Exhibit 10.1

 

CONSULTING AGREEMENT

 

THIS CONSULTING AGREEMENT (this “Agreement”) is made and entered into as of July
11, 2011 (the “Effective Date”) by and between Cano Petroleum, Inc., a Delaware
corporation (the “Company”), and John H. Homier (“Consultant”).  The Company and
Consultant are referred to in this Agreement as the “Parties.”

 

RECITALS

 

WHEREAS, Consultant has agreed to undertake certain duties and responsibilities
and to perform certain consulting services for the period beginning on the
Effective Date and ending June 30, 2012, all as more fully described in this
Agreement; and

 

WHEREAS, the Company desires to engage Consultant to undertake certain duties
and responsibilities and to perform certain consulting services, all as more
fully described in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, for and in consideration of the foregoing premises and the
provisions hereof and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1.             Positions and Services.

 

a.             Consulting Services.  During the period commencing on the
Effective Date and ending on June 30, 2012 (the “Consulting Period”), subject to
the terms of this Agreement (including the extension and early termination
provisions set for in paragraph 3.a. below), the Company agrees to retain
Consultant and Consultant agrees to serve, as a consultant to the Company for
the purpose of serving as the Company’s Chief Financial Officer and Secretary
and performing the customary duties and responsibilities implied by such
positions, and such other duties and responsibilities delegated to Consultant by
the Board of Directors of the Company (the “Board”) and the Chief Executive
Officer of the Company (the “Consulting Services”).  In such capacity,
Consultant shall report directly to the Board and the Chief Executive Officer of
the Company.  Consultant shall use Consultant’s reasonable efforts to perform
the Consulting Services in the best interests of the Company, faithfully,
efficiently and in a professional manner, and shall devote such time as is
necessary to fulfill these duties.  Without the consent of the Board, Consultant
shall not serve as, or be a consultant, employee, officer, agent or director of,
any corporation, partnership or other entity that is a competitor of the
Company, provided that Consultant is not precluded from engaging in other
activities not otherwise prohibited hereunder and receiving compensation for
such other activities.

 

b.             Nature of Relationship Between Parties.  During the Consulting
Period, Consultant shall render the Consulting Services in this Agreement as an
independent contractor.  It is not the intention of the Parties to create, by
virtue of this Agreement, any employment relationship, trust, partnership or
joint venture between Consultant and the Company or any of its affiliates or,
except as specifically provided herein, to make them legal representatives or
agents of each other or to create any fiduciary relationship or additional
contractual relationship among them for the duration of the Consulting Period. 
As an independent contractor, Consultant will not be eligible for any

 

--------------------------------------------------------------------------------

 

Company-provided benefits, including, without limitation, medical, retirement,
short term disability and long term disability.

 

2.             Consideration.

 

a.             Consulting Fee.  During the Consulting Period, the Company shall
pay Consultant a consulting fee of thirty thousand dollars ($30,000) per month
(the “Consulting Fee”), payable in advance on or before the eleventh day of each
month.

 

b.             Payments.  The consideration described in this paragraph 2 shall
be the sole compensation to which Consultant shall be entitled for performance
of the Consulting Services.

 

c.             Advancement of Expenses.  Contemporaneous with the execution of
this Agreement, the Company shall pay to Consultant $10,000 as an advancement on
reasonable expenses that Consultant will incur in performing his duties and
responsibilities under this Agreement, including without limitation, travel
expenses between Houston, Texas and the Company’s offices (“Expenses”). 
Consultant shall be entitled to receive further advancements for Expenses on a
monthly basis or as otherwise agreed by the Company and Consultant.

 

d.             Payment of Taxes.  With respect to any payments or benefits
provided under this Agreement, the Company shall withhold any amounts authorized
by Consultant and all amounts required to be withheld by applicable federal,
state, or local law.

 

e.             Facilities.  During the Consulting Period, the Company will
furnish Consultant with office space, equipment, supplies, and such other
facilities and personnel as the Company deems necessary or appropriate for the
performance of the Consulting Services.

 

g.             D&O Insurance.  The Company shall maintain adequate director and
officer insurance coverage for the Company, as well as the directors and
officers individually (A-side coverage), at all times as instructed by the board
of directors.

 

3.             Termination.

 

a.             Termination.  Except as otherwise provided in this paragraph
3.a., this Agreement shall be effective for the Consulting Period described in
paragraph 1.a. above, provided that the Consulting Period shall be automatically
extended for successive one-year month terms unless and until terminated (upon
the earliest of the following): (a) by the death or Disability (defined below)
of Consultant, in which case the Consulting Period and this Agreement shall
terminate immediately; or (b) by any party hereto for any reason, pursuant to a
written notice provided by such party, in which case this Agreement, and the
Consulting Period shall terminate as of the date of termination provided in such
written notice.  Upon termination of the Consulting Period, the Company will
have no obligation whatsoever to Consultant, except for the payment of accrued
but unpaid Consulting Fees and Expenses rendered prior to the termination date;
provided that the Company shall pay to Consultant all such accrued but unpaid
Consulting Fees and Expenses on the termination date.  For purposes hereof,
“Disability” shall mean the inability, as determined in good faith by the
Company, of Consultant to provide the Consulting Services as a result of any
illness or physical, mental, or emotional incapacity or limitation that
continues for at least thirty (30) consecutive days or exists for at least
thirty (30) aggregate days during any consecutive twelve (12) month period.

 

2

--------------------------------------------------------------------------------

 

b.             Survival.  The provisions of paragraph 4 of this Agreement shall
survive termination or expiration of this Agreement.  In addition, all
provisions of this Agreement that expressly continue to operate after the
Agreement’s termination shall survive the Agreement’s termination or expiration
in accordance with the terms of such provisions.

 

4.             Confidentiality.  Consultant shall not, during the Consulting
Period or at any time thereafter, disclose to anyone, or publish, use for any
purpose, exploit, nor solicit, allow or assist another person to use, disclose
or exploit, except for the benefit of the Company, without prior written
authorization of the Company, any information regarding the business affairs of
the Company, strategies and plans, business information, financial information,
personnel information or any other confidential or non-public information
regarding the Company (“Confidential Information”), except as: (1) required for
Consultant’s work for the Company; (2) required by law; or (3) directed and
authorized in writing by the Company. For purposes of this paragraph,
Confidential Information shall exclude any information that has become part of
the public domain (other than from disclosure by Consultant in violation of this
Agreement) or was rightfully in the possession of Consultant prior to the date
of this Agreement.

 

5.             Remedies.  Consultant acknowledges that the protections and
restrictions in this Agreement, in view of the nature of the Company’s business,
are reasonable and necessary to protect the Company’s legitimate business
interests and that any violation of this Agreement would result in irreparable
injury to the Company for which there is no adequate remedy at law.  In the
event of a breach or a threatened breach by Consultant of any provision in this
Agreement, the Company shall be entitled to a temporary restraining order and
injunctive relief restraining Consultant from the commission of any breach, and
to recover the Company’s attorneys’ fees, costs and expenses related to the
breach or threatened breach.  Nothing contained in this Agreement shall be
construed as prohibiting the Company from pursuing any other remedies available
to it for any breach or threatened breach, including, without limitation, the
recovery of money damages, equitable relief, attorneys’ fees, and costs.

 

6.             Consultant’s Representations.  Consultant represents and warrants
to the Company that the execution and delivery by Consultant of this Agreement
do not, and the performance by Consultant of Consultant’s obligations hereunder
will not, with or without the giving of notice or the passage of time, or both
(a) violate any judgment, writ, injunction, or order of any court, arbitrator,
or governmental authority applicable to Consultant, or (b) conflict with, result
in the breach of any provision of or the termination of, or constitute a default
under, any agreement to which Consultant is a party or by which Consultant is or
may be bound.

 

7.             Indemnity of Company.  Company hereby indemnifies and agrees to
hold harmless Consultant and his heirs and assigns (each an “Indemnified
Person”) from and against any and all liabilities, obligations, claims, losses,
damages, penalties, actions, judgments, suits, costs, expenses, or disbursements
of any kind or nature as a result of a Claim of a third party (collectively, the
“Third Party Claims”), which may be imposed on, incurred by or asserted against
any Indemnified Person arising in connection with the subject matter hereof
(including, without limitation, the defense of any Indemnified Person’s actions
or inactions in connection with the subject matter hereof), unless such Third
Party Claims were the result of the gross negligence or willful conduct of the
Consultant.

 

3

--------------------------------------------------------------------------------

 

8.             Choice of Law.  This Agreement has been executed and delivered in
and shall be interpreted, construed and enforced pursuant to and in accordance
with the laws of the State of Texas, without giving effect to the conflicts of
law principles thereof.

 

9.             Waiver.  The forbearance or failure to pursue any legal or
equitable remedy or right available to any party hereto upon default under, or
upon a breach of, this Agreement shall not constitute waiver of such right, nor
shall any such forbearance, failure or actual waiver imply or constitute waiver
of a subsequent default or breach.

 

10.          Severability.  If any provision or provisions of this Agreement
shall be held to be invalid, illegal, or unenforceable for any reason
whatsoever, (a) the validity, legality and unenforceability of the remaining
provisions of this Agreement (including without limitation, all portions of any
sections containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable), shall
not in any way be affected or impaired thereby, and (b) such provision or
provisions held to be invalid, illegal or unenforceable shall be limited or
modified in its or their application to the minimum extent necessary to avoid
such invalidity, illegality or unenforceability, and, as so limited or modified,
such provision or provisions and the balance of this Agreement shall be
enforceable in accordance with their terms.

 

11.          Headings.  The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

 

12.          Counterparts.  This Agreement and amendments thereto shall be in
writing and may be executed in counterparts.  Each such counterpart shall be
deemed an original, but both counterparts together shall constitute one and the
same instrument.

 

13.          Further Assurances.  Each party hereto shall execute and deliver
such documents, and take all such other actions, as may be reasonably required
or reasonably requested by any other party hereto to effect this Agreement and
each transaction contemplated hereby.

 

14.          Entire Agreement; Modification.  This Agreement constitutes the
entire agreement and understanding of the Parties hereto with respect to the
subject matter hereof and supersede all other prior agreements, arrangements,
and understandings with respect to the subject matter hereof.  No understanding,
promise, inducement, statement of intention, representation, warranty, covenant,
or condition, written or oral, express or implied, whether by statute or
otherwise, has been made by any party hereto with respect to the subject matter
hereof which is not embodied in this Agreement and no party hereto shall be
bound by or liable for any such alleged understanding, promise, inducement,
statement, representation, warranty, covenant, or condition not set forth herein
with respect to the subject matter hereof.  This Agreement may only be amended
or otherwise modified by written instrument duly executed by each party hereto.

 

15.          Binding Effect; Assignment; No Third Party Beneficiary.  This
Agreement shall inure to the benefit of, and be binding upon, each party hereto
and each heir, executor, administrator, legal representative, and permitted
assignee of such party.  Except as otherwise provided hereby, this Agreement,
and the rights and obligations created hereunder, may not be transferred or
assigned by any party hereto without the prior consent of each other party
hereto.  The Company may assign this Agreement upon written notice to
Consultant, provided that the assignee assumes all of the obligations of the
Company under this Agreement.  Except as otherwise expressly provided hereby,
there shall be no third party beneficiary of this Agreement and this Agreement
shall not inure to the

 

4

--------------------------------------------------------------------------------

 

benefit of, be enforceable by, or create any right or cause of action in any
Person other than the parties hereto and their heirs, executors, administrators,
legal representatives, successors, and permitted assigns.  Neither the
availability of, nor any limit on, any remedy hereunder shall limit the remedies
of any party hereto against third parties.

 

16.          Code Section 409A; Delay of Payments.  The terms of this Agreement
have been designed to comply with the requirements of Section 409A of the Code,
where applicable, and shall be interpreted and administered in a manner
consistent with such intent.  If deferral of any amounts payable under this
Agreement is necessary in order to prevent any accelerated or additional tax
under Section 409A of the Code, then the Company will defer the payment of any
such amounts hereunder until the date that is six (6) months and one (1) day
following the Effective Date at which time any such delayed amounts will be paid
to Consultant in a single lump sum.

 

17.          Notice.  Any notice required or permitted to be delivered hereunder
shall be deemed to be delivered only when actually received by the Company or
Consultant, as the case may be, at the addresses set forth below, or at such
other addresses as they have theretofore specified by written notice delivered
in accordance herewith:

 

a.             Notice to the Company shall be addressed and delivered as
follows:

 

Cano Petroleum, Inc.

6500 North Belt Line Road, Suite 200

Irving, Texas 75063

Attn: Chief Executive Officer

Facsimile: (214) 687-9298

 

b.             Notice to Consultant shall be addressed and delivered as set
forth on the signature page.

 

[Signature Page Follows]

 

5

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, each party hereto has caused this Agreement to be executed,
delivered, and effective as of July 11, 2011.

 

 

THE COMPANY:

 

 

 

CANO PETROLEUM, INC.

 

 

 

By:

/s/ James R. Latimer, III

 

Name:

James R. Latimer, III

 

Title:

Chief Executive Officer

 

 

 

 

 

CONSULTANT:

 

 

 

/s/ John H. Homier

 

John H. Homier

 

 

 

Address:

 

 

 

3703 Harper Street

 

Houston, TX 77005

 

                               

 

                               

 

                               

 

CONSULTING AGREEMENT

SIGNATURE PAGE

 

--------------------------------------------------------------------------------