Implementation of Initial Key Employee Retention

EXHIBIT 10.1


IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION


IN RE:
) COHO ENERGY, INC., ) CASE NO. 02-31189-HCA-11
) COHO RESOURCES, INC., )
) CASE NO. 02-31190-HCA-11 COHO OIL & GAS, INC., )
)
) CASE NO. 02-31191-HCA-11
)
) JOINTLY ADMINISTERED
) UNDER CASE NO. 02-31189-HCA-11
)
HEARING DATE APRIL 3, 2002
AT 1:45 P.M.


ORDER APPROVING DEBTORS' MOTION FOR ORDER AUTHORIZING
IMPLEMENTATION OF INITIAL KEY EMPLOYEE RETENTION PROGRAM


ON THIS DAY came on for consideration the Motion filed on behalf of Coho Energy, Inc. et al., ("Debtors") for an Order Authorizing Implementation of Initial Key Employee Retention Program and Supporting Brief, (the "Motion"). Counsel for the Debtors appeared. No party filed a response to the Motion or otherwise appeared at the hearing in opposition to the Motion. The Court, having considered the Motion, evidence adduced in support thereof, and presentation of counsel finds that:


1. This Court has jurisdiction of this Motion pursuant to by virtue of 28 U.S.C. Section Section157, 1334. This Motion involves a core proceeding.


2. Adequate and proper notice of the Motion, and opportunity for hearing thereon, was provided by the Debtors.


ORDER APPROVING DEBTORS' MOTION FOR ORDER AUTHORIZING IMPLEMENTATION IMPLEMENTATION OF INITIAL KEY EMPLOYEE RETENTION PROGRAM PAGE 1


3. The Debtors seek authority under sections 105 and 363 of the Bankruptcy Code to implement a back end loaded key employee retention and severance program (as described more fully below, the "Key Employee Retention Program"). The purpose for the Key Employee Retention Program is to minimize management and other key employee turnover, retain talent in a tight labor market and motivate key employees (each a "Key Employee," and collectively, the "Key Employees") to: (a) continue to provide essential services during this critical juncture in the Debtors' existence; and (b) remain employed by the Debtors throughout these chapter 11 cases.


4. The Debtors' ability to maintain their business operations and preserve value for their estates is dependent upon the continued employment, active participation and dedication of the Key Employees who possess irreplaceable historical knowledge, experience and skills necessary to support the Debtors' business operations, including, without limitation, the Debtors' finances, systems, operations, properties and assets, personnel and management. The Debtors' ability to stabilize and preserve their business operations and assets will be substantially hindered if the Debtors are unable to retain the services of their Key Employees.


5. The Debtors prior bankruptcy filing and uncertainty surrounding the future of their operations has had a significant and adverse effect on the morale of their employees. Unless an incentive plan is expeditiously implemented, the Debtors senior management expect that a number of the Key Employees will resign.


6. The Debtors' situation is unique in that following the confirmation of the Debtors' plan of reorganization in March, 2000, as part of their post-confirmation program to streamline operations and reduce general and administrative operating expenses to the fullest possible


DEBTORS' MOTION FOR ORDER AUTHORIZING IMPLEMENTATION OF KEY EMPLOYEE RETENTION PROGRAM PAGE 2


extent, the Debtors' workforce was reduced from 122 employees, as of March, 2000, to 74, as of the Petition Date. As a result, in the view of Debtors' management, each and every current employee is critical to the Debtors' operations and the Debtors' can ill afford to lose any employees at this time. Indeed, the Debtors' retention plan recognizes the importance of retaining employees at every level and not just senior management and executives.


7. Increased employee responsibilities, the general level of stress visited upon a debtor in possession's key employees and other burdens occasioned by the Debtors' status as debtors in possession may lead some of the Key Employees to resign in the near future and pursue alternative employment despite the Debtors' need for their continued services. Also, competitors of the Debtors and other parties have begun, and will undoubtedly continue to seek, to hire the Key Employees.


8. The Debtors can not afford to lose the Key Employees for many reasons, including: (a) the difficulty of replacing such employees because experienced job candidates often find the prospect of working for a chapter 11 company unattractive; (b) finding suitable replacement employees is improbable unless the Debtors retain executive search firms, with their attendant fees, and incur further costs in the form of signing bonuses, reimbursement for relocation expenses and above market salaries to induce ...