**Exhibit 10.15**

 

***SECOND AMENDMENT TO EMPLOYMENT AGREEMENT***

 

**THIS SECOND 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 **S. Jeffrey Johnson**,an individual currently residing in Tarrant County, Texas (“Executive”),effective as of the 31st day of December, 2008 (the “AmendmentEffective Date”).

 

**WHEREAS**, the Company and Executive entered into that certainEmployment Agreement dated January 1, 2006, as amended by First Amendmentto Employment Agreement effective May 31, 2008 (the “Agreement”);

 

**WHEREAS**, the Company and Executive desire to amend, alter,modify, and change the provisions of the Agreement to bring the provisions intocompliance with Section 409A of the Internal Revenue Code of 1986, asamended.

 

**NOW THEREFORE**, for and in consideration of the mutualbenefits to be obtained hereunder and other good and valuation consideration,the receipt and sufficiency of which are hereby acknowledged and confessed, theCompany and Executive do hereby agree to amend, alter, modify and change theAgreement, as of the Amendment Effective Date as follows:

 

**1.             Section 12 ofthe Agreement is hereby adding the following new sentence at the end of thefirst paragraph of said Section:**

 

Subjectto Section 25 below, all payments made pursuant to this Section 12shall be paid in a single lump sum within ten (10) days followingExecutive’s termination of employment, and any provision of in-kind benefitshereunder shall not affect the in-kind benefits provided in any other taxableyear.

 

**2.             The Agreement ishereby amended by adding the following new Section 25:**

 

25.           Code Section 409A.  The terms of this Agreement have beendesigned to comply with the requirements of Section 409A of the InternalRevenue Code of 1986, as amended (“Code Section 409A”), where applicable,and shall be interpreted and administered in a manner consistent with suchintent.

 

Notwithstanding anything to the contrary in this Agreement, (i) ifupon the date of Executive’s termination of employment with the Company,Executive is a “specified employee” within the meaning of Code Section 409A,and the deferral of any amounts otherwise payable under this Agreement as aresult of Executive’s termination of employment is necessary in order toprevent any accelerated or additional tax to Executive under Code Section 409A,then the Company will defer the payment of any such amounts hereunder until thedate that is six (6) months and one day following the date of Executive’stermination of employment with the Company (or, if earlier, upon the Executive’sdeath) at which time any such delayed amounts will be paid to Executive in asingle lump sum, with interest from the date otherwise payable at the primerate as published in The Wall Street Journal on the date of Executive’stermination of employment with the Company, and (ii) if any other paymentsof money or other benefits due to Executive hereunder could cause theapplication of an accelerated or additional tax under Code Section 409A,such payments or other benefits shall be deferred if deferral will make suchpayment or other benefits compliant under Code Section 409A.

 

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Except as specificallyamended hereby, the Agreement remains in full force and effect as originallywritten.

 

**Signatures**

 

Toevidence the binding effect of the covenants and agreements described above,the parties hereto have executed this Amendment effective as of the date firstwritten above.

 

 
|   |       | THE  COMPANY:                            |
|--------|------------|------------------------------------------|
|   |       |                                     |
|   | ** ** | **CANO  PETROLEUM, INC.**                |
|   | ** ** | ** **                               |
|   |       |                                     |
|   |       | By:                                      | /s/ Donald W. Niemiec |
|   |       |                                     | Donald  W. Niemiec |
|   |       |                                     | Chairman  of the Compensation Committee |
|   |       |                                     |
|   |       |                                     |
|   |       | EXECUTIVE:                               |
|   |       |                                     |
|   |       |                                     |
|   |       |    /s/ S. Jeffrey Johnson |
|   |       | S.  Jeffrey Johnson                      |

 

D-1706635_1.DOC

 

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