Exhibit 10.4


 


FIRST AMENDMENT TO EMPLOYMENT AGREEMENT


 


THIS FIRST
AMENDMENT TO EMPLOYMENT AGREEMENT (“Amendment”) is made and entered into by and between Cano Petroleum Inc., a Delaware corporation
with its principal executive offices in Fort Worth, Texas (the “Company”), and James K. Teringo, Jr., an individual
currently residing in Dallas County, Texas (“Employee”), effective as of the
1st day of January, 2006 (the “Amendment Effective Date”).


 


WHEREAS, the Company and Employee entered into that
certain Employment Agreement dated as of July 11, 2005 (the “Agreement”);
and


 


WHEREAS, the Company and Employee now desire to
amend, alter, modify and change the terms and provisions of the Agreement, as
follows.


 


NOW THEREFORE, for and in consideration of the mutual
benefits to be obtained hereunder and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged and confessed,
Company and Employee do hereby agree to amend, alter, modify and change the
Agreement, effective prospectively, as of the Amendment Effective Date as
follows:


 


1.             Section 4. (a) and Section 4. (b) Compensation. shall be deleted in their entirety and the following
substituted in place and in lieu thereof:


 


4.             Compensation.


 


(a)           Salary:  The Company shall pay Vice President for his
services, a base salary, on an annualized basis, of $120,000.00 (One Hundred
Twenty Thousand Dollars) per annum for the period from the Effective Date
through December 31, 2005 and a base salary, on an annualized basis, of
$200,000.00 (Two Hundred Thousand Dollars) per annum for the period beginning
on January 1, 2006, which salary shall be payable by the Company in
substantially equal installments on the Company’s normal payroll dates. 
All applicable taxes on the base salary will be withheld in accordance with
applicable federal, state and local taxation guidelines.


 


(b)           Bonus: In
addition to the base salary described in paragraph 4(a) above, Vice
President shall be eligible for periodic cash bonuses in an amount up to 100%
of the then base salary and/or stock bonuses at the sole discretion of the
Board.


 


2.             At
the end of the first sentence of Section 12, the following shall be added:


 


“and three times the sum of prior year bonuses paid to the Vice
President  and shall
continue to provide to Vice President, Vice President’s spouse and dependents,
for a period of three years after such termination or resignation, the right to
participate in any health and dental plans that the Company may maintain for
its employees, on the same basis as participation by such employees.


 


Except as specifically amended, altered, modified
and changed hereby, the Agreement remains in full force and effect as
originally written.


 





















 


Signatures


 


To evidence the binding
effect of the covenants and agreements described above, the parties hereto have
executed this Amendment effective as of the date first above written.


 


	
   

  	
  THE COMPANY:

  
	
   

  	
   

  
	
   

  	
  CANO PETROLEUM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ S. Jeffrey Johnson

  	 

	
   

  	
   

  	
  S. Jeffrey Johnson

  	 

	
   

  	
   

  	
  Chairman and Chief Executive Officer

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ James
  K. Teringo, Jr.

  	 

	
   

  	
   

  	
  James K.
  Teringo, Jr.