERIDIAN RESOURCE & EXPLORATION LLC

RETENTION INCENTIVE COMPENSATION PLAN




(As Adopted Effective July 3, 2008)




 









 





THE MERIDIAN RESOURCE & EXPLORATION LLC

RETENTION INCENTIVE COMPENSATION PLAN




(As Adopted Effective July 3, 2008)




WITNESSETH:




     WHEREAS, The Meridian Resource & Exploration LLC, a limited liability company organized and
existing under the laws of the State of Delaware (the “Sponsor”), desires to establish The Meridian
Resource & Exploration LLC Retention Incentive Compensation Plan (the “Plan”) for the benefit of
certain employees and consultants of the Sponsor and affiliates of the Sponsor; and



     WHEREAS, the Plan intended to be a bonus program exempt from coverage under the Employee
Retirement Income Security Act of 1974, as amended, pursuant to Department of Labor regulation
section 2510.3-2(c);



     NOW THEREFORE, the Sponsor hereby adopts the Plan effective July 1, 2008, as follows.



 









 





THE MERIDIAN RESOURCE & EXPLORATION LLC

RETENTION INCENTIVE COMPENSATION PLAN




TABLE OF CONTENTS



	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	ARTICLE I DEFINITIONS AND CONSTRUCTION	 	 	 	 
	1.01

	 	Definitions
	 	 	1	 
	1.02

	 	Number and Gender
	 	 	2	 
	1.03

	 	Headings
	 	 	2	 
	 
	 	 	 	 	 	 
	ARTICLE II PARTICIPATION	 	 	 	 
	2.01

	 	Eligibility
	 	 	2	 
	2.02

	 	Participation
	 	 	3	 
	 
	 	 	 	 	 	 
	ARTICLE III RETENTION INCENTIVE OPPORTUNITIES	 	 	 	 
	 
	 	 	 	 	 	 
	ARTICLE IV PAYMENT OF BENEFITS	 	 	 	 
	4.01

	 	Time of Payment of Retention Incentives
	 	 	3	 
	4.02

	 	Form of Payment of Benefits
	 	 	3	 
	4.03

	 	Payment to Alternate Payee Under Domestic Relations Order
	 	 	3	 
	 
	 	 	 	 	 	 
	ARTICLE V FORFEITURE OF BENEFITS	 	 	 	 
	 
	 	 	 	 	 	 
	ARTICLE VI ADMINISTRATION OF THE PLAN	 	 	 	 
	6.01

	 	Resignation and Removal
	 	 	4	 
	6.02

	 	Records and Procedures
	 	 	4	 
	6.03

	 	Compensation and Bonding
	 	 	4	 
	6.04

	 	Committee Powers and Duties
	 	 	4	 
	6.05

	 	Reliance Upon Documents, Instruments, etc.
	 	 	5	 
	6.06

	 	Claims Review Procedures; Claims Appeals Procedures
	 	 	5	 
	6.07

	 	Company to Supply Information
	 	 	6	 
	6.08

	 	Indemnity
	 	 	6	 
	 
	 	 	 	 	 	 
	ARTICLE VII PARTICIPATION IN THE PLAN BY AFFILIATES	 	 	 	 
	7.01

	 	Adoption Procedure
	 	 	7	 
	7.02

	 	No Joint Venture Implied
	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE VIII MISCELLANEOUS	 	 	 	 
	8.01

	 	Plan Not Contract of Employment
	 	 	8	 
	8.02

	 	Funding
	 	 	8	 
	8.03

	 	Alienation of Interest Forbidden
	 	 	8	 






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TABLE OF CONTENTS

(continued)




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	8.04

	 	Withholding
	 	 	8	 
	8.05

	 	Amendment
	 	 	8	 
	8.06

	 	Severability
	 	 	8	 
	8.07

	 	Arbitration
	 	 	8	 
	8.08

	 	Governing Law
	 	 	9	 







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THE MERIDIAN RESOURCE & EXPLORATION LLC

RETENTION INCENTIVE COMPENSATION PLAN




ARTICLE I

DEFINITIONS AND CONSTRUCTION




     1.01 Definitions. The words and phrases defined in this Article shall have the meaning set
out in the definitions below unless the context in which the word or phrase appears reasonably
requires a broader, narrower or different meaning. These definitions shall apply solely for
purposes of this Plan.



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



     “Base Compensation” means a Participant’s annualized base salary or wages from the Company
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) for the 2008 calendar year (determined as of July 1, 2008), modified by including any
portion thereof that such Participant could have received in cash in lieu of (a) Participant
deferrals pursuant to any nonqualified deferred compensation plan or (b) elective contributions
made on his behalf by the Company 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, and modified further by excluding any bonus; incentive compensation; commissions;
expense reimbursements or other expense allowances; fringe benefits (cash and noncash); moving
expenses; deferred compensation (other than (a) Participant deferrals pursuant to any nonqualified
deferred compensation arrangement or (b) elective contributions to the Company’s qualified cash or
deferred arrangement described in section 401(k) of the Code); welfare benefits as defined in the
Employee Retirement Income Security Act of 1974, as amended; overtime pay; special performance
compensation amounts; supplemental wage payments; and severance compensation.



     “Board” means the Board of Directors of TMRX.



     “Change in Control Transaction” means a change in the ownership of the Common Stock of TMRX or
a sale of substantially all of the assets of TMRX that, in either case, qualifies as a “change in
control event” within the meaning of Department of Treasury Regulation section 1.409A-3(i)(5).



     “Code” means the Internal Revenue Code of 1986, as amended from time to time.



     “Committee” means the Executive Officers of TMRX.



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     “Company” means the Sponsor and any Affiliate that adopts the Plan pursuant to the provisions
of Article VII.



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



     “First Payment Date” has the meaning ascribed to that term in Section 4.01.



     “First Retention Incentive” has the meaning specified in Article III.



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



     “Participant” means an Eligible Individual who has been selected to participate in the Plan
pursuant to Section 2.02.



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



     “Second Payment Date” has the meaning ascribed to that term in Section 4.01.



     “Second Retention Incentive” has the meaning specified in Article III.



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



     “Separation From Service” has the meaning specified in Section 409A.



     “Sponsor” means The Meridian Resource & Exploration LLC, a Delaware limited liability company.



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



     1.02 Number and Gender. Wherever appropriate herein, words used in the singular shall be
considered to include the plural and words used in the plural shall be considered to include the
singular. The masculine gender, where appearing in the Plan, shall be deemed to include the
feminine gender.



     1.03 Headings. The headings of Articles and Sections 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 II

PARTICIPATION




     2.01 Eligibility. Eligibility for participation in the Plan shall be limited to Eligible
Individuals.



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     2.02 Participation. Participation in the Plan shall be determined by the Committee. Each
individual approved for participation in the Plan shall be notified in writing of his or her
selection. 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 prior to the
First Payment Date, he or she shall not be eligible to receive payments under the Plan.



ARTICLE III

RETENTION INCENTIVE OPPORTUNITIES




     Subject to Article V, the Company shall pay to the Participant an amount equal to 16.6 percent
of the Participant’s Base Compensation (the “First Retention Incentive”). The Participant shall
not earn the First Retention Incentive unless he or she is employed by the Company on the First
Payment Date and has signed and returned to the Committee a copy of his or her Notice of
Participation prior to the First Payment Date. As an inducement for the Participant to remain in
the employ of the Company until the Second Payment Date, subject to Article V, the Company shall
pay to the Participant an amount equal to 33.4 percent of the Participant’s Base Compensation (the
“Second Retention Incentive”). The Participant shall not earn the Second Retention Incentive
unless he is employed by the Company on the Second Payment Date.



ARTICLE IV

PAYMENT OF BENEFITS




     4.01 Time of Payment of Retention Incentives. The Company shall pay to the Participant his
First Retention Incentive, to the extent not forfeited pursuant to Article V, on July 3, 2008 (the
“First Payment Date”). The Company shall pay to the Participant his Second Retention Incentive, to
the extent not forfeited pursuant to Article V, on the earlier to occur of (1) March 31, 2009, or
(2) the date of the closing of a Change in Control Transaction (the “Second Payment Date”).



     4.02 Form of Payment of Benefits. All benefit payments shall be made in cash.



     4.03 Payment to Alternate Payee Under Domestic Relations Order. Plan benefits that are
awarded to an alternate payee in a domestic relations order shall be paid to the alternate payee at
the time and in the form directed in the domestic relations order. A domestic relations order may
not provide for a time or form of payment that is not permitted under the Plan. A domestic
relations order will be disregarded to the extent it awards an alternate payee any benefits in
excess of the applicable Participant’s vested retention incentive under the Plan.



ARTICLE V

FORFEITURE OF BENEFITS




     If the Participant incurs a Separation From Service for any reason before the First Payment
Date, he shall forfeit his First Retention Incentive. If the Participant incurs a Separation From
Service for any reason before the Second Payment Date, he shall forfeit his Second Retention
Incentive.



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ARTICLE VI

ADMINISTRATION OF THE PLAN




     6.01 Resignation and Removal. The members of the Committee serving as the Committee shall
serve at the pleasure of the Board. At any time during his term of office, any member of the
Committee may resign by giving written notice to the Board, such resignation to become effective
upon the appointment of a substitute or, if earlier, the lapse of thirty days after such notice is
given as herein provided. At any time during its term of office, and for any reason, any member of
the Committee may be removed by the Board.



     6.02 Records and Procedures. The Committee shall keep appropriate records of its proceedings
and the administration of the Plan and shall make available for examination during business hours
to any Participant, such records as pertain to that individual’s interest in the Plan.



     6.03 Compensation and Bonding. The members of the Committee shall receive no compensation
with respect to their services on the Committee. To the extent permitted by applicable law, the
members of the Committee shall not furnish bond or security for the performance of their duties
hereunder.



     6.04 Committee Powers and Duties. The Committee shall supervise the administration and
enforcement of the Plan according to the terms and provisions hereof and shall have all powers
necessary to accomplish these purposes, including, but not limited to, the right, power, and
authority:




     (a) to make rules, regulations, and bylaws for the administration of the Plan that are
not inconsistent with the terms and provisions hereof, and to enforce the terms of the Plan
and the rules and regulations promulgated thereunder by the Committee;




     (b) to construe in its discretion all terms, provisions, conditions, and limitations of
the Plan;




     (c) to correct any defect or to supply any omission or to reconcile any inconsistency
that may appear in the Plan in such manner and to such extent as it shall deem in its
discretion expedient to effectuate the purposes of the Plan;




     (d) to employ and compensate such accountants, attorneys, investment advisors, and
other agents, employees, and independent contractors as the Committee may deem necessary or
advisable for the proper and efficient administration of the Plan;




     (e) to determine in its discretion all questions relating to eligibility;




     (f) to determine whether and when a Participant has incurred a Separation From Service;
and




     (g) to make a determination in its discretion as to the right of any individual to a
benefit under the Plan and to prescribe procedures to be followed by distributees in
obtaining benefits hereunder.



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     6.05 Reliance Upon Documents, Instruments, etc. The Committee may rely upon any certificate,
statement or other representation made on behalf of the Company or any Participant, which the
Committee in good faith believes to be genuine, and on any certificate, statement, report or other
representation made to it by any agent or any attorney, accountant or other expert retained by it
or the Company in connection with the operation and administration of the Plan.



     6.06 Claims Review Procedures; Claims Appeals Procedures.




     (a) Claims Review Procedures. When a benefit is due, the Participant, or the
person entitled to benefits under the Plan, should submit a claim to the office designated
by the Committee to receive claims. Under normal circumstances, the Committee will make a
final decision as to a claim within 90 days after receipt of the claim. If the Committee
notifies the claimant in writing during the initial 90-day period, it may extend the period
up to 180 days after the initial receipt of the claim. The written notice must contain the
circumstances necessitating the extension and the anticipated date for the final decision.
If a claim is denied during the claims period, the Committee must notify the claimant in
writing, and the written notice must set forth in a manner calculated to be understood by
the claimant:




(1) the specific reason or reasons for the denial;




(2) specific reference to the Plan provisions on which the denial is based; and




(3) a description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such material or information
is necessary.


If a decision is not given to the Participant within the claims review period, the claim is treated
as if it were denied on the last day of the claims review period.





     (b) Claims Appeals Procedures. For purposes of this Section 6.06, the
Participant or the person entitled to benefits under the Plan is referred to as the
“claimant.” If a claimant’s claim made pursuant to Section 6.06(a) is denied and he wants a
review, he must apply to the Committee in writing. The written application can include any
arguments, written comments, documents, records, and other information relating to the claim
for benefits. In addition, the claimant is entitled to receive upon request and free of
charge reasonable access to and copies of all information relevant to the claim. For this
purpose, “relevant” means information that was relied upon in making the benefit
determination or that was submitted, considered or generated in the course of making the
determination, without regard to whether it was relied upon in making the benefit
determination, and information that demonstrates compliance with the Plan’s administrative
procedures and safeguards for assuring and verifying that Plan provisions are applied
consistently when making benefit determinations. The Committee must take into account all
comments, documents, records, and other information submitted by the claimant relating to
the claim, without regard to whether the information was submitted or considered in the
initial benefit determination. The claimant may either represent



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himself or appoint a representative, either of whom has the right to inspect all
documents pertaining to the claim and its denial. The Committee can schedule any meeting
with the claimant or his representative that it finds necessary or appropriate to complete
its review.




     The request for review must be filed within 90 days after the denial. If it is not, the
denial becomes final. If a timely request is made, the Committee must make its decision,
under normal circumstances, within 60 days of the receipt of the request for review.
However, if the Committee determines that special circumstances require an extension of time
for processing is required, the Committee may extend the review up to 120 days following the
initial receipt of the request for a review. The Committee shall furnish written notice of
the extension to the claimant prior to the termination of the initial 60-day period. The
extension notice shall indicate the special circumstances requiring an extension of time and
the date by which the plan expects to render the determination on review.




     All decisions of the Committee must be in writing and must include the specific reasons
for its action, the Plan provisions on which its decision is based, and a statement that the
claimant is entitled to receive, upon request and free of charge, reasonable access to, and
copies of, all documents, records, and other information relevant to the claimant’s claim
for benefits. If a decision is not given to the claimant within the review period, the
claim is treated as if it were denied on the last day of the review period.



     6.07 Company to Supply Information. The Company shall supply full and timely information to
the Committee, including, but not limited to, information relating to each Participant’s Base
Compensation and Separation From Service, and such other pertinent facts as the Committee may
require. When making a determination in connection with the Plan, the Committee shall be entitled
to rely upon the aforesaid information furnished by the Company.



     6.08 Indemnity. To the extent permitted by applicable law, the Company shall indemnify and
save harmless the Board, each member of the Committee, each delegate of the Committee or the Board
and the Committee against any and all expenses, liabilities and claims (including legal fees
incurred to investigate or defend against such liabilities and claims) arising out of their
discharge in good faith of responsibilities under or incident to the Plan. Expenses and
liabilities arising out of willful misconduct shall not be covered under this indemnity. This
indemnity shall not preclude such further indemnities as may be available under insurance purchased
by the Company or provided by the Company under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, as such indemnities are permitted under applicable law.



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ARTICLE VII

PARTICIPATION IN THE PLAN BY AFFILIATES




     7.01 Adoption Procedure.




     (a) Except to the extent that an Affiliate specifically determines otherwise by
appropriate action of its board of directors or noncorporate counterpart, as evidenced by a
written instrument executed by an authorized officer of such an entity (approved by the
board of directors or noncorporate counterpart of the Affiliate), each Affiliate shall
participate in the Plan and shall be bound by all the terms, conditions and limitations of
the Plan. The Committee and the Affiliate may agree to incorporate specific provisions
relating to the operation of the Plan that apply to the Affiliate.




     (b) The provisions of the Plan may be modified so as to increase the obligations of an
adopting Affiliate only with the consent of such Affiliate; such consent shall be
conclusively presumed to be given by such Affiliate unless the Affiliate gives the Sponsor
written notice of its rejection of the amendment within 30 days of the adoption of the
amendment.




     (c) The provisions of the Plan shall apply separately and equally to each adopting
Affiliate and its employees in the same manner as is expressly provided for the Sponsor and
its employees, except that the power to appoint or otherwise affect the Committee and the
power to amend or terminate the Plan shall be exercised by the Sponsor. The Committee shall
act as the agent for each Affiliate that adopts the Plan for all purposes of administration
thereof.




     (d) Any Affiliate may, by appropriate action of its board of directors or noncorporate
counterpart, terminate its participation in the Plan. Moreover, the Committee may, in its
discretion, terminate an Affiliate’s participation in the Plan at any time.




     (e) The Plan will terminate with respect to any Affiliate if the Affiliate ceases to be
an Affiliate or revokes its adoption of the Plan by resolution of its board of directors or
noncorporate counterpart evidenced by a written instrument executed by an authorized officer
of the Affiliate. If the Plan terminates with respect to any Affiliate, the employees of
that Affiliate will no longer be eligible to be Participants in the Plan.




     (f) The Plan, as maintained by the Affiliates, shall constitute a single plan rather
than a separate plan for each Affiliate.



     7.02 No Joint Venture Implied. The document which evidences the adoption of the Plan by an
Affiliate shall become a part of the Plan. However, neither the adoption of the Plan by an
Affiliate nor any act performed by it in relation to the Plan shall ever create a joint venture or
partnership relationship between it and any other Affiliate.



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ARTICLE VIII

MISCELLANEOUS




     8.01 Plan Not Contract of Employment. The adoption and maintenance of the Plan shall not be
deemed to be a contract between the Company and any individual or to be consideration for the
employment of any individual. Nothing herein contained shall be deemed to (a) give any individual
the right to be retained in the employ of the Company, (b) restrict the right of the Company to
discharge any individual at any time, (c) give the Company the right to require any individual to
remain in the employ of the Company, or (d) restrict any individual’s right to terminate his
employment at any time.



     8.02 Funding. Plan benefits are a contractual obligation of the Company which shall be paid
out of the Company’s general assets. The Plan is unfunded and Participants are merely unsecured
creditors of the Company with respect to their benefits under the Plan.



     8.03 Alienation of Interest Forbidden. The interest of a Participant hereunder may not be
sold, transferred, assigned, or encumbered in any manner, either voluntarily or involuntarily, and
any attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the
same shall be null and void; neither shall the benefits hereunder be liable for or subject to the
debts, contracts, liabilities, engagements or torts of any individual to whom such benefits or
funds are payable, nor shall they be an asset in bankruptcy or subject to garnishment, attachment,
or other legal or equitable proceedings. The provisions of this Section 8.03 shall not apply to a
domestic relations order.



     8.04 Withholding. All benefits provided for hereunder shall be subject to applicable
withholding and other deductions as are required of the Company under any applicable local, state
or federal law.



     8.05 Amendment. The Compensation Committee of the Board may from time to time, in its
discretion, amend, in whole or in part, any or all of the provisions of the Plan on behalf of any
Company; provided, however, that no amendment may be made that would impair the rights of a
Participant under the Plan.



     8.06 Severability. If any provision of the Plan shall be held illegal or invalid for any
reason, said illegality or invalidity shall not affect the remaining provisions hereof; instead,
each provision shall be fully severable and the Plan shall be construed and enforced as if said
illegal or invalid provision had never been included herein.



     8.07 Arbitration. Any controversy arising out of or relating to the Plan, including without
limitation, any and all disputes, claims (whether in tort, contract, statutory or otherwise) or
disagreements concerning the interpretation or application of the provisions of the Plan, the
Company’s employment of the Participant and the termination of that employment, shall be resolved
by arbitration in accordance with the Employee Benefit Plan Claims Arbitration Rules of the
American Arbitration Association (the “AAA”) then in effect. No arbitration proceeding relating to
the Plan may be initiated by either the Company or the Participant unless the claims review and
appeals procedures specified in Section 6.06 have been exhausted. Within ten business days of the
initiation of an arbitration hereunder, the Company and the Participant will



-8-









 




each separately designate an arbitrator, and within 20 business days of selection, the
appointed arbitrators will appoint a neutral arbitrator from the panel of AAA National Panel of
Employee Benefit Plan Claims Arbitrators. The arbitrators shall issue their written decision
(including a statement of finding of facts) within 30 days from the date of the close of the
arbitration hearing. The decision of the arbitrators selected hereunder will be final and binding
on both parties. This arbitration provision is expressly made pursuant to and shall be governed by
the Federal Arbitration Act, 9 U.S.C. Sections 1-16 (or replacement or successor statute).
Pursuant to Section 9 of the Federal Arbitration Act, the Company and all Participants agree that
any judgment of the United States District Court for the District in which the headquarters of TMRC
is located at the time of initiation of an arbitration hereunder shall be entered upon the award
made pursuant to the arbitration. Nothing in this Section 8.07 shall be construed to, in any way,
limit the scope and effect of Article VI. In any arbitration proceeding, full effect shall be
given to the rights, powers, and authorities of the Committee under Article VI.




     8.08 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 applicable 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.



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     IN WITNESS WHEREOF, the Sponsor has caused this instrument to be executed by its duly
authorized officer this ___ day of _________, 2008, effective as of July 1, 2008.



	 	 	 	 	 
	 	THE MERIDIAN RESOURCE & EXPLORATION LLC

 	 
	 	By:  	 /s/ Joseph A. Reeves, Jr.	 
	 	 	Joseph A. Reeves, Jr., Manager 	 
	 	 	 	 
	 	 	 
	 	By:  	
 /s/ Michael J. Mayell	 
	 	 	Michael J. Mayell, Manager 	 
	 	 	 	 




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